Mindful Money: Saving is as important as breathing

By Mir
January 8, 2008

Most Americans live paycheck to paycheck, and when you start talking about saving money they get that deer-in-the-headlights stare going on. “I can’t possibly put any money in the bank,” they say. “I’m barely making ends meet as it is.”

If it’s that difficult to make your ends meet, it’s time to start considering different ends.

How you plan your spending and reduce your expenditures is a whole ‘nother topic, of course, and one that deserves its own post (and may get one, at some point, but not right now). What I want to talk about right now is the money that’s going into your savings account on a regular basis. If you don’t have a regular savings plan, you need one. If you think you can’t afford one, you really need one.

Here’s the thing: Don’t tell me you can’t possible afford to save any money if you have a place to live and any income and a means to get to a computer and read this site. If you’re here, you can afford it. Period.

Here’s what you can’t afford: Spending every dollar of what you bring home, to the point where an unexpected bill or repair means you have to put something on a high-interest credit card. No one can afford that.

I read a great site called The Anti 9-to-5 Guide because it’s full of great information and tips about making freelancing work, particularly as a woman. You may not be a freelancer, or even female, but recently Michelle interviewed the authors of On My Own Two Feet: A Modern Girl’s Guide to Personal Finance and I was struck by this bit of advice:

Make sure you have at least a starter $2,000 emergency fund. According to the Consumer Federation of America, the average woman in her twenties and thirties has about $2,000 a year of unexpected expenses yet only $500 in savings. That’s a recipe for stress like you wouldn’t believe. Being self-employed involves enough uncertainty; you don’t also need to be worrying about how you’d pay for a last minute ticket to see a sick relative or a midnight call to the plumber. Our favorite place to stash that fund รขโ‚ฌโ€ savings accounts at online banks like HSBC.com and INGDirect.com.

Again, you may not be self-employed and you may not be female, but everyone should have an emergency fund. Frankly, I find shooting for $2,000 to be low (most often the suggestion you see is that you have 6 months of expenses available in the case of catastrophe, but that’s a large and scary number if you’re just starting to save), but it’s a good place to begin.

And here are the rules for making saving a part of your life:

Set it up to be automatic. If you designate a savings account and then authorize it to withdraw a set amount each week or month, you avoid the temptation to skip a deposit “just this once.”

Start small. How does $5/week sound? It’d be great to do more, but if this sounds impossible to you, start with just $5. You can make it work by skipping one lunch out a week, or clipping coupons instead of tossing them into the trash, or cutting back on fancy coffees. I don’t know where you can cut the corner to make it happen; even if you’re already living frugally, my guess is that you can find a place to squeeze a few dollars out of your budget.

Use an online bank for your savings. We’ve talked about this before, at Want Not, and some folks disagreed with me, but I maintain that having your savings in an online-only bank fulfills a dual purpose. First, you’re likely to get a higher interest rate this way, even on accounts with a low balance. Second, although you can hop online at a moment’s notice to manage your money, the actual availability of your money is always going to be delayed by a few days, making it harder to withdraw it on impulse. (Need help figuring out which bank to use? Check this out.)

Be realistic. You know yourself best. Don’t optimistically deposit $500/month and then end up dipping into that account every single month. This is about what you can afford to pretend doesn’t exist. If you also want to get better about savings in general (not just in terms of building an emergency fund), open two savings accounts—one for your untouchable emergency fund, and one for your “I am going to try really hard not to spend this and I should probably earn a little interest on it in the meantime” fund.

This is not an either-or matter. I know that someone (or maybe a lot of someones) reading this has credit card debt and is thinking that it’s more important to pay down the credit card debt than to put money in savings. You need to do both. Again, we’re not talking about mountains of money, here. $5 a week. I’ll go so far as to say that if you’re paying down credit card debt it’s even more important to do this, because you are in even more dire need of forming a savings habit. Keep paying down your debt. Pay yourself the $5/week while you do it.

If you can save $5/week for two months, you may be surprised to discover how easy it actually was. The third month, maybe you bump it up to $10/week. Who knows. At the very least, until you have at least $2000 in that emergency account, work towards that goal. It will get easier.

And lest you think I’m being glib—I know it’s not easy. I know that sometimes you just have more expenses than you have income. But you wouldn’t just not pay the mortgage or a doctor’s bill (I hope!) and expect it to go away; paying yourself towards a savings fund is just as important. It’s about forming good habits, it’s about disciplining yourself, it’s about finding creative solutions, and it’s about giving yourself a little bit of security.

Don’t make me get all Stuart Smalley on you; you are good enough and smart enough to figure out how to make saving just another fact of life. Pinky swear.


  1. As a female AND a freelancer, thank you for the Anti 9-to-5 site. I hate to admit it, but Sean and I have put off fiscal responsibility for a while (a while=until last week) whereas we’ve always had a savings we really never knew what to do with it. Even after consulting several banks’ financial planners left us clueless. We’re learning. Slowly. And budgeting better (Ack!) which kind of sucks, but it’s also kind of fun in a weird, warped, responsible way.

  2. Is there an online bank you would recommend?

  3. Great post, Mir. I agree totally, even though we’re sucking at maintaining a savings account right now b/c hubby went to commission-based sales. I have about 10 financial blogs on my reader right now… it’s always good to hear different types of advice and choose what works best for oneself, but the thing I read over and over is that ING is totally the way to go. I haven’t made the leap yet to that from my local credit union, but I plan to do so in the very near future.

