Financial Stability is Mental Health: The Series – The Power of Saving Money

In Part 1 we talked about how shame isolates us from seeking help and support with our money problems, how financial literacy is the key to financial stability, the power that understanding your values has over your saving and spending habits, and how our mindset dictates our entire relationship with money.

Today we start talking about saving. Saving money isn’t as simple as spending less than you make. There’s an art to it that can make it not only doable, but also enjoyable and empowering.

The Power of Having Savings

If you read Part 1 (which if you haven’t, I suggest you start there) you’ll know that my journey to financial stability began when I finally admitted to my financially literate and stable SO Dylan, that I was close to being broke. I had less than $1,000 in my bank account and I was losing money every month. He didn’t judge or lecture me. Instead, he told me that it’s going to be okay and that he’s here to help. That’s what I want to be for you now.

If you have little or no money saved, you are not alone. More than 50% of Americans are living paycheck to paycheck, whether they’re making $15 an hour or $150 an hour. It is nothing to be ashamed about and there are ways out. 

If your goal is to reach financial stability or to stress less about money, you must start saving. Whether you are living month to month or want to increase your emergency fund or “F-You money,” you must start saving. If you have debt or don’t have any savings for an emergency, learning how to save and putting it into practice is truly the only place you can start. I can’t emphasize enough how your money stress will be relieved once you start saving.

In this post I lay out a strategy that will guide you to reaching a realistic savings goal. Having a goal and an end date is a great way to kickstart your motivation, but enjoying the process is the only way to maintain motivation. Therefore, your core values and the reasons why you want to save must inform every step of your savings journey. 

I started saving money for my mental health. I was in a constant state of stress and shame over money. Every time I swiped my credit card, paid a bill online, bought something I truly needed, I was stressed. I knew that with every swipe, I was losing money and I felt like I had no control over my financial situation. 

Once I did all my calculations and saw how much I could be saving, I discovered what it felt like to be in control of my finances. It was liberating and it changed my entire relationship with money. I was spending money without guilt. I stopped impulse buying. I wasn’t spending money on unnecessary things. I ended up having less stuff which helped declutter not just my apartment but my mind. And most importantly, the weight of the fear of being broke was lifted from my shoulders. 

So while saving money is the goal, knowing why you are saving is key. I don’t just want to teach you how to save, I want to help you find joy and fulfillment in the process of saving. It’s possible. I swear.

Calculate Your Income vs Spending

At the time of my near broke-ness, I was working at Trader Joe’s and while my hourly wage was $16/hour, my take home was roughly $13/hour. Always calculate income after taxes so that way the money we receive when we file taxes comes to us as a yearly bonus rather than a life saver.

Look at your paystubs for the past 3-6 months. If you’re salaried, your income should be roughly the same every month. If you’re paid hourly, then your income might be varied based on how many hours per week you’re working so take the average of your income for the past 3-6 months. If you’re freelance or self-employed, deduct 30% to put aside for taxes. At Trader Joes, with $13/hour, 7.5 paid hours/day, 10 days/paycheck came out to $975, roughly $1950/month of income.

Now look at your spending for the past 3-6 months. I created a spreadsheet of everything I was spending money on: rent and utilities, car costs (insurance, gas, registration), groceries, medications, laundry, gym membership, clothes, eating out, streaming services, etc. Include every single tiny cost. Total it up. If your spending is more than your income, or close to it, it’s time to cut costs.

Decide Where to Cut Costs

Only when you know exactly how much you’re spending and what specifically you’re spending on can you get a clear grasp of where you can realistically start cutting costs. When I calculated my spending I found that I was spending way more money on clothes than I realized, and much less on eating out than I thought. If I stopped spending so much on clothes, or stopped buying new clothes altogether, I would have more money to save and to eat out. 

Once you know your monthly income and spending, it’s time to look at where you can cut costs. There’s two trains of thought here. 1.) Downsize the big stuff first 2.) Cut out as much of the small stuff as possible first. How you approach this will depend on several things: what is realistic, how much you’re willing to sacrifice, how determined you are to save, your current level of frugality, etc.

I looked at all my big expenses first. My biggest cost was rent. I was paying $800/month in rent which I wouldn’t have been able to find much cheaper. Not having a car was not an option for my lifestyle and after some research I found that my insurance rate was pretty good. My climbing gym cost $85/month but that was also a cost I wasn’t willing to cut. If you’re spending, for example, $200/month on new clothes or eating out (which I was), that counts as a big cost! Don’t dismiss anything until you’ve really thought it through. Once you’ve sifted through the big stuff, start looking at the smaller costs.

