Have you ever see the Austin Powers movie series? They can be a bit crass, but who doesn’t love how bumbling secret agent Austin Powers manages to outwit the hapless Dr. Evil? All while making fun of the James Bond series and Bond’s ability to escape from witless henchman after witless henchman. There is a financial lesson to be learned from a scene comes from the first film as Powers is infiltrating a company he suspects is in cahoots with his nemesis. In need of a high speed getaway vehicle Powers (played by Mike Myers) hijacks a steamroller and runs over a slow to react guard:
Just move guy! Roll, walk, crawl, do anything but just get out of the way. Hard to feel bad for the guy when he has 30 seconds to dodge the slowest moving vehicle on earth. This scene is of course using hyperbole, but it also shows how we seem to be surprised by similar slow creeping, possible to prepare for expenses. There are major expenses that each of us face, that we know are coming, and need to prepare for. Yet it seems that often we are shocked and surprised when one of these expenses steamrolls our budget, even though we had plenty of time to dodge it. These are expenses you can’t afford to be surprised by.
Let’s start with the big one, retirement. It is first on the list because it is the largest expense, and most of us have an incredible amount of time to prepare for it. For the sake of argument let’s assume that an average employee is going to spend 40 years working, that is a whole lot of time. Putting away 10-15% (a conservative retirement savings amount) for that 40 years seems very doable right? It would seem so but the retirement reality in our country paints a very different picture. Millions of Americans seem to be surprised by retirement based on their lack of preparation for it.
It is as if they turn around and suddenly a steamroller with the word “retirement” is upon them, when in reality it was sneaking up on them for 40 years. According to the federal reserve roughly half of all American families have nothing saved for retirement, not a dime. We’ll let you in on a secret, you cannot work forever, so you need to prepare for life after work. With the changes to the Military retirement plan, younger service members are going to face what many workers have faced, difficulty saving for retirement. Make sure you contribute as much as you can as soon as you can to your
Paying For College
Whenever someone has a baby imagine in your mind a big countdown clock starting with 157, 785 hours on it. That clock represents the amount of time they have to save to help pay for college. It’s the time they have to avoid the college steamroller and get to say yes when the bill for their kid’s dream college shows up. Again it would seem to reason that 18 years is a long time to prep to pay for something, but again the stats paint a different story. The average amount a family saves for a college bound student by the time they reach 18 is $15,346. That isn’t an insignificant number but it seems diminutive in comparison to the net annual price for a private college education of $13,380.
If you feel it is your responsibility to help you kids pay for college, then get prepared. There are many good options for saving for college and 18 years is plenty of time to avoid a surprise. Plus as military members your G.I. Bill education benefits can be used for your dependents.
Car Repairs & Insurance
This one may irk some people but your car is going to break down, it is just a matter of time. Your insurance comes due every 6 months, so there is plenty of time to prep for it. If you have a well stocked emergency fund fixing your car becomes a stress free experience. It is estimated that you should save $50-$60 per month for maintenance plus $80-$200 per month for insurance. Don’t be surprised and put these in your budget.
There are indeed circumstances and costs that are difficult to prepare for, and many can be devastating (like getting run over by a steamroller). An unexpected job loss, a medical emergency, a recession (which we are no longer in), these things are beyond the control of even the most prepared saver. We implore you to get ready for expenses you know are coming, the choice is yours, do you want to be ready?
What other expenses shouldn’t we be surprised by? What are you doing to get ready?