I am not what you would call the “greatest with money.”
Despite my enginerd father doing his damnedest to teach me about stocks and bonds at a young age, I really never managed to get past, “Don’t spend more than you have,” as far as possessing a general budget plan. It’s not that I don’t see the importance of having some degree of financial savvy -- it’s that at this point in my life, I am way more concerned with the immediacy of bills and food than with my shaky retirement plan in 40 years.
Yes, I realize that as a hippie-dippy middle-class vegan humanities-type, I'm reverting to a bit of a stereotype. Believe me, I like calculus and I don’t believe money magically appears in my bank account every month like bartered pears off a backyard tree, but something about “IRAs” and “1099 forms” and basically everything that begins with the word “fiscal” sends me into a fit of angry confusion reminiscent of the last time I tried to slog through “Anna Karenina.”
My problem, I think, is with the “theoretical” aspect of this money. Much like advanced mathemeticians say that the hardest part of high-level math is the reliance on theory rather than concrete numbers, I have real trouble interpreting “Money you might get later” as preferable to “Money you have right now.”
If you hand me $20 and tell me I’ll need $10 of it tomorrow night, it’s no problem for me to stash the extra 10 under my mattress until Dr. Debt comes a-callin’. But with all the talk about Medicare and Social Security during this election, it’s hard for me to even fathom what the retirement system will look like or how much money I’ll need to have saved by the time I eventually slog my way there.
Plus, somewhat more problematically, there’s a not-so-small part of me that seriously doubts I’ll make it to 60. I don’t mean this in a macabre or self-harming way; rather, it just makes me feel sad and strange to think of holding off on small, self-contained thrills of pleasure in favor of a comfort that I’ll never reach.
I can feel all of you practical types rolling your eyes at me. Don’t worry, I’m well aware that I’m being ridiculous. After all, my dad made the exact same face the first time we talked about a 401(k) after I got hired full-time at my Real-Person Job.
“OK, I get the difference between a high-risk and a low-risk investment,” I said, eyes half-lidded with fatigue, after 10 minutes of him earnestly monologuing from behind his moustache. “But, like, what if I don’t make it to 60?”
He frowned. “What do you mean, what if you don’t make it to 60?”
“Like.” I squirmed. “If, say, there’s an apocalypse. Am I going to be able to get my funds out of my IRA in time? Won’t that be kind of a waste?”
He stared at me, clearly trying to figure out the degree to which I was bullshitting him (answer: only a tiny bit). “No,” he finally said. “No, it will not.”
“What if I get hit by a bus?”
“What -- why -- you’re not going to get hit by a bus!”
I shrugged, unconvinced. “If you say so.” I’m fairly certain I’m going to get by a bus between 40 and 50. It’s just a feeling.
I do agree, though, that it’s vital to have some sort of backup financial plan in place in case disaster strikes. Even though I’m not saving up for anything in particular, it’s nice to be stuffing a proverbial money-cushion on the off-chance I take off for Peru on my 30th birthday or something and leave my chances of gainful employment behind.
As someone who is lucky enough to have a job, I do have the privilege of choosing whether to allocate some of my paycheck for a later date or to make arguably irresponsible financial decisions. Admittedly, that feels kind of awesome. The process, though, can be kind of intimidating.
Even starting a savings accoun can be trickier for some people than you might realize. As the folks on this Reddit thread show, for example, figuring out how much of your paycheck to set aside every month can be an exercise in cheating $5 or $10 between accounts at intervals to fund your (okay, my) burrito addiction. Not exactly "savings" material.
Some folks say that if you can, you should pay 50% needs out of your check, 30% wants, and 20% into savings. Others go by the “pay yourself first” method -- calculate how much money you earn on a daily basis and then feed that into your savings before you do anything else.
Some sort of throw all their money at their rent-and-transit expenses on the first of the month and then hoard their remaining hundred bucks or so until the non-expense-laden payday on the 15th. Then they throw half of that paycheck into savings and blow the rest on jeggings, kale, and craft beer, which I guess all works out to a vague 50-25-25 split rate in theory.
(Ten of my precious dollars if you can guess what camp I’m in)
I actually don’t even have a savings account anymore -- when I first got it in college, I transferred money out of it so often that they took it away from me. This is apparently a thing that can happen when you are a dumb shit. Instead, I have two free checking accounts: one for spending, and one for squirreling away like a rodent who’s trying to shred dollar bills for her nest for winter.
Even so, my method actually seems to be working out okay in the short term. It’s allowed me to save a little less than $5,000 in the last year or so, which seems like a lot of money to someone who frequently has staring contests with the produce aisle in order to get as many calories-per-cent as possible. And despite not actually having a savings account, I’m pretty good about not dipping into my second checking one for things like fancy hats and Renaissance swords. Most of the time.
Of course, this is in San Francisco, where I live in a thankfully inexpensive part of the city, can wear jeans to work, and get 90 percent of my meals from the bodega down the street with 69-cent avocados year-round. In another city, I could very easily imagine needing to actually draw up a budget in order to live comfortably. Instead, I haphazardly decide how much a week’s supply of coffee and lentils is going to shake out to and then play fun-chicken with the rest.
I realize, too, that I should also probably be putting my “'Savings' Account Money” in something like a CD or a DVD or whatever. But honestly. Is it so bad that I think of that account as “Plane ticket to go visit Cape Town” or "Emergency MRSA Treatment" or “Sound studio rental” rather than a cozy little retirement fund? At least while I’m younger than 25?
Maybe I’m being neurotic. How do you guys manage your savings? Do you, like my friend Ella, just make sure that you have a month’s extra rent in the bank at all times? Or do you actually draw up a budget and shit? Also, can someone explain how I’m paying taxes this year? I am the worst at everything I do.
Kate is continuing to offer dubious financial commentary at @katchatters.