We are living in a remarkable time. We’re experiencing the longest bull market and the lowest unemployment rate, which makes us wonder when is this going to end?
We live in cycles and it won’t be this way forever. What can you be doing right now in this remarkable time to prepare for when it’s not remarkable?
Let’s talk about the story of Joseph for a minute.
Joseph was born into a time when Egypt’s economy was strong. He has a crazy dream that bad times are going to be ahead. The Lord gives him a vision for this and he goes and tells the pharaoh they need to begin storing up grain. They needed to set aside wealth for when things aren’t so good. Pharaoh listens to Joseph and it ends up saving the land when they experience a seven-year drought.
The wisdom of that story echoes across humanity for thousands of years regardless if you are a bible believer or not.
Have you applied that to your life right now? Are you sitting at a time when you have excess income and a good job? How have you stored up for when times aren’t that good?
When things get bad, people started saving money.
When we have a lot, and we’re in a time when the economy is growing, people tend to spend more. We see saving rates go up with the market drops.
In 2008, we saw people spend less money. I wasn’t just the people that lost their jobs that began spending less, it was also people earning the same amount of money. They began looking around saying “Holy cow! I’ve got to be ready. What if things get worse? What if I lose my job? What if the market doesn’t recover?” Did your spending habits change in 2008?
When the overall environment is one of fear and anxiety, we tighten up. We begin saving. When the overall environment is one of abundance, we go spend those extra dollars.
A lot of people understand they should be saving, but very few people save it intelligently. Saving intelligently means having a strategy and a plan.
How to make sure you’re in a position that when the economy turns south, you’re still doing well.
1. Make sure you’re saving.
a. A lot of people are saving but aren’t sure if they’re saving enough. They’re putting money aside, but have no idea if that’s the right amount of money for them to be OK.
b. You need to design an income plan. Have a clear target. Once you have a target you can tell if you’re aiming towards that goal correctly and accurately.
2. Make those saving intelligent.
a. Are you strategically thinking about where those dollars go? Maybe you’re putting all your dollars into a 401K. You’re saving, but is that the best way to go about it? If you lose your job, how easy can you access those savings? You need liquid funds accessible. You need layers of liquidity.
i. First layer: emergency fund. Put 3 months of expenses into a boring savings account.
ii. Second layer: pay off all bad debt. If it’s over 9%, it’s bad debt. pay that off!
iii. Put money into a ROTH IRA.
Do you have that? Do you have the ability to access a large amount of money if you need it right now with no penalty? Most people don’t, and it’s where you will find financial peace.
If you’re not sure if you’re saving intelligently, or have more specific questions to your life situation, sign up for a free consultation. I would love to sit down with you, answer your questions more in-depth, and create a plan that works for you future.