Every day is a holiday.
"That's silly," you say. "I don't remember having the entire year off." Fair enough. Every day isn't a federal holiday, but over the past couple decades or so, seemingly every box on the calendar has been shackled to something that demands recognition.
This past week, por ejemplo, Kyle celebrated National Margarita Day. Last month, Riley celebrated National Hot Pastrami Sandwich Day. In September, all but a few hundred thousand Americans observed Stay Away From Seattle Day—though most of us probably didn't realize it.
But if you sift through the hundreds of unofficial calendar observations, you'll find quite a few that are actually worth your time: Black History Month (which will sunset this upcoming week), National Diabetes Month, and—very much in our lane—America Saves Week, which in 2023 kicks off Feb. 27 and lasts through March 3.
According to a recent survey of middle-income families by financial services firm Primerica, nearly three-quarters of American households with incomes between $30,000 and $100,000 say they can't save for their future. That's not only a horrible place to be, but it's much worse than even a year ago, when 66% said the same thing.
America Saves Week exists to help people claw out of these situations. So to observe this important call to action, we've interviewed a personal finance expert and financial therapist who will not only discuss a few practical ways we can all become more disciplined savers, but—to hammer home the importance of taking these steps—also explain the very real financial and psychological tolls of having no economic backstop during times of economic turbulence.
YATI Tip: Looking for ways to level up your savings without thinking about it? Try these roundup apps.
The Tea: America Saves Week, which came to life in 2007, is part of the nonprofit Consumer Federation of America's America Saves awareness and education campaign. The overarching goal: Help low- and moderate-income households save money, reduce debt and build wealth.
"America Saves Week is a great opportunity to commit to a personal savings plan, whether it is intended to buy a home, pay for education, or plan for life events like retirement and emergencies," Karima Woods, Commissioner of the District of Columbia Department of Insurance, Securities and Banking (DISB).
It's a yearlong cause, of course, but America Saves Week is a way to draw attention to it. America Saves celebrates the week by shining a light on various financial themes—automatic saving, paying down debt, etc.—though other organizations are increasingly getting in on the action, too.
The DISB, for instance, will offer programs like Bank on DC—a joint effort where D.C.'s government, local financial companies and nonprofits provide the area's un- and under-banked households with low- or no-cost access to financial services and education—and the Opportunity Accounts Program matched-savings initiative for qualified District residents. (And if you're not in D.C., check with your local government to see if they're running any America Saves programs this upcoming week.)
The Take: At this point, you might be asking yourself: Why a full five days' fuss about dropping some coins into the piggy bank?
We've recently chatted with Lindsay Bryan-Podvin—a personal finance expert and Certified Financial Therapist (CFT-I) who is uniquely qualified to talk about both the financial and emotional impacts of a rocky economic environment, and how to better weather difficult times by saving more.
The Hurdles Middle-Income Families Face
You'll be unsurprised to hear that the general state of the economy is the main pressure on American households right now. Persistent inflation, stagnant wages and rising interest rates—all the financial buzzwords du jour—weigh heavily.
"Middle-income individuals and families are spending more on day-to-day necessities, leaving them with less money for strategic planning around short- and long-term goals," Bryan-Podvin says.
YATI Tip: Take a look at the most-powerful anti-poverty program in the U.S.: the earned income tax credit.
But also on the horizon for many is a potential return to student loan repayments, saddling borrowers with even more monthly expenses than they've had since the beginning of COVID-era forgiveness. "The average middle-income borrower owes around $43,000 in student loan debt, which might be a year's salary for these individuals," she says.
The Toll(s) on Us
A turbulent economy has two effects on people.
The more obvious one is the financial effect, which you'll notice by simply looking at your bank account.
The less obvious one—but the one that's still clearly felt—is the emotional effect. And this can end up making a huge impact on our short- and long-term savings.
"The unpredictable state of today's economy adds to the anxiety and stress Americans already associate with financial planning. Each financial decision, big or small, can impact how we feel about money," Bryan-Podvin says. "For example, say you have a goal of buying a house by the end of the year; it can be easy to get laser-focused on interest rates, down payment costs and legal fees associated with buying that home—so much that it can feel unattainable, stressful, or overwhelming."
