One of the most powerful things that I learned early on in my career is that of having a safety net. Also known as a war chest, rainy day savings, or emergency fund. Essentially a pot of liquid assets or money safely stored somewhere that will enable you to survive hard times such as unemployment or a health problem.
Ideally this fund should last you at least 6 months. A year is better, two or more years even better.
This safety net doesn’t just allow you to weather the unforeseen, it also has the added bonus of giving you a better work-life balance and even boosts your confidence. You see, if you lose your job you know that you are able to survive for a period of time without it. The larger the safety net the longer you can be without income. This has the knock-on effect of not making you desperate for work in-between jobs. You are not so desperate for work that you have to take whatever is being offered. You don’t have to work for awful bosses, you can pick and choose who you work for and when. If you don’t get a job, so what? The worse case scenario is you return to your couch and binge watch Netflix for a while or catch up on your reading. It’s not the end of the world because you have your safety net.
They say that retirement is wasted on the old. Plus we are never guaranteed to make retirement. You might get hit by a bus tomorrow so why put everything off until the end of your lifespan? Why not have mini-retirements throughout your life? That’s the beauty of the safety net as it allows you to do this. As it grows it allows you to be out of work for several years and still maintain your lifestyle. Why not take a long holiday? Three months, six? How about a year off? Gaps in your resume don’t matter these days as they can easily be explained away. I took time off to travel and explore the world as a reward to myself for all the hard work I put in this past year or so. That’s the beauty of the safety net.