Every year the monsoon rolls in and most of Southeast Asia gets buckets of rain falling from the sky. The timing of the actual storms may not be predictable but the general time of year when they come sure is. Knowing this ahead of time makes it very easy to prepare. Most of the yachts have more than ample time to escape the rough seas that come along with the monsoon and find safe harbours. The financial rainy days in our lives, on the other hand, are anything but predictable.
Setting aside an emergency cash reserve for those unforeseen rainy days should be the absolute first priority in everyone’s life. This should never be sacrificed in favour of anything. An emergency is something unpredictable and as such we need our emergency reserve to be there at any and all possible times. If you “temporarily” dip into your reserve for a down payment on your dream home you may be making a big mistake with much bigger repercussion than you could imagine. You need to save for the deposit alongside maintaining your reserve, and if that means it takes longer to buy your first home, then that is what you should do. Being fiscally responsible isn’t always fun, but it will always be more fun than growing old in the poorhouse.
Too often I have seen people stretch to make purchases like a boat, only to have chance rain on their parade just when they temporarily have no money set aside for an emergency. You can’t trade in your boat cushions for the dinner tab at most restaurants. Imagine buying that Harley you have always been dreaming about, but dipping into your emergency reserve to do so, only to crash it the first week, end up missing work and thus not earning anything while you rack up medical bills recovering in the hospital.
I don’t mean to pick on bikers or boats here, but these types of financial mistakes are so common and yet very easy to avoid if you learn to treat your emergency cash reserve as something sacred. It is your safety net. Knowing that you have such a net in place drastically reduces your overall stress levels which has a dramatic positive effect on our health, as well. When you know that you can survive the time needed to change jobs if your boss is a jerk, it allows you much more freedom to stand up for yourself as well. Nobody likes to be stuck in a position they dread solely due to a short term financial problem.
Nobody goes through life without occasionally running into some unexpected monsoon force financial rainy days. It is almost as certain as taxes and death. However you don’t need to let them destroy years of hard work, saving, and fiscal responsibility. The difference between those who can roll with the punches and elevate their financial life to consistently higher levels and those who get washed away is the amount of cold hard cash they have stashed away specifically for those rainy days.
David Mayes MBA provides wealth management services to expatriates throughout Southeast Asia, focusing on UK Pension Transfers. He can be reached at david.m@faramond.com. Faramond UK is regulated by the FCA and provides advice on pensions and taxation.
