One great solution that has helped to keep me from obsessing over my finances is the idea of margin. Surprisingly, I learned this at my church and my pastor used a great phrase to sum up the impact of margin. He said something to the extent of, “Relationships are made in the margin.” The idea at the time being all the great things we love about life – friends, hobbies, adventures, solving problems – are only possible when there is room for the unexpected.
What is Margin?
To some people, margin is the extra profit they make on a deal, but for now, think of margin as the extra room we leave ourselves for the unexpected. Here are some examples on how you can create margin financially.
- Make sure your checking account has more money than you plan to spend each month.
- Have a budget item called “margin” that goes towards unexpected causes.
- Create an emergency fund (3-6 months expenses) in case you lose a job or have an emergency expense.
- Don’t buy a big purchase on credit/debt.
How Does Margin Help?
No matter how you do it, leaving room for unexpected opportunities allows you to experience the best of life. Here are some examples on how financial margin can benefit you.
- With a well funded checking account you no longer have to worry about over-drafting.
- A “margin” line item in your budget frees you up for spontaneous activities like treating a friend who is in town or supporting a sudden crisis.
- An emergency fund is like insurance for down times.
- Avoiding debt gives you the ability to take on unexpected opportunities to invest in yourself or others.
How have you incorporated margin into your finances? Have you experience any unexpected opportunities that make you wish you had more margin?