We all know that it is a good idea to prioritize our savings accounts. Yet, 63% of Americans are living paycheck-to-paycheck and would experience major financial complications from one missed paycheck. I used to live this way. In addition to the expected financial challenges, my poor money management skills carried stress into every facet of my life. If I had known all of the non-financial benefits of prioritizing the establishment of financial margin, I’m convinced I would have avoided a lot of unnecessary stress. Perhaps by sharing these benefits, I can help give someone the final nudge needed to begin to prioritize saving money.
Benefit #1 MARGIN = SPACE
When you have a healthy savings account, it allows you to accommodate “life happens” events without having your entire financial world thrown into chaos. In the I Was Broke. Now I’m Not. Ladder (free download here), we recommend starting with a goal to build your savings up to equal one month of expenses (Rung #2) and then, after completing a few other financial steps, build on up to a minimum of three months of expenses (Rung #5).
You know what I mean about “life happens” events, right? These are things that are going to happen regardless of whether or not you have money saved for them. Here is a list of several common “life happens” events:
Appliance failure (dryer, washing machine, hot water heater, air conditioner, furnace, dishwasher, etc.)
Car repair (water pump, battery, failed bearing, gasket leak, etc.)
Home repairs (leaky roof, mold, plumbing leak, driveway wash-out, etc.)
Emergency trip out of town
Sickness or injury
Job layoff or reduction in hours
When you have prioritized and built financial margin, you can accommodate these expenses without them having an immediate and direct effect on your ability to prosper.
It all adds up to less stress and better sleep. Isn’t that worth any sacrifice that is necessary to achieve margin?
Benefit #2 MARGIN = FOCUS
How much time do you spend thinking about your finances each day? Each week? Each month? For most people, money is a near-continual thought. Is it because they are greedy? Is it because they love money? Is it because it is their favorite topic?
I submit that the answer to all three of these questions is almost always a firm, “No!”
If these aren’t the reasons, then why do they spend so much thinking about money? The biggest reason is because they lack financial margin. As a result, they are in a constant state of “juggling” financial obligations. Because of their paycheck-to-paycheck situation, they spend inordinate amounts of time just figuring out how to survive – with little to no time left to consider how they might thrive.
A completely different scenario is created by the establishment of financial margin! The countless hours spent stressing about money, on the phone with creditors, and balancing various bills is instead able to be utilized to focus on the future. It is amazing how powerful focus can be in your career, with your family, and for your money.
If you’ve never experienced the power of financial margin, you will find a freedom to focus, unlike any time you’ve ever enjoyed before! I’ll never forget this moment for me. It was in February 2004. I chose to put my tax refund into the bank to establish margin. It was a life-changing decision. It actually had a physiological effect on me! I could physically breathe in a way that I had never experienced before.
Once I discovered that financial margin allowed me to focus – on bigger picture items, on thriving instead of surviving, on pursuing a dream, on my career, on my family – I never allowed myself to live paycheck-to-paycheck again.
If you feel like you’re living in a constant state of distraction due to a lack of margin, take steps today to remedy the situation. You’ll never regret it!
Benefit #3 MARGIN = SPEED
Have you ever had to park a car in a garage that had a narrow entrance? A garage entrance so tight that you feared that you would knock both mirrors off of the car each time you tried to park in it? As a result, you approached the entrance very slowly and cautiously.
If you had to park in a garage with a double-door entrance, you could screech in at 30 mph and still safely make it into the entrance.
This is exactly the case with financial margin! Without financial margin, a person is forced to proceed with great caution for fear of making a major financial error. One misstep and there will be financial damage! With a lot of savings, you can move more freely and with greater speed. This is a wonderful benefit!
Have you ever noticed that people with money tend to get better financial deals? They are the ones who purchase a house, business, land, and investment at a major discount. Why? Because they had money ready to do the deal! They had margin!
Back when I was broke without financial margin, I attempted to purchase a business. Think about that statement for a minute. I tried to purchase a business without any money. Do you think I was successful? Absolutely not! They looked at me incredulously and laughed me out of the building. I resolved to get better instead of bitter.
Flash forward to six years later. I had indeed gotten better by prioritizing financial margin, and I found a farm for sale at a steep discount (it was in the middle of the Great Recession). Because of margin, I was able to close on the deal in 11 days from the date I first walked on the land. Speed. Enabled by financial margin. It’s a wonderful benefit.