Budgeting can be a valuable exercise for any family, whether you’re just scraping by or you have a nice cash cushion month to month. But “month to month” is one of the key assumptions of most budgets. Since most of us get paid on a twice-monthly or monthly schedule, it makes sense to budget across the same time period.
This works fine for most expenses like your mortgage payment, utilities, groceries, shopping, and clothing purchases, but what about large, irregular expenses?
The economic uncertainty due to COVID-19 has caused strain on businesses and households alike. Two weeks ago I wrote about the CARES Act and the variety of funding vehicles being rolled out to businesses and families, such as rebate checks (starting soon), penalty-free retirement distributions, and loan and loan forgiveness programs for small businesses and sole proprietors. These efforts are sure to help most Americans.
Still, times remain uncertain. Those filing for unemployment benefits in the U.S. topped 17 million last week over the course of just a three week period. Hopefully those benefits come sooner than later, but on a broader scale this has me thinking about how important it is to have access to cash in times like these.
I’d like to take some time today to consider sources of cash to help you and your family whether the financial storm we’re in, and future storms yet to come.
Last Friday, President Trump signed into law a massive piece of legislation, titled the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The law provides over $2 trillion (yes, trillion) of funding to everything from the health sector, state and local governments, large and small businesses, and of course, individuals and families.
“Cash is king,” the popular saying goes. Of course, some also say that holding cash--rather than investing it--is money wasted. Which is it? Recent research suggests that we’re probably asking the wrong question.
When considering what cash really does for us, the research points to a greater value which may not be as obvious: Having a greater amount of cash savings actually increases one’s overall life satisfaction and financial well-being in a really big way.