August 2, 2021 • Newsletter
This Month’s Money Message: Prepare
An unexpected vet bill to save a furry friend. The sudden loss of a job without warning. A decision to extend a vacation by one more week to get some extra writing done.
What do these three things have in common? They are all reasons clients have used savings over the years. And there are plenty more.
To pay bills until the unemployment/stimulus check arrives. To walk away from a project with an abusive manager. To be there – literally – for a friend in need. To support an important cause with an unexpectedly generous contribution.
When we think about “preparing” for something, we often think about something specific. We have smoke detectors to prepare for an unexpected fire. We have car insurance to prepare for the foolish driving habits of others. We have retirement savings to prepare for a time when we won’t work quite so hard.
And for some people, having a clear thing to prepare for helps. When we prepare for something tangible, it can feel more real. We may even feel more motivated.
But the reality of accumulating a bit of savings is that we are preparing for the unexpected. No one anticipates working for an abusive manager. But it happens. No one plans to need emergency life-saving surgery for a beloved cat. But it happens.
What we are really preparing for, by saving a bit here and there, is to make future decisions regardless of money. If you have savings – whether for an emergency or a rainy day – you can make decisions without worrying about the financial implications. You’ve got the finance piece covered.
What freedom.
That’s why we prepare. As you think about your own preparation this month, I’d encourage you to think specifically about how much you’d like to have in your savings account. The general advice is to have enough to cover your expenses for six months, so that can be your starting point, but if that feels too big or too little, feel free to adjust it. It’s your goal after all.
If you’re feeling confident about this number, then think about the amount you’d like to save toward your retirement. You can take your annual expenses and multiply them by 20 if you need a good starting point. This isn’t a perfect approach, but it’s a start. (So for example, if your expenses are $50,000 per year, you’ll want to save 20 * $50,000 or $1,000,000 for retirement. Ish.) Don’t worry about the size of this number. You have plenty of time to work towards it (and you can benefit from things like compound interest along the way).
Then think about how much you want to add to your savings every time you get paid (because goodness knows you may not be able to set aside a weekly or a monthly amount). A good starting point might be 10% toward your emergency fund and 10% toward your retirement (so you are saving 20% overall), but you get to decide the number that works for you.
Then do it. Forgive yourself if it doesn’t work out, but don’t let perfection get in your way. Progress toward savings is still progress. It is still helping you prepare.
As you prepare this month, here are some things to know, do, and believe:
Know: How much you want to save.
Get specific about your savings goals (what you want the balance in your account to be) and how much you’ll add to it each time you are paid.
Do: Actively save.
Automatic transfers help here. Think about setting up your bank account to automatically transfer 20% of whatever you deposit to a separate savings account (especially if it is one you don’t check quite as often). Plus, if you have the opportunity to make payroll contributions toward your retirement, take them. If you paused those contributions during the pandemic, go ahead and restart them now. We want to make this as easy as possible.
Believe: You are capable of saving. It is not something that other people do. It’s something you do.
And it’s something you can start doing anytime – even if you are older, even if you’ve never done it before, and even if you had a goal and fell short. If you make contributions to your savings as automatic as paying your rent, you’ll start to see progress. It won’t be immediate, and it may not be huge, but you are worth investing in.
What We’re Doing
Want to hear Elaine answer the five most common questions about saving? She’s hopping onto Instagram Live on August 16 to do just that. Feel free to add your question to the conversation or just hang out and listen.
This month, Elaine is also doing another workshop with the Dramatist Guild and joining this year’s Pew Fellows to kick-off their fellowship year. (There are some incredible humans in this year’s group, FYI. You should know them and their work.)
What We’re Talking About
Saving – From setting goals to tracking habits, this month we are talking about savings with clients. Fair warning: These slots are full (ish) for the next few months, but that gives you plenty of time to pull your numbers together.
Creative Coaching (1 hour, $110)
If you’d like to chat with me to answer your own questions, feel free to find a time that works with your schedule. Fair warning: These slots are full (ish) for the next month or so.
Prepare
I hope your preparations go well this month, whether you are preparing for a final adventure before the fall, preparing an exciting new work, or preparing for something unexpected. I can’t wait to hear all about it.
Until next month…
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