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- I have always found saving for the long term more difficult than saving for short-term expenses, such as textbooks or a security deposit on an apartment.
- As a kid, though, when I worked in family businesses, I would put away my paychecks from one of my jobs and allow myself to spend the other (much smaller) checks on myself.
- Now, to build my savings and pay off my student loan, I put one whole week of pay towards my loan and one into savings — no matter what.
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Many people can agree that saving money is a challenge. Experts say we should all be saving, at minimum, 20% of our incomes and have an emergency fund with three to six months of expenses. There is a big difference between knowing this and practicing it.
One of the parts we often miss in the discussion about savings is the feasibility of implementing a savings strategy for people in different situations. People experiencing poverty, for example, do not have enough to meet their daily needs. Savings cannot even be a consideration. For me, as a person with a low income, it was important to create a system that would allow me to save without compromising my ability to meet my financial obligations.
To do that, I looked to my childhood experiences with money.
As a kid, I used to save one whole paycheck
I started working in family businesses at a young age. My great-grandmother had a ladies’ boutique, and I spent many weekends and school breaks there. As I got older, I was allowed to write in the sales book, take inventory, and use the cash register. During school breaks, when I worked six days per week, I probably made about $200 per week. When I was in high school, my cousin opened a salon just above the boutique and I worked there as a receptionist on Saturdays. She paid me $20 on Saturdays and the nail technician renting a booth from her paid me $10.
I have been cultivating a practice of saving since then. When I was only working in the boutique, most of the money went into my short-term savings — reserved for summer vacations when I would shop for school supplies, books for leisure reading, and gifts for family members — and I allowed myself a small amount for delights like lip gloss and nail polish. When I started the salon job, I learned to direct the boutique money to savings and the salon money — a much smaller amount — to personal spending. I was building the financial discipline muscle, allowing myself a little while saving a lot.
Applying my childhood savings strategy to my adult paychecks
As a young adult, I found that long-term savings practices were most difficult to maintain if there was no system. There had always been something I needed to save toward, from required textbooks for university to first and last month’s rent and security deposit for an apartment. But it did not seem possible to save when I was just making enough to cover my expenses, even though I knew it was important to start saving for the long term. So, as a start, I saved $5 bills. Anytime I received change, I put the $5 bills aside for my long-term savings. It was a game of chance, but it taught me that I could always make things work and prepared me for the next step.
In recent years, I have had to change my perspective and revisit the discipline of my younger years. I am a freelancer and currently have one anchor gig that does not cover all of my expenses. Even so, I am uncompromising in my plan for those four monthly checks. Two of those checks pay a portion of my rent. The other two, in my mind, do not exist. They are like meat on a menu in the hands of a vegetarian. I don’t see them. One goes directly to my student loan, and the other goes directly to my savings account.
One of the most important things to me is that I do not accumulate more debt. For example, my student loan got out of control when I was not able to pay it, and I refuse to let that happen again. To ensure I never miss a payment, the first check I receive every month is not mine. It belongs to the bank where I pay that bill. As I keep paying the loan to bring my debt down, I secure my savings, knowing no one will come after it.
Equally important is consistency in my savings practice. The second check I receive every month is not mine to have today. It is for much later. I take it to a credit union where the only accounts I have are savings accounts. The one I consistently deposit to is an “asue” account — something we have here in the Bahamas — that offers a higher interest rate, similar to a certificate of deposit in the US. Asue accounts run for three, six, or nine months. When the period ends, I have the option to withdraw my funds and the accrued interest, but I always let it rollover. I continue making my deposits on a monthly basis, pleased that I am building savings for my future. I have been doing it consistently for two years and it is not something I ever even think about changing.
Growing my income to grow my savings
We are not living in a world of fairness. Capitalism, racism, and wealth inequality put marginalized people at a disadvantage. All of us are not able to pull ourselves up up the bootstraps. I know that saving the way I do is not feasible for everyone. I am fortunate to be able to access opportunities and monetize skills that enable me to stick with my system. In order to continue the practice, I have to work smart, picking up new gigs. It means I write more, work on building my portfolio, and spend more time applying for consultancies. It’s not the ideal situation, but I am now working to address that by building a passive income stream to reduce the pressure.
My savings practice is not easy. Short-term saving has always been much easier for me because I have been doing it from a very young age. Long-term was more difficult until it became a habit. Paying my student loan and depositing to my savings account is now a norm. I no longer think of that money as my own. I focus on making more money to cover my expenses and doing everything I can to reduce my cost of living. This includes more strategic meal planning and grocery shopping, not owning a car, focusing on holistic self-care rather than the “treat yo’ self” variety, and being clear with friends and family members about what I cannot afford. Saving comes first. It is my most important expense, so it reduces my disposable income, but I know I am securing a better financial future for myself.
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