Working at Trader Joe’s we were allowed to take the last 15 minutes of our shift to grocery shop. This always ended with me choosing all the little treats I enjoy because, well, I deserved it. I worked hard! That’s how I justified it at least. Looking at my bank statement, those costs appeared as only $10 here, $6 there. But when I totaled up the cost I was actually racking up an extra $30-40/week on sweets and snacks that I didn’t need and/or didn’t even end up finishing before they went bad. I didn’t even want to be spending that much on cookies and crackers and junk food. So, I stopped the practice of buying groceries during my shift altogether. That habit change alone saved me roughly $160/month!

Look into cheaper car insurance, promo deals on internet and phone providers. Are there particular items in your fridge or pantry that you always end up throwing out? Stop buying them! Do you buy books? I used to. Then I bought a Kindle and started using the Libby App that syncs up with my library. Like reading a physical book? Get a library card! If your library doesn’t have a particular book you want, you can always request they get it. Need to replace your microwave? Try buying it used! (And, no, buying used is not gross.) Sure, there’s lots of good content on HBO, Netflix, Hulu, but do you really need all of them? All of those small costs add up quickly so don’t fall into the trap of, “Oh, it’s only $8/month.”

Set a Savings Goal

Once I tallied up all my cut costs, I found that I could save $400/month. If I stuck with my budget, in 2.5 months, saving $400/month, I would have $1,000. So I made my goal $1,000 by April 1. This meant that after all my bills were paid, I would still have $1,000 in my savings account. Just the thought of seeing that number steadily in my bank account was so thrilling and motivating. 

I chose a goal that was 2.5 months away because it felt far enough out that I had to work for it but not so far out that it felt overwhelming and unattainable. 2.5 months of frugality for the pay off of having $1,000 in my bank account felt worthy.

Part of goal setting and keeping is that you are going to have to make some compromises and sacrifices and work hard. Is achieving a goal even rewarding if it’s not a challenge? I think not. Make sure your values are informing your savings journey so you can maintain a healthy balance between frugality and deprivation. I want you to enjoy the journey, not resent it. 

Where to Keep Your Savings

If you don’t have a bank account, that’s the place to start. Choosing a bank is a personal choice. There are big banks like Bank of America and Wells Fargo. There are credit unions which are not-for-profit. There are fintechs which are online only. If you like to go into a physical bank then choose one close to your home. If you prefer to spend in cash then having plenty of ATM’s might be more important. If you want something more ethical and with the lowest fees, check out credit unions.

Once you choose a bank, you want to store all of your savings in a savings account. Why? Because even though it tends to be very small, savings accounts do earn interest. Your money is federally insured up to $250,000 (though I don’t recommend keeping that much in your savings account) and it’s a good way to track your savings by having your savings separate from your allocated spending money, which you’d keep in a checking account. 

Keep it Up

When I reached my savings goal, the pride and accomplishment I felt was immeasurable. I had set a goal for myself and achieved it. It was an empowering moment in my life, one I will never forget. Reaching that goal also opened my mind to even bigger possibilities. If I can reach $1,000, can I reach $1,500? Can I reach $2,000? I was so motivated by reaching my savings goal that I decided to start saving even more. I even expanded my frugality once I started learning about the FIRE movement. 

That’s the beauty of goal setting. Once you achieve the goal, you’ve shown yourself what’s possible and it inevitably opens your mind to other possibilities. I found I was actually happier not spending money on new clothes and eating out felt like more of a treat when it was preplanned and not just a last minute, I’m too tired to cook, spur of the moment decision. I realized that if I continue on my savings journey that a mini-retirement or dream trip is not only possible, but 100% attainable.

Final Thoughts

We live in a consumerist culture where we’ve been taught that to be happy we must have the newest phone, nicest car, prettiest apartment. We’ll drop $1,000 on a brand new phone without even thinking about it because that’s what we’ve been conditioned to do. Because of this, not everyone around you will understand or be supportive of your decision to start saving money. So always keep in mind your core values and reasons for saving. They will help you stay strong against the naysayers.

And remember. The joy and fulfillment is in the process. You are taking back control. You are saving for your mental health. You are learning a new skill. You are preparing for your kids’ future. Whatever your reasons for wanting to save, it’s a process that can be empowering and life changing when entered with the right mindset.