You know how when you run into a friend you haven’t seen for a while, you promise to catch up, but unless you make a plan, it just never comes together? Money works the same way. We all know we should save more, the same way we really should catch up with an old friend. But if you leave that intention vague and open-ended, it just doesn’t happen.
It’s a lot easier to save when you have a clear, specific goal to work toward.
When you know you need to save $5,000 for a car down payment, for example, you can crunch some numbers and make plans around that milestone. And with a plan, it’s a lot easier to motivate yourself to actually save the money rather than spend it on something else.
Unfortunately, uncertainty seems to be the theme of 2020. How do you make specific plans for your money when you don’t know what the future will look like?
Should you start saving for next year’s vacation when travel restrictions may still be in place? Should you plan for a big move if you need to relocate to a lower cost of living city? Should you start bolstering your emergency fund in case you lose your job? These are all questions I’ve been asking myself in the wake of the pandemic, and there’s a good chance you have been, too.
To make matters more uncertain, I’m also at an age where it’s time to decide whether I want–or can afford to–start a family. Adoption, fertility treatments, and parenthood, in general, is expensive. For myself and many other millennials, saving is difficult because milestones like these can seem like they’re becoming increasingly harder to reach.
About 30% of millennials don’t expect to retire, and a quarter say they’ll never buy a house, according to a 2018 TD Ameritrade study. These kinds of milestones — family, homeownership, retirement — just aren’t as accessible as they used to be, which can make saving for them feel hopeless.
But before you get to that point, certified financial planner Betty Wang’s best advice is to take a step back and think about what you were saving for before the pandemic: “New home? Amazing trip? Comfortable retirement? Then, ask yourself, ‘Do I think there will be a vaccine or a better way to manage COVID-19 in three years? Five years?’”
Most people are optimistic about three years out and definitely five years out, Wang says, “so this helps give you some perspective.” And it can help you get back on track to keep prioritizing and saving for your goals.
With that perspective in mind, there are a few specific money moves I’ve found helpful when it comes to saving amid uncertainty.
Actually save the money you’re ‘saving’
For the time being, without weekend plans with friends or last-minute travel excursions, I have fewer ways to spend my money in person. On the other hand, it’s easy to buy things online: on furnishings, home decor, and other ways to feel a little cozier in quarantine.
To avoid this, I’ve started automatically putting the money I’m “saving” into a savings account every month. For example, in our pre-pandemic life, my husband and I spent about $600 a month on restaurants and takeout. Dining out is our biggest indulgence and one I’ve struggled to control for years.
Now that we’re spending so much time at home, our restaurant spending has decreased to about $350. Of course, our grocery spending has also increased, but I still estimate we’re spending about $150 less on food each month. So I’ve upped our automatic savings by $150 so that we’re truly saving that money.
And because I’m used to spending that amount anyway, I don’t even miss it.
Try an ‘emergency budget’
Back in March, when quarantine began, I prepared what I call in my book an “emergency budget.” An emergency budget is pretty much what it sounds like: a pared-down, bare-bones version of your current budget in which you’re not spending on much more than basic necessities. It’s meant to be a temporary solution for weathering any kind of financial storm, like a job loss. Or, you know, a pandemic-induced global recession.
Admittedly, we kept our Netflix subscription because, while it may not be a necessity, reruns of “Queer Eye” and “The Great British Baking Show” have made quarantine a lot more palatable.
I knew my husband’s job and my own income would be extremely volatile for the next few months, as we’re both in industries that are completely nonessential. So I went through our budget, line by line, to see what we could cut to get our monthly expenses as low as possible to not only prepare for the worst but also sock away extra money in the meantime.
In auditing each line item, I also looked for outside-the-box strategies to save. We refinanced our home. We called bill providers and asked for discounts. We canceled some other subscription services.
All these small steps have helped us continue to move forward.
Set smaller, manageable savings goals
Aside from beefing up my emergency fund, which we should all be doing as much as our means allow, I’m really not sure what our future savings milestones should be. Maybe travel? Maybe a family? The future is unclear, so I’m trying to focus on what I can do in the present.
We’re lucky. Our incomes have stabilized a bit and we’ve started folding more “nonessential” expenses back into our budget. But that luck could always change, and it’s a good idea to save in case it does. And on a more positive note, if we do start a family in the near future or get to travel sometime soon, it’s smart to start saving for that now, too.
“While the uncertainty of 2020 is certainly painful and overwhelming, it doesn’t change your longer-term financial goals or your need to save for them,” Wang said. “It may alter your timeline or how you approach savings in the shorter term, but your motivation to reach your longer-term objectives remain the same.”
In order to motivate myself to save for those larger unknowns, I set smaller milestone savings goals each month. Breaking up goals into smaller chunks, like $100 a week or $400 a month, is a lot easier than saving for a massive, vague goal that may or may not happen sometime in the future. It gives you an immediate plan to work with so that you’re more motivated to find ways to save.
Of course, those big picture goals like parenthood will require a lot more than the few hundred bucks a month I’m saving by cutting back on my expenses. But I’m doing what I can in the present, and that helps ease my mind about the future.
Kristin Wong is a freelance writer, journalist, and author of the book, “Get Money: Live the Life You Want, Not Just the Life You Can Afford.” She has written for The New York Times, The Cut, Refinery29, and Glamour magazines.
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