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If you got fired tomorrow and stopped receiving a paycheck, how long would you be able to live off of what you already have?
I’m weird, but this is a game that I like to play from time to time. It tells me how financially secure my family and I really are. Yes, I really need better hobbies than making up financial games in my head.
Related: Cheap Entertainment With Board Games
My Major Mistake
Not too long ago, I was living paycheck-to-paycheck and couldn’t even afford to fix up my car after it had died. The worst part is I have a finance background. I knew better, but I was young and overly confident and thought nothing would ever happen to me.
That was the wake up call that I needed to get my life in order. I’ve gone from living irresponsibly to now knowing that we could live for the next 21 years without a paycheck and be fine. For those of you scoring at home, I think within the next 2.5 years, we should be able to reach FIRE. At that point, I’d never have to work again. Whether or not I actually quit is a completely different story that my wife and I are still trying to sort out.
Hopefully, you are not in the 78% of full-time working Americans who live paycheck-to-paycheck (source: CareerBuilder). The worst part of the report is that nearly 1 in 10 workers who make over $100,000 live paycheck-to-paycheck.
Admittedly, I couldn’t believe these figures. Nearly 4 out of 5 people in that type of financial situation seemed high. But, then I remembered a co-worker who was making over a $100,000 per year. She had to file for unemployment compensation during the Federal Government Shutdown of 2013, when the government closed for 17 days. She didn’t have enough money to afford to miss even a portion of her paycheck.
That’s right, us government employees didn’t even lose a whole paycheck, since we were retroactively granted backpay. We received a partial paycheck during that time period and a bigger paycheck a week or so after the shutdown ended.
While I can’t pretend to understand her personal life situation, I do find it interesting that she has a finance and accounting background. Typically people in these fields know enough to advise people on how to handle their money. Even so, it can still be a struggle.
With the median income for a family at $59,039, I am curious to know what would happen if the average family could save just 1% more a month. That would equate to $50 extra a month. I wonder if that could help alleviate some of the financial problems that most Americans seem to have.
I understand that people have their reasons for not being more secure with their money. However, I think that most people can figure out how to save $1.67 per day if they really set their mind on doing so.
This is why I am such a huge advocate of building up your emergency fund. It lessens the chances of you getting into a sticky financial situation down the road. At some point in your life, you will definitely experience some sort of financial hardship. It’s only a matter of when, so doesn’t it make sense to start saving now?
Related: Why You Need an Emergency Fund
Today’s a great day to start. Then, when times get rough, you have something that can tide you over.