A way to mentally steel yourself is by thinking about economically difficult times like inclement weather, she says. "We can't change the weather, but we can dress appropriately for it."
Bryan-Podvin has recently been working with a MetLife financial wellness app, Upwise, which "takes a financial therapy approach by acknowledging the role emotions play in our personal finances and provides actionable guidance for individuals to follow to improve their financial wellness." This helps battle the overwhelming feeling people get when they believe they have to tackle these problems all alone.
"Upwise offers a 'Prepare for the Unexpected' challenge to help individuals get started and become less fearful of the unknown," she says. "I definitely recommend resources like this to my clients to help them build emotional resilience and a better, healthier relationship with their money during these ever-changing times."
Start With Small Steps
"Many procrastinate taking action to cope with financial anxiety," Bryan-Podvin says. "It's a great coping skill, though it's not the best long-term. I call this 'financially avoidant' behavior."
Her solution: Quick wins.
Bryan-Podvin says that when her clients turtle up in the face of financial anxiety, she suggests small, easy goals to get the ball rolling—spending no more than $5 on a weekly coffee, putting $10 into a savings account every day—and then celebrating these minor steps as if they were major milestones.
"These types of financial 'quick wins' have psychological benefits, like the release of feel-good hormones, including endorphins and dopamine, all of which can bolster an individual's financial health and well-being," she says. "While the financial rewards may feel small, this practice helps individuals associate positivity and progress with savings in a way that feels good – in time, this will help improve their attitude towards money overall."
A way to really make these small wins stick is by targeting areas where negative feelings are paired with a financial behavior or issue. For instance, maybe you subscribe to several streaming services. "Limit your subscriptions to the ones you use regularly and bring you joy," Bryan-Podvin says. When you realize you only signed up for a service to watch one show, and you don't use it anymore, it makes it easier to cut back.
Another tip: As you try to start saving for more important financial goals, set a little aside in a "joy fund jar," too. "Doing so will help you get excited for the upcoming event, while also preparing you for the big cost around it," she says.
Don't Fear Debt
"For a large majority, debt comes off as a very overwhelming, anxiety-inducing term, and as a result, people often end up avoiding talking or learning about it entirely," Bryan-Podvin says. "In fact, I often witness clients exhibiting "financial avoidance"—a coping mechanism used to evade hard truths about our personal finances, such as the need to reduce our debt."
But you can fight your fear with knowledge. The more you learn, the more you'll demystify some of the prominent untruths about debt.
"One key area of misunderstanding debt is the idea that it takes an all-or-nothing approach, or else you'll be stuck with debt forever – this is so not true!" she says.
If you have a large amount of debt, you need to strike a balance. Yes, you want to pay it down quickly to reduce the interest you'll pay and get out from underneath the burden. But it's possible to overdo it at the cost of your emotional or even physical well-being. "Maybe reducing your streaming services is a no-brainer," Bryan-Podvin says, "but cutting your monthly massage if you have chronic pain isn't a place to trim spending."
Build That Emergency Fund
How important is an emergency fund? We've suggested that, if $100,000 suddenly falls into your lap, the very first thing you should do—before paying down debt, and before investing it—is to finance an emergency fund.
An emergency fund is basically there to tackle some unexpected financial hurdle sometime down the road. The general rule of thumb is to save three to six months' worth of expenses, but Bryan-Podvin says there's something you should do before calculating your own personalized figure.
"I always recommend clients first take a moment to understand what an emergency fund means to them by asking questions that get to the root of why they are saving, such as: 'What will be the purpose of these funds?' and 'Why is having an emergency fund important to me?' she says. "Doing so allows individuals to consider aligning their values with their savings so it's less of a chore."
Bryan-Podvin applies "small wins" to emergency funds, too. Saving three months' of expenses can feel like a tall task, so start by saving $100, then $500, then $1,000, then your first month, and so on. Eventually, get into the habit of putting a percentage of your paycheck aside into the fund as soon as you receive the money.
"This way, you get into the routine of building your 'safety net' immediately as you have the funds in your account, rather than leaning on what's left over at the end of the month and trying to scrape together the last few dollars in your bank account," she says. "You should have a decent emergency fund set aside before you know it!"
Riley & Kyle
Young & The Invested
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.