7 Money Lessons Unemployment Taught Me
Learning about managing your money and building wealth can be difficult.
I didn’t learn about it growing up. My parents taught me to save money and to not get in debt.
I had turned thirty years old and still had no idea about investing, saving for my kids’ college, retirement or an emergency fund.
How is that for a great foundation in personal finance? Pretty sad, right?
But then, the 2008 U.S Recession happened, turning my life upside down, and teaching me a crash course on money management and priceless -no pun intended- money lessons.
Also from the “Get Your Money Life Together” series:
The 7 Money Lessons
Money Lesson #1 Never take your job for granted, specially during a recession
Before the financial crisis I used to be pretty naive. I believed that my husband and I would always have jobs as long as we wanted to work.
For me the unemployed were lazy people who would rather live off their welfare check than have a job.
But then my husband lost his job as a program manager at a manufacturing plant in Phoenix, Arizona. “We are moving your job to Mexico”, he was told.
Businesses were letting people go left and right, and we were suddenly faced with the reality that I never imagined possible; living on one income, mine, as we still had to pay for our two-income lifestyle.
We had a mortgage, credit card debt, two car payments and student loan debt. We were “normal” by any American standards, except we were now dealing with the ripple effects of a job loss.
Money Lesson #2 Triple your emergency savings fund
As time went by, it became evident that supporting our lifestyle on one income was not going to last forever.
Although we had cut down expenses, the money coming in was not enough.
Our checking account balance kept shrinking every month, then the savings account followed.
I thought we needed to start using credit cards to supplement our income and cover basic needs like groceries and gas.
Then, after many resumes sent, job interviews conducted and what seemed like an eternity waiting and hoping for things to get better, my husband finally got a job!
As I write this I still have vivid memories of the relief that I felt when he told me the amazing news.
Whatever we had saved for emergencies was evidently not enough to face the 2008 Recession.
Whatever you have today in your emergency savings account is most likely not enough to get you through unemployment.
Triple it, at least. It is better to have more than not enough. The most valuable asset that money can buy you in difficult times is piece of mind.
Money Lesson #3 Get rid of Credit Cards
During this rough patch I thought that it was a blessing having a credit card, just in case we needed to cover our basic needs.
One afternoon, I opened the mail to discover that our credit card interest rate was being increased.
My stomach sunk.
This must be a mistake! We hadn’t missed a single payment nor had we incurred any additional debt. Instead, we were paying off our balance.
That is one of the most valuable lessons I learned about money, debt and credit card companies.
They let you borrow money because they know they will be making money off you, through the interest charged on your balance.
But this credit card company was “punishing” us with a new higher interest rate of 15 percent on future purchases, for what I considered “no reason”.
Then, the realization came, they were increasing it because they were no longer making enough money off our debt. I even called them to complain, but didn’t get anywhere.
Just when you thought your credit card was your lifeline, does it show its true colors!
What kind of despicable company increases your interest rate when you are current on payments and dealing with a layoff at home?
That day, I vowed to paying that stinking card off and never deal with credit card companies again.
Today, I don’t even have a credit card.
Money Lesson #4 Be Grateful in Every Situation
Our journey through unemployment was long, depressing and stressful. But it was also insightful.
I didn’t know much about having an emergency fund, saving for retirement, kids’ college and saving for expensive purchases like vehicles or vacations.
The loss of my husband’s job and the financial and personal struggles that it triggered, opened my eyes about getting our money life together and living simply better!
Listen to my podcast episode on 10 Ways to Live Simply Better
In hindsight, experiencing that layoff taught us precious lessons. It is not easy to say this but today, I am grateful that it happened.
Unemployment changed the course of our lives because it made us experience situations we never want to go through again. And we never will. I am not naïve anymore.
Job security? That is just an illusion, nobody really has it. What I do have now is a fat emergency fund.
Getting in credit card debt? Never ever again! Saving for retirement? You bet!
Thanks to the 2008 Recession when we retire we will be rolling in the dough. We learned our lesson and are investing now in our financial future.
Money Lesson #5 The Struggle is Temporary
We suffered because we didn’t know how to manage our personal finances. We just did what everybody else did, relied on credit to live our “ordinary” lives.
But now, we know better.
If you are going through difficult financial times I have good news for you: The struggle is temporary.
It will pass and, if you are ready to live financially fit, it will plant the seed for financial stability in your life.
Fortunately, we came out of the rough patch wiser and stronger. We managed to live on one income, pay off our car loans, then the credit cards.
When my husband went back to work our savings and checking accounts started growing steadily.
Ready to get your money life together?
Don’t miss my podcast episode on Getting your Money life Together.
Money Lesson #6 Commit to Living Debt Free
Changing your financial reality for the better is very possible, but you must acknowledge your mistakes, take responsibility and commit to living debt free.
Stop swiping your credit card to fuel up your new pickup truck. If you don’t have cash to feed that beast you can’t afford the monthly payment either.
It takes humility to accept that there is a better way of living a good life than living off credit and being broke.
I don’t want you to experience the pain of financial struggle. I want you to have a fulfilling, happy and comfortable lifestyle.
Money Lesson #7 Learn from your Mistakes
If we faced another layoff today our experience would be totally different.
The emergency fund we have built would take care of our family for a long time, without having to relive the stress and anxiety of 2008.
We learned that it is possible to live and have the things we want without getting in debt.
We are committed to paying cash for anything we buy, from groceries, to vacations to new cars.
If you really want to live simply better, make the decision today to learn to be smart with your money! You don’t need to wait for a layoff or a financial crisis to slap you in the face and teach you life’s most valuable money lessons.
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From the “Get Your Money Life Together” series:
- 12 reasons most Americans are broke- How to break the cycle
- 7 personal finance lessons learned from the 2008 Recession