(By Loyd Ford) You simply cannot ignore today that working in broadcast media isn’t what it used to be. If you are an employee, you have to work to take care of your family well beyond making an income and taking it home. In today’s world, that means it is more important than ever to have a basic strategy for protecting your family from the downside of being in the radio business in the 21st Century: Weathering potential downsizing.
To do this correctly, you want to think of your working life in two forms:
- Working for an employer (and funding your daily life)
- Placing funds regularly and consistently in emergency savings until you reach a specific goal and then investment (or, as I call it, increasing your net worth)
To do these things effectively, you are encouraged to establish an emergency savings account (if you haven’t already). Many say that you should have 3 to 6 months in this account. However, I like to recommend to friends to work consistently until they have a 9 to 12 month emergency savings account.
The experts say that it takes one month for each $10,000 you want in your salary when you get a new job. Given the current environment in the radio business, a larger emergency savings is recommended because of the potential that you could stay out of work for a more extended period of time. I call this ‘plan for the worst; hope for a better outcome.’
You always hear: Pay yourself first. When I was younger, that never really made sense to me. My focus was always on paying bills and having nothing left. It wasn’t until I read the book “Rich Dad, Poor Dad” by Robert T. Kiyosaki that I changed the way I looked at money and how I could utilize it to strengthen my life. If you haven’t read Mr. Kiyosaki’s book, it could do the same for your family.
If you are not yet involved in your company 401k (but you are eligible), I highly recommend you work with your family budget to jump-start your 401k. This is often called “free money” because of potential company match (check to see if your company does this). If you can successfully begin contributing to your 401k, you will have likely made one of the strongest moves you make for your family in the future. If you have additional opportunity to save, look at a Roth IRA as additional retirement-based savings, but do this AFTER you have set aside enough monthly to begin securing a substantial emergency savings account.
As busy as your world is today, the best way to save money is to think strategically. Make a consistent and automatic plan to save with each paycheck. That is the most likely way you will look up this time next year and feel 80% better about your personal situation. Downturns often show up unexpectedly. Making these adjustments will give you more confidence if the bad times come or even if they don’t.
A lot of people make the mistake of keeping too much money in their checking account. Your checking account is a leaking instrument that is poorly designed to leak money. I call this a daily operating account and money will simply more easily flow through this account. You’ll look up one day and ask, “Where did the money go?” You have to watch money closely or it will evaporate.
Of course, it matters what you get paid, but the real bottom line is this: Do you have a consistent plan to get ahead? Existing isn’t a great goal. I know saving money isn’t exciting, but it is exciting when you look up and realize you have a plan that worked even in the worst downturns.
You may have heard examples where someone never made more than $26,000 a year and retired a millionaire. Having a plan to consistently put money in places other than your leaky checking account can make that happen for you.
An emergency savings account should be simply that: Only touched in cases of real emergency. Building that account up will provide you with a family buffer for more difficult times. Not just in our business, but in any business good times and bad times come. The cleaner your debt is (reducing and eliminating debt gives you more power and potential control over your life) should be a significant goal in your personal life.
If you have funded a 9 to 12 month emergency savings account, good for you. If you haven’t, it’s not too late. None of us can predict the future. Getting busy now with emergency savings will increase your stability for the long-term. Once you’ve put yourself on a strong path to accomplish this, dig in to your company 401k and a Roth IRA.
There are a lot of great people in the radio business. Just like other professions, our people deserve to get ahead and protect themselves from the downside of employment issues in the modern era. It is not the concern of major or even some smaller companies to take care of their employees. It may not be easy for you to put money aside for things like the future because of current bills, but you must find a way for your family. You can do it. No matter the circumstances down the road, you’ll be so glad you did.
Loyd Ford consults radio stations, coaches personalities, and provides behavioral and strategic programming to radio with RPC. Reach him anytime. 864.448.4169 or [email protected]