Don't Live With a False Sense of Security

Morphine by Michael Hussar
Morphine by Michael Hussar
People don't save enough these days.

It's apparent in almost every survey done when we ask people how much they have saved for retirement. The most recent survey that I saw was conducted by LearnVest and Chase Blueprint supports my thoughts pretty well, it's actually quite shocking how underprepared the average person is for their future retirement. I think that many of these people are going to have to work for much longer than they really want to.

But what comes before savings is living below your means. If you can live off of 50% of your income then you can save a lot more compared to someone that lives off of 95% of their income. It's simple math. But actually executing this is the hard part, not everyone can live off of small portions of their income. In fact some people live off of more than they make thanks to credit cards.

The other day a person that I know was talking about sending their daughter to summer camp. There were various courses that they could sign up for at this camp but they mentioned that they couldn't afford to sign up for certain courses because they cost $75 more than some of the courses. While I'm glad they recognized their limits I was stunned that they weren't able to afford the extra $75. After all, this family of 4 had season passes to Disneyland, ATV's for each of their children before they were even 10 years old, and own their own RV. So why were they spending so much that the $75 for their daughters summer camp was too much?

I think they were living with a false sense of security


So what is a false sense of security? It's similar to a false sense of awakeness (yes I made this term up). Have you ever stayed up all night studying for an exam? Or had a long drive that you had to stay awake for? It's occasions like these where I would load up on caffeine to stay awake to keep going. It's where you know you've been awake for so long that you know the only reason that you are awake is because of all the caffeine pumping through your system.

I described this once to my psychiatrist when I was trying to tell him how anti-depressants made me feel. It gave me what I described as a false sense of happiness; where yes, I was feeling happier, but at the same time it didn't feel right. Something about it didn't feel natural and I knew the only reason I felt that way was because of the anti-depressants.

Anyways, I think that these days most people live with a false sense of security and they don't even realize it. Do you think you have job security? Do you have an emergency fund?

If a job loss, accident, or unplanned event would cause you to not know how to afford your life then you are one of these people. Obviously if a major event happened you would change your lifestyle, but how long could you get by? This is why you need an emergency fund or savings of some sort to help you get by while you get back on your feet.

While you may think that your job is secure, it's hard to really tell these days, anything can happen. And no one ever expects accidents, that's why they are called accidents. I think that freelancers are one of the only groups of people that plan to not always have work, but most people don't plan like this. Hopefully you are prepared in case there is a major shake up in your life, because not knowing how to afford your own life is a pretty scary thought.

Have you ever lived with a false sense of security? Do you have an emergency fund saved up?

22 comments:

  1. I agree that an emergency fund is needed. Although I don't literally separate the money into a different account since my checking account has 3% interest, I have a bottom dollar amount I would like to keep in there to cover emergencies. Also eliminating debt will reduce the amount needed in the emergency fund because there will be less bills that need to be paid.

    ReplyDelete
    Replies
    1. I have a confession, I don't actually have a separate account for emergencies either. But I do have an account that I have money saved in that I could live off of for a few years if I had to, but that would push back my goal of financial independence a bit so I'd rather not dip into it. But it's there in case of an emergency if I needed it.

      Delete
  2. I have a small $1k emergency fund in a separate savings account, but I know that's not really enough for much. We are working to pay off our mortgage by the end of this year, so I tell myself I'll be better at moving cash over there next year...

    ReplyDelete
    Replies
    1. FI Pilgrim,

      At least you have something saved for smaller emergencies like car repairs or something. But if you have your mortgage almost paid off you're probably waaaay ahead of other people. I haven't considered paying off my mortgage since I don't really think I'll live in my current house forever. I think I'll downsize if I can find a good opportunity. Great job on your house though, that is impressive. Thanks for stopping by!

      -Zee

      Delete
  3. I have an emergency fund and I'm working hard to really build it up since I know I won't have a job much longer. The funny thing is, my coworkers are in the same boat and they're still spending money exactly as they were before....going out to lunch everyday, etc. I think their false sense of security comes from being confident that they'll be able to find new jobs right away, but that may not be the case. Or it may just be a serious case of denial. Either way, I just want to stand on my desk and preach. And yell. And point.

    ReplyDelete
    Replies
    1. Hey Bee,

      I've read about your job situation, that sounds pretty unique. It's good to have notice so you can prepare but it still sucks to know that is coming. But I think I remember reading about how you are wanting to start a family so perhaps you can find something new that is flexible enough to have more time at home.

      I'm actually sort of surprised that your coworkers haven't started looking for a new job already. If I knew it was imminent I would be on the hunt. I've stayed at a job because of bonuses before and I found the last time moving somewhere new meant a higher salary and that made up for the bonus within 6 months or so.

      I hate seeing people being stupid with money when you know they shouldn't be. I would hope that if I ever kept spending above my means someone would yell at me.

