Savings & Survival101
credit: nataliya vaitkevich
Figure out how to save when you’re just trying to survive.
The more uncertain the state of the world becomes, the more important it is to have a sense of security. One of the most crucial aspects of feeling safe in an unpredictable economy is by having a nest egg that is within reach in case something happens. This can be hard to maintain when panic and survival mode turns on.
In the way many survivors have hopefully learned to build a community around them of reliable people to heal from the unreliability of their younger lives, such is building a savings plan to heal from a pattern of scarcity and wanting.
As you may know, a traumatic event can elicit a flight/fight/freeze response within the brain. What you may not know, is that when the brain is in survival mode, executive functioning (i.e. planning for the future, equating numbers, organizing responsibilities) goes out the window. Additional tasks, such as problem solving, organization, emotional regulation, critical thinking, and decision making are also negatively impacted.
In short, it is difficult to create plans for the future and research investment strategies when you are just trying to pay rent or make it to your next paycheck. Surviving paycheck to paycheck can put your brain into survival mode and comes at a price to your financial security.
Saving money then becomes a strategy to feel safe in your environment. When you save, you are able to feel more confident during times of stress because you have a safety net.
There most popular types of saving are:
Emergency savings= savings used for your car breaks down, your shoes finally wear out their laces, your pet needs a trip to the vet because they ate something they shouldn’t have, etc.
Big Ticket savings= savings used for buying a new car, paying for a trip to go to a wedding, paying partially for school, etc.
Long Term savings= saving for retirement
Steps to Successful Saving:
1) Create a goal and write it down. Read it out loud twice a day. For example, “I want to save $500 in 6 months.” At this stage, you don’t need to know HOW you’re going to do it, just that you want to. Write down something small and realistic to begin with, but don’t side track yourself with, “ugh, I can’t do this. I don’t make enough!” Just allow yourself to start somewhere. Give yourself permission to have something just for you. Make the goal close enough in time that you won’t lose interest, and far away enough to actually see progress. Anywhere between 3-6 months is great!
2) Create a budget for each paycheck. If you have an estimate of how much you’ll make, write it down and start subtracting your expenses from that number. For instance, if you live with roommates, get paid twice a month, and make $1,000 a check, your budget may look something like this:
Check #1: $1,000 - $500 (rent)= $500-$50 (bus pass)=$450-$200 (food)= $250-$20 (Netflix)= $230
Take 50% of whatever is left over and put it in savings. $230/2=$115 or, save all of it.
Check #2: $800-$150 (utilities)=$650-$50 (phone)= $600-$200 (food)= $400
Save half or all of the rest.
In the above example, you have saved $630 this month. Use a journal, excel file, dry erase board, or something to document your progress. Figure out what you really do and don’t need.
3) Accept that sacrifices will need to be made. While you’re saving, you will need to balance what is necessary versus what is desired. For instance, if you go out with friends every week, take that “fun money” out of your leftover budget. If you need to go out because it’s your friend’s birthday, stick to well drinks or cheaper options like soda. Eat before you go out and think of an affordable gift like printing out a photo album of you both on the library printer. If you can’t afford to go out, treat yourself to an at-home hobby like reading, painting, or organizing the apartment. Not only are these cheaper options, they are good self-care techniques. Sacrifices won’t have to be made forever, just for the goal period of saving. Who knows, you might end up liking the look of your savings account and getting used to a calmer lifestyle. The hard truth is- you can’t save to your full potential without giving something up temporarily. If you find things are getting in the way, no worries. We will cover that in another post!
Additional Tips:
1) Open a savings account with a high annual percentage rate, like at Ally.com . Ally usually has great interest rates, although fluctuate depending on the state of the economy. This is the easiest way to earn compound interest, or “Free money” without doing anything.
2) Open a savings account that cannot be immediately transferred into your checking. For instance, if your checking account is with Bank of America, open a savings with Ally so that you aren’t tempted to withdraw money constantly. By having an account from another bank, it will take your money a few days to transfer and allow you to think through what is really needed.
3) Minimize and simplify. Think about what you actually need and minimize your costs by selling rid of items you don’t need on Mercari . Learn to cook food at home, listen to books on Spotify instead of buying more, etc.
4) Hang up some inspiration. If you are saving for a car, tape a photo of your car to the wall above your desk to look at everyday. If you are saving for a rainy day, write out what it would feel like to feel secure then read it out loud. Give yourself something tangible and visual to stay motivated by.