money by primusboy


									Making Money Work

                                                        d     Dyna
                                        ave -Spen S n e l l ’ 8 6
                                   The S a r y a n n Te a l e
                                            By M

Around my house                  come naturally—and that’s          money for home repairs,         have to work more or spend
are urgent notes I’ve            true for most of us, says          and trying to support           less—or both.”
written to myself                money coach Olivia Mellan          her two young children.
describing budget woes,          ’68. But setting realistic         She says it’s “extremely        Setting Goals
admonishing my behaviors,        goals, creating an accurate        discomfiting to see my bank     Jennifer K. Dick ’93 wants
and suggesting reform:           budget, and striking a             book hemorrhaging.” Like        to buy property. She lives
                                 balance between discipline         Utzinger, Smith concedes,       “on less money than most
                                                                                                    everyone I know,” but the
  Spending $500/                 and deprivation are steps in       she’s not sure she can afford
                                                                                                    savings process is slow
  month on food;                 getting there.                     the way she lives. “I feel
                                                                                                    despite a contract teaching
  budget is $300!                Savings Challenges
                                                                    trapped in my house …
                                                                                                    English and American
  Figure out how                                                    I’m terrified that I should
                                 Saving even a few dollars at                                       literature in Paris. Still,
  to cut back!                                                      [instead] be in a crappy
                                 a time may seem impossible         little apartment with a         what she sets aside is adding
                                 if you’re living paycheck to       roommate, to cut costs,” she    up, and soon she hopes to
In my attempts to get a          paycheck. When Lisa M.             says. “I’m used to buying       invest her savings in home
financial grip, I’ve tried       Utzinger ’02 started work          what I want at Target when      ownership. Beth Regish
the cash-only method.            at a nonprofit in Boston,          I want, but I have a feeling    Smith ’92 too is saving for a
(Attached to my credit           she supplemented her               I should be buying ramen        down payment on a home.
card is a ratty Post-it note     entry-level income with odd        and eating at home more         While Boston-area housing
with the command No! It’s        jobs, but still couldn’t save.     than I do.”                     prices are “out of sight,” she
ratty from all the times I’ve    A little self-examination,                                         and her husband are saving
removed it to use the card,      though, has yielded                The first step toward saving    what they can and seeing
and then stuck it back on.)      insights: “A city lifestyle is     money is understanding          progress.
I toss change into a little      expensive. I spend way too         your short-, medium-,
                                                                    and long-term goals, says       Utzinger’s goal is to save
cast-iron crock several times    much on clothes, eating                                            $30,000 over the next five
a week (yield: $45 annually,     out, and entertainment.”           Mellan. “Until you know
                                                                    what you’re saving for—a        years, to make a down
used for groceries). I stash     After graduation, Sabra                                            payment on a house.
a modest sum ($150) from                                            vacation, your kids’ college
                                 L. Smith ’81 got in the            educations, something           Toward that end, she
my paycheck in a savings         habit of stashing away a                                           has $250 automatically
account, but there’s always                                         you want to buy—you
                                 bit of her paycheck each           can’t get motivated about       deducted from each
a surprise expense (new          month. “I feel better if I’m                                       paycheck. But “things
brakes) or one I forgot to                                          saving.” She has clients
                                 sitting on a pot of cash in        keep a “spending diary” of      inevitably come up—car
budget for (oil delivery), or    case of an emergency,” she                                         repairs, Christmas
some sudden, dire need (a                                           where their money’s going
                                 says. Now divorced, the            and how they feel about it.     shopping, trips—so I’ve
hammock).                        once stay-at-home mom is                                           had to dig into my savings,”
                                                                    “Then they can think about
Being savvy about the save-      paying grad-school tuition         what they need to change        she says.
spend dynamic is no small        as she prepares to reenter         to come up with more            “Balancing competing
task, especially if it doesn’t   the workforce, shelling out        money. It’s simple: You         priorities—home, school

                                                                  Mou n t Ho lyo k e Al u m na e Qua r t e r ly      Spring 2007     25
                                                                          “... things inevitably
                                                                           come up–car repairs,
                                                                           Christmas shopping,
                                                                           trips–so I’ve had to
                                                                           dig into my savings...”
                                                                           – Lisa M. Utzinger ’02

                                                      debt, emergency funds”—is a           Approaching a bank for
                                                      challenge for Beth Smith. That,       answers can be daunting,
                                                      and having the patience and           especially if you sense you’re
                     Spending $400/                   discipline to “plan for long-term     getting a sales pitch rather than
                     month on clothes                 goals at the expense of short-term    helpful information. Dick says
                                                                                                                                P h o t o b y Pau l S c h n a i t tac h e r

                     and entertainment!               ones.” Women, she adds, “need to      she taps friends, family, and
                     These are not even               be more vigilant about saving for     the Web for info—as well as
                     in the budget!                   retirement. We need to plan for       bankers.
                                                      ourselves, not just our families.”
                     Do without!                                                            Expert Advice
                                                      Many of us just want to               “Saving and spending are
                                                      know what our savings—and             like opposite ends of a tilted
                                                      investing—options are, and to         pencil,” says Dam T. Nguyen
                                                      receive useful, unbiased advice       ’02, a financial adviser setting
                                                      from a trustworthy source.            up her own firm. “If one goes

