No one knows tomorrow. As long as you are alive tomorrow is bound to bring challenges, trials and problems on your way. This is why the financial principle of “saving for the rainy day” is extremely important.
Saving for the rainy day entails keeping something aside for a future need that you might have. These needs require money to take care of them. They are usually unpredictable and unexpected. It makes savvy money sense to keep rainy day monies aside so that one is not caught unawares when the need surfaces.
However saving for the rainy day cannot be the only reason to save. This is because you also need money to take advantage of numerous opportunities that tomorrow will bring to grow and increase your wealth. Putting all your money into saving for future needs will deprive you from investing in other ventures that will get you out of poverty and lack.
Needs come and go, and by all means you must take care of them. The money spent on your needs however cannot be gotten back again. It cannot multiply or yield you gain or profit. It’s gone and gone forever, never to be used to grow wealth for you. Money is meant to be employed to produce more for you, not just to take care of your needs.
The wealthy do not save only for the rainy day; they also save for the “opportunity day.” Needstake your money while opportunities you invest in are a means of multiplying your money. Putting all your savings into your future needs is extremely unwise and a sure recipe for poverty and lack.
It is imperative that you deploy a two-pronged approach to saving. This will entail saving for both your needs and opportunities. You must save a minimum of 6 – 12 months of all your current living expenses in a special account to meet future needs, a kind of emergency fund. Do all you can to restrict ease of access to it –get a joint signatory to the account, don’t have an ATM card or a cheque book to this account. Give your bank a standing order to ensure money is automatically transferred to this account regularly. I highly recommend you put 75% of the funds you are currently saving into this account till you accumulate enough.
You should also go ahead and open a second account where you put the remaining 25% of your monthly savings in to take advantage of opportunities. Once again make it difficult to gain access to these funds. These funds’ objective is to be deployed into producing more wealth for you. As soon as you have attained your targeted objective for the emergency fund proceed to put 100% of your savings into this account. Don’t be fooled into thinking you cannot invest or start business with small amounts. Use this money judiciously and wisely to produce more for you which you plough in over and over again thus growing your wealth.
You must remember to always replenish your emergency fund whenever you take from it to spend on your needs. You can thus proceed to save 50% of your savings in the fund again until you attain your targeted threshold. Once completed then go back to putting all your savings into your opportunities account.
A disciplined adherence to this principle will see you in no time beginning to accumulate wealth as you take advantage of the right opportunities and plough back the gains. Endeavor to live within the means of the funds you are not saving. Remember that wealth and riches can only be accumulated by taking advantage of opportunities continuously and consistently! You need to stop saving only for the rainy day!
Kenneth Doghudje
