With businesses closed, work hours reduced and jobs eliminated due to Covid-19, many people now find themselves in the grip of a financial crisis. Even before the pandemic, America had a savings and retirement problem. Statistics tell us that 45 percent of American workers have no retirement savings, and according to the Federal Reserve, over one-half of Americans could not come up with $400 in an emergency. The reality of these statistics is apparent right now.
Many are searching for a scapegoat for this crisis and its effects on our nation. Instead, I choose to ask what we can learn from this and the ongoing retirement savings crisis in America. Here are some steps we can take to weather future storms better:
EXAMINE YOUR FINANCIAL BELIEFS
One of my favorite quotes is from Henry Ford: “Whether you think you can, or you think you can’t – you are right.” Do you really believe that you can be financially stable? Do you think it is possible for you to build an emergency fund? How about a retirement savings plan? If you don’t believe it is possible, you never will take the necessary steps to make it a reality.
As my daddy used to say, “Can’t never could.” I know all too well the struggles of single moms, small business owners, and the underemployed. When you combine any of those situations with poor financial decisions, the problems are compounded. Take the time to carefully examine what you believe about your money and your financial situation.
STOP SPENDING FRIVOLOUSLY
Now that you have examined what you believe about money, you must examine your spending and savings habits. In
this crisis, your spending probably has changed. Things you thought you could not live without you now find aren’t essential. Should that change once you are free to move about as you wish?
Consider if continuing to do without those things might facilitate a breakthrough for your financial future. Are they things that add value to your life? Do they help you achieve the financial future you dream of? Decide what is important to you and make a realistic budget, one you can stick with.
When one of your children is “on your last nerve,” have you ever told them to “just stop it?” I have. Before you spend money that will hamper your financial future, consider telling yourself to “just stop it.”
The reason many people fail to save is their false belief that saving has no point if you don’t have a large amount of money to put away. If you were to ask different people how much money is a “large amount,” I guarantee the numbers would vary widely. Using a “large amount” number as a threshold to begin saving is an excuse to procrastinate and let yourself off the self- discipline hook.
If your budget is very tight, take the small step of opening a savings account at your local bank and deposit whatever you can. If your budget only allows you to save $5 a week, then save $5. After a year, you will have $260 you didn’t have before. Regularly review the expenditure tracking and budget you developed for ways to increase how much you are saving. Just as spending becomes a habit, so can saving. As the Nike slogan says, “Just do it.”
We as a society are working hard to remove the stigma from mental health issues by encouraging people to seek help before struggles turn into crises. In the same way, we must be willing to seek financial help and encourage others to do the same before the struggle becomes disastrous.
You may not be able to change many of life’s problems, but you can change how you face them. Imagine with me what life could be if you broke the mold of financial crisis in your family and left a legacy of financial wisdom instead.