      -Zee

      Delete
  4. In my younger years, yes, I'd say that I lived with a false sense of security. As I grew older I realized I couldn't rely on my parents' money anymore and that they wouldn't live forever and I had to stand on my own. Since then I've been trying to live independently and and try to build up enough emergency and retirement fund.

    ReplyDelete
    Replies
    1. I think that when you are younger if you have parents that are willing, being able to rely on them is an alright solution. Obviously it's not ideal because you won't be able to rely on them for forever. But eventually we all have to start making it on our own. It's good to hear that you're forging your own way.

      Delete
  5. I should have more in my emergency fund (which I do keep in a separate account) - it's recently helped me out to replace my broken-down oven (which couldn't be fixed). Perhaps I am living with a false sense of security right now as things are pretty good for me right now. I need to ensure I divert more funds towards unexpected events.

    ReplyDelete
    Replies
    1. Being comfortable can be a dangerous place. They say (I'm not exactly sure who "they" are in this situation) that when investors get too comfortable they get caught by surprise.

      I know that life doesn't follow the markets but there's different levels of comfortable in my mind, comfortable because you have prepared and comfortable because "things have been going smooth". I think it's better to have money saved for a rainy day and not need it than be caught off guard.

      Delete
  6. That's interesting, how you described being on anti-depressants. I took anti-anxiety medication for years and felt pretty much the same way, but I was never any good at describing it.

    On the plus side, with an anxiety disorder, I don't ever really feel any sense of security, much less a false one ;o)

    ReplyDelete
    Replies
    1. Haha, touché. Perhaps anxiety isn't something to laugh at though.

      I wonder if you feel like your anxiety has helped you prepare for the worst case scenario? I wrote about personal finance and personality disorders once, it focused on my perceptions of how each type of individual might be helped or hindered by their disorder. Almost everything I wrote was speculation of course, but when I talked about bipolar I was speaking from my own personal experiences. I didn't cover anxiety disorder though.

      http://www.work-to-not-work.com/2014/02/personal-finance-and-personality.html

      -Zee

      Delete
  7. You always hear the financial advisers recommend each of us have an emergency fund to cover X number of months or for unexpected expenses such as car or medical, but the reality is that most people are not prepared for such cases. I can understand the difficulty in saving up for such a fund when rent, food, transport and other bills are more pressing. Now we must contend with college debt, personal debt and more besides normal living expenses. How can one save enough to have a fund let alone invest for the future? A fall sense of security is sometimes the best way to lull us to sleep each night without taking meds. Don't mean to be such a downer but the current state of the state if you will is quite sad.

    ReplyDelete
    Replies
    1. DivHut,

      A false sense of security is good in the sense it will get you to bed at night. But on the other hand, if you don't pay attention to these things then you may wake up to a horrible surprise one day. What if you woke up at the age of 50 and realized that you hadn't even started saving for retirement! That's a lot of ground to cover so late in life. But essentially that's my current goal, is to save like I'm 50 years old. Granted, I'm 2 decades younger than that (give or take a few years) but essentially I'm just front loading my savings early on in my career so I don't have to do it later.

      Financial advisors also starting to say that 2 million is the new 1 million for retirement. That millennial will need that to retire. While I think that's a fine goal to shoot for, I know I will fall short of it, probably waaay short of it. But I know I won't need that much to retire. I won't spend anywhere near 100k per year in retirement, I think I spend less than 30k per year right now so I can't imagine needing that much for anything even with inflation. Thanks for the comment!

      -Zee

      Delete
  8. This comment has been removed by the author.

    ReplyDelete
  9. Very good post! We are linking to this particularly great content on our website. Keep up the good writing..
    lie detector test

    ReplyDelete
  10. Good posting and very nice article, and this site give a interesting information..thanks for sharing. detektyw

    ReplyDelete
  11. In the event that you hold North Carolina securities, where do you go for offer assistance? Rest guaranteed, there are lawyers in business and monetary law who can exhort you in respects securities that you may hold. Be that as it may, until the point when you have held the administrations of a neighborhood legal advisor, we should get up to speed on the wording of securities law so you are prepared for your first arrangement. Fast Guard Service

    ReplyDelete
  12. It can be extremely exhausting to be a security monitor. Low pay is a staple of nature in Albuquerque. Advantages. What are benefits in the security business?hubstaff login

    ReplyDelete
  13. Your initial phase in finding a spy camera is to comprehend what spy cameras can do, and why you would need to utilize an incognito camera. On the off chance that you as of now have a reason at the top of the priority list for your video or still camera, you are well on your approach to realizing what you require. its right here

    ReplyDelete
  14. CCTV cameras are cheap to buy and simple to introduce and utilize. Numerous organizations offer home security frameworks with directions on the best way to do it without anyone's help.Best Security Place

    ReplyDelete
  15. Will you place the cameras inside or outside? On the off chance that you'll be putting cameras anyplace outside you'll require cameras that are manufactured harder than run of the mill indoor security cameras. the business website

    ReplyDelete