If you’ve been following the news, it seems like it’s not just our health and safety that’s not secure these days. Jobs, businesses, relationships, political stability, the economy, and our environment are at risk from further disruption.
Action is the antidote to such uncertainty. Although we can’t control many of the events globally, we can choose how we respond and exercise agency in areas where we can make a difference.
One vital aspect of our lives where most of us need to take urgent action is financial management. Too many households are struggling to make ends meet, despite having the bandwidth to spare. It’s time to step up and do more than the minimum required to survive in this regard.
The perils of breaking even
According to the latest available data from Pew Research, more than half (52%) of American households fall in the middle-class category. Median incomes had been rising since the Great Recession. Unemployment was at an all-time low.
The catch is that those numbers were reported in January 2020, before the pandemic had turned our lives upside-down. Months earlier, other reports had indicated that a disturbing number of Americans were living with little to no financial buffer. Seven out of ten said that they struggled with at least one aspect of financial management.
Few people could have foreseen the impact of the pandemic, but that’s hardly the point. Those who had sufficient funds to tide them over in case of an emergency would have been able to handle things better. Not just the immediate shock, but in months that followed, because they would have a more stable base of financial practices in place.
Talk and be frugal
The rich certainly have better insulation against disruptions. Poor people arguably suffer disproportionately from their effects. But it’s in the middle class where a high variance can be found. And with those households comprising such a large slice of the population, individual actions can make a real difference in financial outcomes.
The problem is that the middle-class mindset doesn’t like talking about finance to begin with. It’s deeply ingrained in their identity to have all the external markers of moderate success and stability.
If you’re not yet a master of everything there is to know about personal finance, how will you learn if you don’t talk about it?
Opening up to others can enrich your knowledge. You can start to shed the extraneous trappings of a middle-class lifestyle and live frugally without impacting your self-image.
Grow a garden of native plants and save a ton on lawn maintenance. Switch to efficient lighting from suppliers such as LED Direct Ltd. Buy second-hand furniture, and sell the clutter you don’t need. You may even consider downsizing your house.
Hustle and build wealth
Frugal living is a start. Ultimately, however, your goal should be having a sizable buffer between your income and the trap of breaking even.
Don’t settle for making ends meet. Or having an emergency fund. Or even setting aside money each month into a savings account.
Make no mistake. Those measures are vital to survival. But on their own, they are insufficient to build wealth. You have to find ways to bring in more income.
That could mean having a side hustle. Or investing money, or starting a business. Depending on your risk tolerance and the quality of opportunities you come across, there are many routes to follow.
It’s time to forget uncertainty. Take decisive action using all the time and energy you have to spare and aim higher than merely making ends meet. It’s the only way to survive unpredictable future disruptions.
