I woke up an hour earlier today. Usually, my alarm is set to wake me up at 9:00 AM but I was amazingly awoke at around 8:00 AM. My weekend body clock got a bit confused because I'm certain that I always wake up around the usual 9:00 - 9:30 AM on a weekend unless something turns up. This morning there were no unusual events that forced me to wake up. I just simply woke up, gently got off the bed, and feeling good today. Because of that, I didn't force myself to get back to sleep.
I took it as a sign to get ahead of my chores for the day. Wasting an extra hour today may not be a good trade-off so I removed my used bedsheets and blankets and brought them to the laundry room to wash. Washing heavy fabrics like these will take around 80 minutes in the washer and then another 120 minutes in the air dryer. Everything is mostly automatic except the part where I will need to pour in the detergent and then pull out the fabrics from the washer to hang them in the air dryer compartment. Other than that, everything that I do is mostly waiting until each process is done.
I really appreciate what technology has brought us in this modern age. Imagine going back to the days when washing clothes was done manually. I remember my college days when doing laundry was a back-breaking routine that consumed a lot of my time and energy just to clean a few clothes.
During those years in college, I did my laundry for quite some time until I got tired of the routine and started sending my used clothes to laundry shops. It was expensive, considering that I didn't have enough money back then. So, I had to allocate a part of my food budget to cover the cost of washing my clothes. This experience was invaluable because it was when I learned about budgeting and managing my finances effectively.
Allocating my budget to several aspects of my lifestyle allowed me to understand one of the popular finance strategies and that's the 50/30/20 Rule. The numbers may vary to each person depending on their financial status and their income but the principle will always be the same. That means that allocating a certain portion of your income to the aspects of your lifestyle while maintaining a specific percentage of it to your savings.
The way I interpret the 50/30/20 Rule is that in basic terms, I will allocate:
- 50% of my income to my Needs
- 30% to my Wants
- and 20% to my savings
It was a very simplified version but you may diversify or add complexity to it by breaking down the percentage into several other categories like investments, housing, leisure, car, and many other things that you wish to add provided that you maintain a very specific percentage towards savings. It's crucial that no matter how much you earn, there should always be a part of it goes to your savings account.
This savings account will serve as your money for the future and a portion of it will be your emergency fund.
You must keep some of your income to be allocated to your future needs in life. You could be buying assets in the future when you have enough savings in your account.
And then another reason why you should be keeping a specific amount in your savings account is to set aside an emergency fund. Typically, people would say that you should keep an equivalent of 3 to 6 months' worth of your living expenses in your emergency fund. This is going to be useful in case of emergencies like job loss, hospitalization, car or house repairs, and many other unforeseeable events in your life.
In conclusion, while all emergency funds are savings, not all savings are emergency funds. It's important to maintain both: an emergency fund for unforeseen events and additional savings for planned future expenses and financial goals.
