Priming the Pump: How to Get Started on Your Financial Journey

By the author of What School Should Have Taught You: 75 Skills You’ll Actually Use in Life

I’ve been reading an older finance book I really like from the 1980s (investment guru Russ Crosson is the author), and one of the things that the author mentions is the concept of “priming the pump.”

Let’s say that you’re trying to reign in your budget, things have gotten out of control with the credit cards, and so you’re turning to using the envelope system. As we’ve discussed here before, that can be something of an issue when it comes to making that transition. You know that using the envelope system can save you money, but how on earth are you supposed to suddenly make the jump from using credit to purchase everything to making cash, especially when you don’t have the cash to pull out of the bank? (Here’s some advice.)

This barrier makes a lot of people just decide that the envelope system really isn’t for them. It’s not that they think it doesn’t work – it’s that they think they can’t get it to work for their particular situation.

The problem? You have to prime the pump.

As you can probably attest to yourself, and as Crosson says, it’s almost impossible to make a budget work if you don’t have some type of savings put aside already. If you’ve spent any deal of time reading Dave Ramsey, you know that he’s a huge advocate of creating a $1000 emergency fund as fast as possible. Before he ever tells anybody to start to pay off the kajillion dollars of debt that they’ve accumulated, the first thing that he always says is that they need to build that grand emergency fund in cash they keep at their homes as fast as possible.

I find this sentiment echoed by Crosson’s idea of priming the pump. You want to make the transition to the envelope system? The first thing you need to do is to start to build up an emergency fund. This “primes the pump” so that you can then budget more effectively on a monthly basis.

Regardless of how careful you are, regardless of your income, regardless of whether you’re living paycheck to paycheck or not, there are going to be financial curve balls that get thrown your way. And it’s the person who has an emergency fund in place that is able to better stay on budget.

You may be on a shoestring budget where every penny is accounted for, but if you don’t have an emergency fund of some sort, when that curve ball gets thrown your way, the entire month’s finances get shattered like a glass table at a rowdy elementary school birthday party.

You have to set up your emergency fund BEFORE you embark on other budget tactics.

The pump hasn’t been primed, and it makes it so that the switch over to an envelope system is just about impossible. First things first. Make sure that pump can work first, and then move on over to putting money in your allocation envelopes.

It’s not doom and gloom to build up an emergency fund. Just like buying life insurance doesn’t mean you’re guaranteed to die next month and wearing a seat belt doesn’t guarantee that you’re going to get into a terrible car crash, so building up that pump priming fund doesn’t mean you’re going to have your HVAC unit die next month either.

The fact of the matter is that sooner or later, you are going to have some type of expensive repair that you’re going to have to do, but you’re envelope system will be rendered non-existent (and what does that then mean for your budget?) if you don’t have some measure of emergency fund there to draw from.

How do you come up with an extra thousand bucks?

The problem is that if you’re already living as tight as possible, how are you ever supposed to get that money to prime the pump in the first place?

This is where hard decisions have to come into place. Do you need that truck? Is there exercise equipment sitting around your house that you can sell? Does your job offer overtime you could pick up for a few Saturdays? None of these decisions are fun, but they all result in a bit of extra cash flow that you can stow away in that emergency fund to get it built up as quickly as possible.

By doing that, you can then shift your focus to better budgeting, which you just may find is one of the best things that you can do to make it so that you’re no longer living on such a paycheck-by-paycheck basis. Using cash allows you to visually see what you’re spending, causing people to end up spending much less (it’s also a boon to privacy). Using solely cash is not a panacea that will make all your money problems go away, but it most certainly will help to reduce the ones that are already there. And if you can then keep that up for long enough, you can gradually whittle away at those money problems until many strokes have felled the great oak.

What do you think? Do you agree with the idea of priming the pump? Have you tried unsuccessfully to make the transition to the envelope system in the past because of the reasons outlined above? Let us know your thoughts in the comment section below.

About Aden

Aden Tate is a regular contributor to TheOrganicPrepper.com and TheFrugalite.com. Aden runs a micro-farm where he raises dairy goats, a pig, honeybees, meat chickens, laying chickens, tomatoes, mushrooms, and greens. Aden has four published books, What School Should Have Taught You, The Faithful Prepper,  An Arm and a Leg, The Prepper’s Guide to Post-Disaster Communications, and Zombie Choices. You can find his podcast The Last American on Preppers’ Broadcasting Network.