Stress Test Your Budget With Financial Fire Drill
What would you do if you lost your job? Do you have savings or a reserve fund? If you’ve already come up with a worst-case plan, try stress-testing that plan with financial coaching: Spend one month without touching your core income.
The idea of a fire drill is like a personal finance blog. Save money, damn it! explains, is that if you ever got into a disaster where you no longer had your monthly income, you would need to spend your savings or emergency funds to take care of yourself. If you don’t use your monthly income and instead dive into a contingency plan, you will see how well your system can handle. It can also be a great way to save some extra money for a month:
You will save quite a lot of money this month. While you will technically be withdrawing money from your emergency fund, you will still have monthly income and be able to top up what you took from your emergency fund. Not only that, but you will have a savings surplus if you live less for a month.
This can be more difficult for some than for others, depending on how you keep your savings. If most of the money saved is invested or not easily accessible, this can cause problems. However, how to save money, damn it! indicates what is most important in this struggle. If it actually happened, it would be difficult to deal with. Knowing how to execute your plan in an emergency is what fire drills are for.
Spend “Fire Drill Month” To Test Your Budget | Save damn money with Rockstar Finance