Life tends to teach us lessons and remind us of things along the way, if we are paying attention. Back at the end of June my wife wound up fracturing the upper portion of her tibia while playing with the kids. The details aren’t important, but as a nurse working two 12-hour floor shifts a week, she has been unable to be at work all throughout the summer and probably for another month or two. A few observations we have made…
Benefits Sure Help
While health and insurance benefits shouldn’t be fully trusted, they sure help when things go wrong. Working part-time as a nurse my wife definitely provides stability for our young family with the benefits her job provides. The doctor and rehab fees associated with this injury have taken less out of our pocket than the average car payment. The short-term disability insurance provided by her employer only provides 60% compensation as opposed to the 100% coverage it used to provide. Those living paycheck to paycheck might be devastated by a 40% reduction in pay combined with medical bills and other associated costs, but this isn’t a big deal when you try to live within your means.
Pad Your Landing
It isn’t a question of ‘if’ but ‘when’ life events will trip you up. Illness, injury, and other issues can pop up at any point and without ‘padding’ the financial effects of these incidents can become long-term. (Obviously catastrophic illness or events will stay with you long-term in many ways.) Let me give you an example…
I live in the great state of Texas! I love this state but do take issue with a few things, like the unregulated payday loan industry. In the last few years, these ‘vultures’ of the loan industry have popped up everywhere. The industry preys upon people who probably don’t understand precisely what they are signing up for. Payday loans literally have your paycheck spent before you even get it. With interest rates as high as 650%APR it is hard to ever recover from this poor financial decision.
Most experts would advise having an emergency fund for injury, major repairs, or other tough events that arise in life. The average suggestions is around $6,000. That number is a lot easier to attain before the events of life trip you up.
Thrifty vs Minimalism
Allow me a quick aside that runs parallel to this topic…
One of the best ways to live within your means is to be careful with your money, but is there a difference between being thrifty and living a minimalistic lifestyle? My wife and I were talking about this topic the other night…exciting, I know. It seems that minimalism is becoming a goal for the wealthy while being thrifty is relegated to the working class. Minimalism seems to be focused more on the visual, mental clarity, and simplicity, rather than saving money.
An example, a minimalist, in order to cut down on paperwork and clutter in the files might buy a $400 NeatDesk digital filing system and digitize all those paper receipts and files. But does a $400 scanner fit into the profile of someone who is classified as thrifty? I guess that answer depends on who you ask.
The point, no matter how you think of yourself – minimalist, thrifty, penny pinching tyrant – stop and think about what are you doing and if it helps you to truly reach the goals you are striving for. (You do have measurable goals right?) Look to previous generations for examples of true thrift – no cable, economical and reliable cars, dedicated times for financial chores, modest homes…the list could go on and on.
We have been blessed with the ability to handle an injury and loss of income with little to no impact on our family. The outcome could have been much different if a few variables were changed. I encourage you to really think about how well you have planned for the challenges of life, and set honest goals that will help your family be prepared.