26   w w w. a l u m n a e . m t h o lyo k e . e d u
                           up, the other goes down. To            to an investment account             monetary domain requires
                           get a handle on saving for             from your checking account.          effort. Mellan suggests
                           any purpose—retirement,                It’s easier than trying to           keeping a picture of what
                           a home, a wedding—you                  make yourself sporadically           you’re saving for in your
                           need a clear understanding of          save.”                               wallet, as a reminder.
                           where the money’s going.”              Inspiring people to take             Expect to fall off the
                           Tiffany Ross ’93, a                    charge of their finances is          wagon now and then. “As
                           financial representative               part of Olivia Mellan’s job,         a nation we are very bad
                           for Northwestern Mutual                but she encourages self-             at delaying gratification
                           Financial Network, says                compassion while learning            for deeper fulfillment,” she
                           “it’s critical to ‘pay yourself        how to put money aside.              says. “We don’t seem to
                           first.’” Consider your savings         “You shouldn’t save so much          understand the value of it.
                           a “bill” you’re responsible for        that you feel so constrained         But getting better at it can
                           each month, she advises. “Pay          and then go out and have a           be a tremendous boost to
                           it just like you’d pay the rent,       binge,” she says.                    people’s self-esteem.”
                           mortgage, or cable bill.”              “Also, some people say if you        As someone who has paid
                           “The best way to save                  have credit-card debt, you           down her credit-card debt
                           is through automatic                   shouldn’t save anything, you         from $35,000 to $5,000,
                           deduction via payroll or               should just pay it off. But          is now making monthly
                           from your bank account,”               many of us in the money              payments to a savings
                           says Camille M. Gagliardi              field don’t believe that,”           account, and has recently
                           ’90, a certified financial             Mellan adds. “We think it’s          managed to satisfy a couple
                           planner® with Ameriprise               psychologically important            of decades-old yearnings
                           Financial Services. Sign up            for people to start saving           (drum set and pickup truck),
                           for “an employer-sponsored             something, even if it’s a            I can attest to that. T
                           plan (such as 401(k), 403(b),          teeny bit. It helps them see
                           or 457), where you receive a           that they can save.”                 Maryann Teale Snell ’86 is a
                           match.” If that’s not available,                                            writer and editor in Saratoga
                                                                  Any way you look at it,              Springs, New York.
                           set up a monthly [payment]             being master of your

                                                                                  10 Tips from the Trenches

1. Redefine “emergency.” Consider                5. Be real. Buying something on sale          9. Split your raises. When you get
your savings account off-limits except in a      doesn’t mean you’ve saved—you’ve still        a raise, put at least half of it in your
true emergency (not that the boots you’ve        spent money.                                  401(k). You won’t miss that money
lusted after are on sale, or that you bought                                                   and you’ll still see an increase in your
                                                 6. Live modestly. Even if you can
too many mai tais on vacation and the                                                          paycheck.
                                                 afford to drive a BMW, join a fancy gym,
credit-card bill has now arrived).               and go to an expensive hair salon, that       10. Keep your eyes on the prize.
2. Set spending priorities. Forgo                doesn’t mean you should.                      Save for something specific—a house,
the Starbucks latte and drink free office                                                      a wedding, grad school, a new car, a
                                                 7. Be binge-free. When you see
coffee (or, if coffee is your thing, have your                                                 trip to Europe. It helps to visualize a
                                                 something you want but it’s at the limits
Starbucks every morning, but bring lunch).                                                     goal.
                                                 of your budget, think hard: will you really
3. Keep your mitts off. Put a small              wear it, use it, value it? Why or how         A tip of the hat to Jennifer Dick ’93,
amount in an account that can’t be touched       often?                                        Sabra Smith ’81, and Lisa Utzinger ’02
for several years. It will earn interest, and                                                  for their advice.
                                                 8. Nip that paycheck. Get a savings
you won’t empty the account when things
                                                 account and have money automatically
get tight around holiday or tax times.                                                         Web Extra: There’s more “Making
                                                 transferred to it every pay period.
4. Live within your means. If you can’t                                                        Money Work” information at
afford that ski trip, don’t take it.                                                 

                                                                   Mou n t Ho lyo k e Al u m na e Qua r t e r ly             Spring 2007   27

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