It’s possible you were raised in a home that had a healthy mentality about money. Your parents your parent figures talked to you about finances, gave you tips on managing money and modeled a responsible, financial lifestyle.
But based on current statistics, many people weren’t raised in a home like that and feel daily financial stress. And even if we were, the contemporary financial scene is very different than when our parents were young, meaning a lot of the old rules don’t apply. Saving money is as important now as it ever was — possibly more so, with a rapidly eroding Social Security net — but it’s trickier too.
We spoke with Clint Hodgens, Director of Thrivent, about some practical goals for saving money, and how our spiritual lives tie in with our financial ones.
This conversation has been edited for length and clarity.
Let’s start with the basics: How much should we be saving and what sort of things should we be saving for?
It’s always important to be saving, but also important to realize that circumstances and situations can be different. For example, the amount you save is likely impacted by the amount of debt you have. As a general rule, 20 percent of your income should go toward savings and paying down debt.
Your first savings milestone should be to save enough to get $1,000 in an emergency fund to start. This can help you avoid adding more debt should you experience any unexpected expenses. If you are fortunate enough to have an employer that offers a matching contribution, try to contribute enough to get the full match. It’s hard to turn down free money. Then look to pay off any high-interest debt (like credit cards).
People in their 20s, 30s and 40s will likely be saving for several goals, but try to save at least 10 percent toward retirement. If you’re in a relationship, make sure that both you and your partner are on the same page when it comes to your saving priorities. Your goals may take more or less savings, but this should be a good starting point.
A lot of us aren’t making much money and are suffering from student loans. How can we save if we feel like we don’t even have enough to make ends meet as it is?
The first question to ask yourselves is if you truly are in a situation where you don’t have “enough.” In some cases, it’s completely true. But in others, it may just be time for a reality check. Look at your loans and see if you can consolidate or refinance them to a lower rate. This in turn may lower your payment and help create a little more cash flow that you could use to save.
I would also suggest tracking your expenses. This will give you the insight you need to determine if there are any opportunities to reduce expenses. We don’t endorse cutting out all of the fun stuff forever, but even if things are tight you could give something up for a week or a month to save a few bucks. Also, consider whether you could start a side hustle to create more income.
Let’s say I’m in my thirties. I’ve got a job, I’m a little more stable now, but I’ve got nothing saved. How can I start catching up with where I should be?
If you feel like you’re behind, ask yourself why. Where do you think you should be? Take some time to be thankful for what you have and what’s most important to you. Get your spending to a point where you can dedicate 20 percent of your income to savings and debt repayment. Take full advantage of an employer match if one is available. Each time you get a raise, increase your savings rate. Time is still on your side, so just keep saving what you can.
What’s more important? Saving, or paying off debt?
Both! Twenty percent of your income should go towards these two areas. Take advantage of an employer match if you have one. Then pay down any high-interest debt (like credit cards). From here, though, you should be doing both. Try to save 10 percent or more if your debt allows. Don’t ignore your emotions here. If debt is causing you stress or anxiety, pay that down. If you think you need to save more, do that. In my experience, the most important strategy is the one you stick with.
Some people argue that saving money shows a lack of faith in God to provide in the future. How would you answer that?
That’s a fair question to ask. After all, the Bible espouses this radical, counter-cultural community that completely cares for one another. It is an awesome vision to aspire to, but does it mean that God frowns upon saving, or even having any material possessions or “wealth”? This can be a slippery slope; one that leads people to “test” God’s providence. Saving is part of what we do to take care of our families and communities. Managing the resources we are entrusted with in a wise way includes saving for the future.
Let’s say I want to save money, but I also want to make sure I’m giving to my church or charities. Is it wiser to pull that money from the money I’d set aside to put away in savings, or from the money I’d set aside for non-necessary expenses?
God’s money story is simple. Everything is a gift from God and Christians are called to be good stewards of those gifts. This responsibility creates tension in most people as they make choices about how they will use God’s gifts.
In the example here, there are only two options in the budget where money is available for giving — savings and non-essentials. We recommend a shift in perspective that includes building an intentional giving plan into your budget. If you make your giving plans and goals first, it will increase alignment with God’s plan. It also forces you to look at the other elements of your money story differently. If you pay for your needs, put money in savings, spend on your wants, and then start looking at what is left to give, you may feel like you ‘don’t have enough’ to give the way you want. Planning for giving and being generous up front — along with planning for essential needs — will align your spending with your values and give you a more realistic view of what you have available to spend on your wants.
How can I get more disciplined at sticking to a budget once I’ve created it?
Sticking to a budget is hard for most people. At Thrivent, we believe one of the reasons it’s so hard is because people don’t really understand what’s going on under the surface when it comes to their relationship with money. There are a lot of influences — from the way you were raised to your spiritual beliefs and so much more — that affect the choices you make when it comes to money. Gaining understanding or making sure you “know your story” is an important part of getting to the root of why you’re having trouble sticking to your budget.
Another key to success is to review your budget regularly. Spreadsheets are a great tool, or you can start by using an app that can help you track your budget and look at your spending each week.
A few other things that make it hard for people to stick to a budget include:
- Taking on too much too fast. One reason people often fail at their goals is that they get way to ambitious and then give up. Start with small steps and build upon that success. Save just a little bit, celebrate that success and then add more. Cutting out every good thing in your life is a surefire way to make sure you don’t stick with a budget.
- Failing to plan for challenges. If you anticipate challenges, you’ll greatly increase your odds of success. Take a look at what will knock you off track before you start. It may mean proactively removing yourself from automated emails from retailers so that you aren’t tempted by that never-ending “best sale ever” … every week. Or it may mean phoning a friend when you’re struggling.
- Trying to do it on our own. When you make a public declaration of your goals and enlist the help of others, your odds of success will increase substantially. So, get your spouse or a friend involved and support each other. Being aligned and working together leads to greater discipline and results. And it’s more fun!