  4. P.S. I just re-read my comment, and it sounds (to me) like I’m blaming hubby, but I’m not. He’s MUCH happier at work, which makes him happier everywhere else, even as we work through the budgetary craziness. ๐Ÿ™‚

  5. Veronica: I happen to be a very happy and loyal ING customer, myself. My husband uses Emigrant.

  6. I have been a happy and loyal ING customer since 2004. Interest has gone down lately, but I suppose that’s true everywhere.

  7. Thanks for the kick in the pants. I’ve been meaning to set up a new MMA for short-term savings for months. After reading your post, I finally took the 10 minutes to do it. This freelancer appreciates your encouragement.

  8. After five and a half years of denial and avoidance, I have decided to start managing our money. And it’s not as hard as I thought. And your advice is always great. Thanks!

  9. Thanks for the tips!

    I think that we will be implementing the savings account at an internet bank idea. Right now we have a savings account that we have been pretty good about adding to on a regular basis but the advantage to having it at a seperate bank is that everytime we check the accounts… that amount won’t be in our face as temptation. We have another account that we rarely think about when looking at our current status because it is a paper account only so I know it can work.

  10. I do appreciate the tips. As a stay-at-home mom, I sometimes forget that it’d be a good idea to have my own savings account in case, God forbid, my husband wasn’t part of my financial equation anymore.

    Boy, that sounded cold. I swear that I’m not trying to say I just married him for his money instead of his humor and loveliness in general – when I met him, the boy was a broke college student who drove a Colt, for goodness sakes. I’m just saying that sometimes the universe can be cruel, and I have to force myself to consider contingency plans just in case he’s not here all of a sudden.

    To show you just how much I appreciate the money musings, enjoy this clip. It’s all about bacon:


    Cheers! -Kati

  11. I’m going to be a total downer here and say that it is especially important for us SAHMs to have a savings account AND a retirement account. After 35 years of being a stay-at-home mother (retired, she says), my mother was facing a divorce (losing her house and living on far less than she was accustomed to) because my father had a bitch of a mid-life crisis (and a bitch of a mistress, as it turns out). I know your husband is lovely and he’d never do that, but that’s what my mother always said. In my mother’s case, it all worked out and they reconciled, but that is such an old story, it’s become cliche.

    By the way, Mir, Otto would totally never-ever do that! And neither would Mr. Clairol. Because I’ve already told him I’d skip the divorce and plead out for manslaughter.

  12. YES, DRILL SARGANT!! Geez, you’re bossy! ๐Ÿ˜‰

    I will admit, my emergency fund is my kids’ savings. I am kind of ashamed of that. Its every penny they ever received for birthdays, christenings, etc. I do have the will NOT to spend that, it isn’t mine but it gives me uneasy comfort (oxymoron?) to know its there. Because of stories like Jennielynn’s mom, its in my and my children’s names only (doesn’t make my husband very happy but he’s the one with the pension and the 9-5. I’m the one with sweet potatoes in my hair and a gap in my resume. So, you know, tough.)

    I think I will take your advice about savings even though I have credit card debt. It isn’t as though I am consciously putting an extra $20 toward my credit card (though I definetly put more than the minumum, I have it budgeted to a certain amount). That had been my excuse before. You’re on to me though.

    Why my life story? I have no idea.

  13. The whole “six months worth of expenses” used to intimidate the heck out of me, until I read somewhere about the brilliant idea to start with one month of expenses. Holy cow! So simple and yet it never occurred to me.

  14. I do my banking through Bank of America, and they have a “Keep the Change” program that rounds up each debit purchase and moves the rounded amount to your savings account. If my purchase costs $6.43, they automatically move 57 cents into my savings account. It doesn’t sound like much, but I save an average of about $35 a month.

    We won’t discuss how I could save more by just NOT SHOPPING . . . but I think it’s a great program for those of us who are less disciplined about saving.

  15. Good tips, Mir! I use ING too, and having it inaccessible is awesome. Plus the fact that I can never remember my account number means I’m not obsessively checking it all the time, so it just grows invisibly. I forget it’s there.

    I had my wake-up call about 18 months ago when I found out my husband of 10+ years was having an affair. I realized practically *everything* was in both our names and he could take it all and hang me out to dry with no money or credit. I immediately got online and got my own credit card and started the ING account – I’m putting $25 a week into it, and to this day hubby has no idea it exists. (He repented, therapy, blah blah…but I’m not naive anymore.)

    I probably should work on Leigh’s idea of NOT SHOPPING. But then I would have to stop coming here. ๐Ÿ™ So I refuse. At least when I DO shop you help me find the deals!

  16. Please, please all of you listen to this post. I was a work-from-home mom who took on contracts because they interested me rather than out of some intelligent career plan. I never felt I had to worry about that because my husband was well-employed. Four years ago my husband went missing, I had to pack up my three children and move away from the area that was fantastic for my career field into one that has chronic unemployment and ridiculously low wages – and I was suddenly the only bread-winner for my family. We’re struggling still, but we’re making it but I tell every woman I know that they must, MUST have a financial plan of their own that includes a savings/investment program. If I can do it on my pittance of a salary with my three hungry teenagers then anyone can – no excuses.

  17. A friend of mine just went through a Dave Ramsey personal finance class. His first step is saving a $1000 emergency fund. Step two is paying off debt (credit cards and cars). Step three is building a three to six month living expenses fund. This is for unexpected loss of wages as opposed to the emergency fund, which is for the midnight plumber calls.

  18. Thank you! Thank you! This was the kick in the pants I needed. I just opened an ING Automatic savings account. I’m having $50 deposited every pay period. Since it comes right out of my checking account, I won’t see it or miss it. The best part? It’s hard to get to so I likely won’t drain it as fast as it gets deposited. You rock. And you’re pretty.

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