When you set up a budget, you probably decide how much you can afford based on your monthly income. However, it's prudent to keep in mind that you may not always make that much. Photo by dynamosquito.
As personal finance writer Jessica Moorhouse explains, nothing lasts forever. Sombre advice, but it's true. You may not be able to rely on having the same job or same level of income in the future. While there's nothing wrong with being optimistic about the future, having a contingency plan in place in case your life takes an unexpected turn can help:
We aren't like our parents' generation where we stay at the same company for 40 years then retire. Us millennials like to move around, whether it be to experience working in different industries or to switch careers entirely. That or we've been let go, fired, laid off because, well, the economy. Whenever I find out someone I know has just gotten a new job with a pay bump and is already making plans for all that extra income, I seriously want to steal their credit cards and freeze them in an ice block. That job may be here now, but there are no guarantees for how long it will stick around.
How you deal with this impermanence can vary. You may want to create multiple income streams or embrace a more minimalist lifestyle. Your strategy may be as simple as keeping the monthly payments on your home low, rather than splurging on a house because you can afford the monthly payments. However you handle it, the more prepared you are for the future, the better.
You'll Be More Successful Once You Stop Believing Anything Is Permanent [Jessica Moorhouse via Rockstar Finance]