Sunday, April 25, 2010

The Rainy Day Fund

Picture this scenario: you have been working at XYZ Corps for 15 years. You have been putting in diligent effort and have even managed to get elected for some company awards like employee of the month. The suddenly you are fired or laid off.

Did you prepare for your "rainy day"? There is a proverb that states, "you should save money for a rainy day". This simply means, when things go sour you should have a savings account to "weather the financial storm" so to speak.

So how much should one have saved up? Well last year, I stated six months is a good amount, but considering the changes in the economy, I would change that to ten months worth of pay. The economy is down and is showing no real signs of improvement yet. The total amount of job losses here in Reno is numerous. With 13.6% unemployment, everyone is literally holding on to what they have. In other words, job hopping is dead. There are only a few people  who engage in job hopping these days. There are people out there that are just greatful to have a job, which means if you have a good job, there will be people that will try to vy for your position if you so let them.

If you do get the ax, hopefully you have money saved up for a rainy day. If you do this you will have a prosperous transition. If you do not, getting a new job will be that much harder because you did not save any money. So keep that in mind should you try to move from one job to another.