Savings & Navigating The Financial Unknown
Do you have a savings practice?
We're collectively navigating a lot of unknown in the world, especially with what's happening with the Coronavirus, stock market, and upcoming election.
What I've learned is that in times of unknown, it's even more important to be conscious with resources. One of the best ways to be conscious is to have an intentional spending plan and allocate as much as possible to savings.
Savings provide you with an experience of financial security and inner peace, as well as a sense that you're setting up your financial future according to what’s most important to you.
When you know you're allocating your resources in a way that takes into account your present life and the long-term future, you can experience the confidence and wisdom that come from taking care of your future self.
While contemplating your savings practice, it’s important to understand this:
Just as there are cycles of seasons in nature, there are cycles with money.
The more you can expect both sides of the spectrum, and see them ultimately as natural as the seasons changing, the more you'll experience equanimity and financial peace.
Your savings practice will provide a reserve, so you don’t need to experience stress, anxiety, or fear — or take on debt, strain your relationship, or face financial losses when lean times appear.
“A savvy saver plans for both the expected and unexpected.”
Here are 7 tips to help you be a savvy saver in all the money cycles in your life:
1. Set a financial intention.
In order to effectively build up your savings, you need to know what you're saving for — and what your deeper why behind it is.
Do you want to reduce financial stress and insecurity? Do you want to travel more, buy a house, or start a family? Do you want to plan for the unexpected?
If your intention is to avoid the stress that comes with an unexpected life event or medical bill, you'll feel amazing knowing that every month, you're allocating funds into a periodic savings account. You can relax and know the money will be available when these instances occur.
What's your intention? What positive inner experience do you want to have as a result of building savings?
2. Have a specific financial goal & measure your progress.
While intentions are based on the feeling or experience you want to have, goals are specific and can be measured in terms of amount and time.
For example, I'm going to build a prudent reserve and have 3-6 months of basic living expenses covered.
Getting clear about your goals will help to hold you accountable, and measure your progress along the way.
Looking at your numbers each month tells you how closely you’ve stuck to what you want, and reveals where you may need to make some adjustments.
What are your financial goals?
3. Break up your savings into different buckets.
I recommend allocating your money to separate savings account, according to each category of expenses, such as planning for the unexpected, home improvement, travel, Golden Goose investments...).
This will give you a lot of financial clarity, and help you track how in line you are with your financial goals.
If you only have one general savings account, you can get nervous or confused drawing from it, and unclear about how it will impact your larger financial picture.
4. Name your savings accounts in your banking and tracking systems.
People who give their savings accounts inspiring names are 20x more successful than those who don’t!
Name your categories according to your priorities.
For example, a generic bland savings account becomes much more motivating when it's called "Back-Up Fund," "Long-Term Stability," or "Peace of Mind Fund."
When you see the names, you automatically associate your savings practices with the vision you have for your resources and financial life — and you're much more likely to do what it takes to stay consistent with the vision.
5. Determine what monthly amount will be successful and sustainable for you.
Make sure you know exactly what fits into your current budget. Don’t force yourself to give up everything in your discretionary spending, which can lead you to a feeling of deprivation and sabotage your success.
Likewise, try to remember the reason you want to save money, and find places where you feel inspired to allocate your spending in an expansive and intentional way.
6. Put monthly deposits on auto-pilot.
Once you’ve chosen the appropriate amount to save each month in each category, put the transfer on autopilot.
You can do this through your bank, or through an online system like www.smartypig.com.
Then, you can relax and enjoy the fact that you're planning for a prosperous and thriving financial future each month.
7. Start with a periodic cycles of life savings account.
Don't know where to start?
I recommend building your periodic savings account first. Your periodic savings account covers medical and dental bills, any lumped annual payments (such as auto insurance or registration), home and auto repairs, and any unexpected expenses.
You can be sure that these expenses will come up, and if you have built this type of cushion into your financial strategy. you'll feel financially empowered — which will fuel continued success with your savings practice.
These are my top #7 tips to build a prosperous savings practice! I hope this serves you.