Personal Finance Insider writes about products, strategies, and tips to help you make smart decisions with your money. We may receive a small commission from our partners, but our reporting and recommendations are always independent and objective.
- I have a habit of giving money away before making sure my own financial security is in check.
- When the COVID-19 pandemic hit, I knew I had to come up with a formal savings plan that would help me offer financial support to others without going broke.
- I created a high-yield savings account to save funds that can then be donated spontaneously as needs arise within my community.
- I only allow myself to deposit money into that account each month after I’ve paid off my credit cards, filled up my emergency fund, and contributed to my retirement accounts.
- See Business Insider’s picks for the best high-yield savings account »
I have a habit of worrying about the needs of others while neglecting my own, and this habit becomes most painfully apparent when I reflect on my financial life.
In the past, I’ve donated money that I don’t have and then paid for my groceries with a credit card, I’ve forgone depositing money into a savings account in order to support my partners, and I’ve blown through my savings account buying gifts for people I love.
If this sounds like a humblebrag, trust me, I don’t think the quality of giving to others without taking care of yourself is admirable — it’s unsustainable at best and destructive at worst. It leads to stress, burnout, resentment, and can even ruin the very relationships it aims to nurture.
There’s that saying, “Put your own mask on first before helping others.” When you don’t do that, not only do you put yourself at risk, but the help you can offer others is often limited or misguided.
This pressure to take care of others before taking care of yourself is felt more strongly by women. After all, self-sacrifice has long been painted as the defining trait of motherhood. Women are often socialized to attend to the needs of others over our own, and we tend to feel that putting our needs first is selfish, or even cold-hearted.
When the COVID-19 pandemic hit, my impulse to give kicked into overdrive. So many people are suffering financially right now, and while I’m far from swimming in cash, I am in a place to help. But I wanted to make sure that I didn’t end up falling into old patterns and leaving myself financially vulnerable in the process.
So, I came up with this savings plan that lets me offer financial support to my community during COVID-19 while still putting on my own mask first
I’ve made it a goal of mine in recent years to be more selfish, and in terms of my finances, more “greedy.” Even in the midst of a crisis, it’s important to me that I focus on hitting three financial goals each month:
At the beginning of each month, I make sure that all three of these needs are taken care of. Only when I’ve done that do I allow myself to give financially.
The first thing I do is pay all of my bills, and because I use travel credit cards regularly for the rewards, I also pay off any credit card balances I’ve run up in full before my statement is due. By never carrying a balance, I avoid interest fees completely, and I maintain a good credit score.
The second thing I do is check up on my emergency savings fund. I have a full year’s worth of basic living expenses saved up, which has given me a priceless sense of security during this pandemic. I rarely have to dip into it, but if I did have to withdraw any money in prior months, I put my paycheck toward refilling it.
The last thing I do is set aside at least 20% of my paycheck and funnel it into retirement and investment accounts that I’ve opened with Vanguard. I got what most financial advisers would consider a late start on saving for retirement, although I know plenty of my peers are in the same boat. So, now, I invest rather aggressively.
My income fluctuates as a freelancer. Twenty percent of my income is the minimum I invest each month, but some months that rate is above 50%.
Once my financial goals are met, the money that’s left gets split between two different high-yield savings accounts that I’ve opened with Ally. One is for short-term savings goals like travel (or now that we’re all on lockdown, a Nintendo Switch), and the other is for supporting my community during COVID-19. I try to put at least 10% of my income into these accounts.
I use these funds spontaneously as needs arise within my community. So far, I’ve dipped into this savings account on several occasions.
I was able to Venmo money to a couple of friends who lost their jobs while they waited for unemployment checks to arrive. I’m normally traveling most of the year, and I sent money through Western Union to a private tour guide I’ve used a lot who isn’t receiving any clients right now.
While giving directly to friends and acquaintances is important to me, I want to make sure that I’m also giving to organizations that are working to distribute resources throughout bigger networks.
I was living in Costa Rica for five years until recently, so I donated some of the funds to a nonprofit called Amigos of Costa Rica that redistributes donations to various on-the-ground organizations working to make sure Costa Ricans have their basic needs met during this crisis. I also donated to a campaign raising money to buy food for vulnerable families in the town where I used to live.
By taking care of my financial checklist first, I’m able to get a clearer picture of how much I can actually afford to give each month. By setting that money aside in its own savings account, I always know how much I have left, and I never risk overspending on donations.