Ask Grace Pomroy: Can You Ever Save Enough?

A few weeks ago, the lovely career coach Lisa Lewis interviewed me for her blog series about money. We got to talking about whether or not you can ever have enough in savings. The desperate pursuit of the elusive “enough” too often leads people to live in fear: fear of spending too much, fear of giving away too much, fear of not having enough to support themselves and their family.

Can you ever really have “enough” to protect you against every eventuality? The answer, of course, is no. You don’t know what will happen — good or bad. But is that really the goal? Are you trying to build yourself a fortress that can withstand every possible blow? Or, are you trying to build yourself a house on a strong foundation that can protect you against most reasonable, risky situations?

My husband’s accident was the first critical moment where I found savings to be important. As I’ve mentioned before, one of the most comforting thoughts for me when I was sitting beside him at the hospital was: We have an emergency fund. We can cushion this blow. It allowed me to breathe easier and worry about him instead of how we would pay the medical bills. But the truth is, we haven’t touched our emergency fund since the accident. Instead, the other protections we had in place have carried us through: car insurance, health insurance, disability coverage, and our Health Savings Account. We were (and still are) living below our means, so we were able to spend a little of the cushion we had built up in our checking account when we needed to instead of dipping into savings.

Concerned about saving enough? Here are a few things I’d suggest:

1.     Reset Your Mindset: The best place to start tackling your concern is to shift from a mindset of scarcity (i.e., there will never be enough everyone so I have to gather as much as I can) to a mindset of abundance (i.e., there is enough for everyone and that includes me). Don’t spend so much time considering what you don’t have that you miss the opportunity to cultivate gratitude for what you do have.

Tip: It can take time to peel back the layers of financial insecurity. Be patient with yourself. Spend a few minutes each week taking stock of what you have and giving thanks. Or, clench your fists tightly as you imagine holding on to your money with a vise grip. Then open your palms and feel the tension leave your body as you picture yourself ready to give and receive freely.

2.     Find a Healthy Balance: A healthy budget should support us today, prepare us for the future, connect us to others, and bring us joy and refreshment along the way. I firmly believe every budget should include saving for future goals, giving money to causes you care about, and spending on something you enjoy that’s aligned with your values. Take a look at your budget. Does it reflect all three of these categories?

Tip: You may be saving at the expense of giving or spending. If that’s the case, take small steps to begin opening up your wallet to your own needs and wants as well as to those of others. Start small by giving a few dollars away to a cause you care about. Ask yourself: How did that feel? Did that small amount really put me or my family in danger? Do the same with spending: Set aside $25 month in your account to spend on yourself (or on a date night with your spouse) and make yourself spend it. Ask yourself the same questions. Slowly, you’ll begin to find that healthy balance. 

3.     Employ Percentages: Obviously most of your budget probably goes toward bills and necessities. But what about the rest of your discretionary income? Identifying how you’ll distribute that money can give you a sense of purpose. Begin by setting a percentage for savings so you know that’s taken care of — say, 15% — and hold yourself to it. Now, consider what will you do with the remaining amount: What percent will you spend? What percent will you give away?

Tip: As a member of a faith community, giving at least 10% of my income away was instilled in me early on. Thinking about a percentage instead of a fixed dollar amount allowed me to grow the amount I give as my income has grown. It also showed me early on the transformative power of giving for both the giver and the receiver. Even when money has been tight, I’ve felt good about my ability to be generous.

4.     Use Rules of Thumb Wisely: Sometimes it’s helpful to dig into the numbers and compare yourself to industry standards to see if you’re in the ballpark. Remember, these are just general guidelines — but they can help you get a sense of how you measure up against what the experts recommend.

Tip: Here are a couple of rules of thumb I lean on: When it comes to emergency funds, experts recommend saving 3-6 months’ worth of expenses in your long-term emergency fund. Since you can’t fund this savings account overnight, I suggest starting with a short-term fund of $500-$2000 and growing your long-term fund from there. When it comes to retirement, I appreciate Fidelity’s recommendation of saving 15% of your salary (including your employer’s contribution).

5.     Make It Real: Sometimes it’s actually helpful to consider the worst-case scenario. Name what you’re most afraid of: Is it the loss of a job, your spouse passing away, your house burning down? Then, play it through. For example, if you’re afraid of losing a job, how will you plan for that? Consider all of the vehicles — not just savings — that might be at your disposal. Might unemployment income or a severance package help you cover the gap? Would you have your spouse’s income? How easy would it be for you to find another job? Are there other skills you could refine now that might make it easier for you to find a job later?

Tip: I know it sounds morbid, but this exercise can be a helpful way to get to the root of your fear, and to name the resources you have that can help you deal with it. Once you’ve faced up to the worst-case scenario and made a plan for it, it often doesn’t feel so scary.

I leave you with a quote by one of my favorite money authors:

“When you let go of trying to get more of what you don't really need, it frees up oceans of energy to make a difference with what you have.” ― Lynne Twist