The Four Pillars of Preparation


These four pillars will help you prepare for the uncertain and unknowns in life.  They’ll ease those troubling times and make them less stressful.  But, what if you’re already in financial trouble?  What do you do then and how do you get back on your feet?  There are things you can do in those trying times of job loss to ease the strain of the situation and keep yourself afloat.

Even if you don’t think anything bad is going to happen, you should be prepared just in case.  Job loss and other emergencies can happen without warning.  You can’t always know what’s going to happen, but you can prepare for when it does.  There are four major steps, or “pillars,” to help you get the upper hand on life’s up and downs.

  • Pillar One:  Emergency Fund

Perhaps the easiest and most important pillar is to create an emergency fund.  Your goal is to save $1,000.  This acts as a cushion in case a situation arises that you can’t deal with in any other way.  Making sure your emergency is truly an emergency is a crucial step.  You don’t want to pull money out of the fund for just anything; you need to know when to use it.

We tend to regress much more quickly than we progress, so it’s important to make sure you replace any funds you use ASAP.  If you do dip into your account, it’s important to remember it’s a lot more difficult to replace the money than it is to spend it.  That doesn’t mean you’re wrong for using it, but it can be helpful to keep that in mind when considering if something really is an emergency.

You also need to consider where you’ll be keeping your savings. Cash, savings accounts, and CDs are all options.   Look into what works best for you.

  • Pillar Two: 3-6 Months Living Expenses

We need not fear disruption if we prepare for it.   Before disaster strikes, you need to plan ahead and save money.  What is the minimum you can live on each month?  The easiest way to do so is write out your entire budget and highlight the bare minimum you can survive with.  This will give you a baseline amount to shoot for. Things like rent, groceries, and utility bills.  It may also include daycare, gas money, and entertainment.  Yes, we said, “entertainment.”  You can continue to live a balanced life even in the face of adversity.  Do yourself a favor and put Netflix into your rainy day fund.  But generally, this three to six month rule of thumb is for the basics.  If you can do without your favorite restaurant meals for a time, then leave them out of the plan.  Strip down your overall number to the things you truly need. 

  • Pillar Three: Funding Retirement 

Retirement planning is an in-depth endeavor, but at its core, you need to build a money reservoir and passive income stream to last for the rest of your days.  You’ll need to take a look at your annual income currently and figure out how much you’ll need to comfortably save and generate for retirement.   It’s important to remember, you’ll want to have at least 30 years of income planned out.  Setting aside 10% of your income a year for this won’t be enough.  After 30 years of working and saving, that would be only three years worth of income saved up!  You’ll need to research what retirement tools and plans work best for you and your situation to make this work.

  • Pillar Four: Buy What You can Afford

Rena-Fi believes this pillar should be implemented immediately and become a life strategy.  It doesn’t mean you can’t borrow money or make large purchases, but it does mean you should be mindful.  It means you shouldn’t spend if it will compromise your future or the future of your family.  You need goals in place whether it’s for purchasing a new car, home, or saving for your child to attend college.  Make sure you save up money for your down payment or other fees.  Don’t rack up debt where you can avoid it.

These steps may seem like a lot, but like with any lasting change, small changes and consistency are the key.  Start out with small things you know you can stick to, and build from there.  In doing so, you’ll give yourself the solid foundation you need to prepare for a better, brighter future!


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