Financial airbag: why you can’t save and how to fix it. BEAUTYHACK

The MIF publishing house published the book “I spend and get”. Its author is Natalia Kolbasina, a financial coach and co-author of the MIF’s “Trick and Treat” course. With the permission of the editors, we publish an excerpt from the chapter “Creating a financial reserve”, which explains why we need savings for a rainy day and how to create them.

— We live in a constantly changing world that throws us new challenges. In addition, unplanned events can occur in the life of each person that will negatively affect the level of his income: loss of a job or business, forced transition to a job with a lower salary, health problems, etc. What to do in such cases? There is no secret here. The answer is simple: a financial reserve will help you survive difficult periods.

A financial airbag, or financial reserve, is a reserve of funds that will help you survive temporary financial difficulties. Its recommended size is three to six monthly expenses of a person or family. Although here everything, of course, is individual. For someone, savings in the amount of a three-month amount of expenses are quite enough, while someone needs a reserve in the amount of a year. It all depends on the characteristics of your psyche, values, current financial situation.

For example, Olga and Egor tried several times to create a financial airbag, but they constantly broke down and spent their savings. The situation in the family worsened during the pandemic. Olga was still at home on maternity leave with her two-year-old son, and Egor suddenly lost his job. They lived in a small town, so it was not possible to quickly find a new one. For four months I had to save money, deny myself everything. Parents’ support helped me get through this difficult time. After that, the family began to save up so that in the future they would always be ready for such force majeure situations.

We all understand that a financial reserve is necessary: ​​with it, life becomes calmer. But not everyone is able to create it. Here are the main reasons why people fail to save money:

1. Creation of a financial airbag on a residual basis, after payment of all current expenses. Often this is the main reason why it is not possible to create a financial reserve.

2. Lack of planning and accountingwhen all the money earned is spent without a trace.

3. Really low income of a person or family. Even after cost optimization, there is enough money only for basic needs. In this case, you need to think about options for increasing income, ways to optimize them. You already know three optimization options – to issue tax deductions, to receive income from everyday calculations, to use government support measures.

4. Negative financial beliefs. I often hear the phrase from people: “I don’t want to create an airbag, save up for a rainy day. As long as I don’t have a reserve of funds, nothing bad happens. As soon as they appear, something is sure to break, or I get sick, or somewhere else the money becomes urgently needed!

What to do with such thoughts? We are all adults and we understand that a reserve is needed. If you are afraid that if you have savings, something bad will happen and the money will go somewhere anyway, I suggest looking at the situation differently. Don’t save up for a rainy day! Save up for a bright future, dreams, new opportunities. When creating a financial safety cushion, call it a fund of stability, prosperity, freedom – whatever you like. Choose a word or phrase that will inspire you. I call my financial reserve a stability fund, and its very presence gives me an additional sense of calm, confidence, and reliability.

By creating a financial reserve, you will get rid of one of the most negative financial attitudes – “There is no money” and gradually form a new positive belief – “There is money. Always”.

If you don’t have a financial cushion, what’s stopping you from creating one? Think about how you can overcome these obstacles? What actions will bring the maximum result? How to create a guaranteed financial reserve? I offer a short step-by-step work plan, which you can at any time adjust to suit your needs and adapt to your situation.

  1. Choose a resource name (stability fund, financial reserve, reserve, etc.). I am sure that you will not have any difficulties with choosing an inspiring name.
  2. Calculate the amount of financial reserve you need.
  3. Calculate what percentage of your income you can set aside in a financial reserve.
  4. Act on the principle of “pay yourself first”: save 10-20% at the time of income.
  5. Automate the collection process. Use banking services-piggy banks.
  6. Save in parts: create a financial reserve for one month of life, then for two, three, etc.
  7. Observe financial discipline. The main thing in savings is the regularity and strength of small steps. It is not the smartest or the most brilliant who become rich, but the most disciplined.

To determine the size of the financial airbag you need and the comfortable terms for its accumulation, use the table from the workbook (available in the book, approx. Below I will give an example of how you can apply it to solve a specific problem. Youyou can also fill it out yourself in a workbook, taking into account your situation and opportunities.

Example: calculating the financial reserve

Masha wants to create a financial reserve.

Masha’s monthly expenses are 50,000 rubles.

There are savings in the amount of 65,000 rubles.

Masha decided that first she needed to create a reserve for three months of life – 150,000 rubles. She had to accumulate 85,000 rubles.

If Masha saves 5,000 rubles a month. and save on a bank deposit at 8% per annum, then she will have the required amount in 16 months. If she wants to save up faster – in 12 months, then she will need to save 6827 rubles a month.

More on the topic:

4 tips from a financier on how to save money in supermarkets, but not deny yourself anything

Keep track of expenses and follow the “pay yourself first” rule: a financier on how to save for a dream

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