A little over a year ago, the penny dropped on the concept of “inflation.” For several years now, I’d been able to save a little money each month and the number in my savings account was slowly rising a few pennies a month. I’d had my money in my regular bank’s savings account and had considered that the “right” thing to do.
Then, I was walking in a park with J, and for reasons which are lost to time, he wound up explaining the following:
A cup of coffee that today costs one of my dollars will next year cost a dollar two. But I will still only have the same thing called one dollar. Meaning that conceptually, even if I save that dollar, I’ll only have 98cents where this year I have a whole dollar.
What this idea sent me into was a panic.
Because for more than five years, I’d diligently been siphoning off money every month into my savings account — but now realized that there was a hole in the bottom of that bucket called “inflation.”
No matter the fact that it was in a savings account (and yes, technically I was “saving”), that money was also leaking out a sieve with every moment it sat in a near-no-yield account.
I was appalled. I literally dropped his hand, stopped walking in the middle of the path, and was aghast. WHAT?! Wait, what?! Explain this again.
And he did. And I didn’t move. He eventually nudged me on as I felt the foundation of savings I’d been building crumple to sand beneath me.
If the price of everything goes up about 2% a year, but my dollar in the bank is not growing at that same rate, I am losing money. (sort of)
Nearly immediately, I researched savings accounts that could rival the rate of inflation and found Synchrony Bank and Marcus Savings, each of which now have savings rates of over 2%. The 2018 rate of inflation (CPI, in this case) was 1.9%, meaning by putting my money in those savings accounts, they ARE actually earning money, which is what I had thought my savings account was doing in the first place!
I had imagined that by putting my money in a savings account, that each month those little additions of a dollar here and a dollar there were EARNINGS. It turns out that, because they weren’t keeping up with the rate of inflation, they were not only NOT earnings, they were indicating a LOSS.
Forchrissake.
For years, I had felt self-esteem about saving every month. Which is great, and well and good, and I continue to think that it is important.
However, with the penny, nickel, DOLLAR drop that I had last year, I realized that all of that hard earned money was actually a drain.
So, I suppose this is a cautionary tale about ignorance of the financial system — because understand it or not, like it or not, want to be in the “system” or not, I am a part of it. And, I DO want to be in the system, because that can be where benefits are. If there are options for me to increase (or at least HOLD) my teeny weeny wealth while I SLEEP, then I should do everything I can do to that.
And while I also later made other choices that increase that yield, starting with moving my savings to a sturdier bucket was a start.
Yesterday morning, I ran into a coworker in the faculty lounge (basically, where we drop our lunch in the fridge and leave). She’s youngish, new this year, and somehow we got to talking about financial planning (I think we were talking about her having moved out on her own recently).
On Friday, I went to the San Anselmo library to find this book I’ve been itching for: The Opposite of Spoiled: Raising Kids Who Are Grounded, Generous, and Smart About Money. I’d taken a photo of the cover over 2 years ago when I was working in a school and they hosted a book fair. (In fact, I took many photos of the parenting section, as there’s little difference sometimes between parenting and teaching.) And, as I begin to gel my ideas and intention around a blog uniting parenting, finance, and spiritual principles, I wanted to get some inspiration.
When, 7 years ago August, I sat across from two folks who volunteered to help me look at my finances, I went as a ball of anxiety, misery, and defensiveness. (I’m sure that was great for them!)
Yesterday afternoon, I had the first call of my new Goals Group. Like the last one I participated in, we’ll have a group phone call wherein we’ll walk through a series of weekly assigned questions—about our vision for our lives, our goals, a specific goal, what blocks us from this goal, how we can accept help to overcome these blocks, and how we will maintain these (generally spiritual) connections to ensure we continue actions toward fulfilling our vision.
At the start of the year, I participated in a weekend-long “intention setting” meditation retreat with a few friends. One of the major themes of the work was about sussing out our own optimal balance between our masculine and feminine aspects (according the “traditional” meanings of such, as in yin/yang, active/receptive, etc.). Through some of this work, I got to see that my “masculine” or active-in-the-world self was much less developed than it needed to be if I were going to step into fuller power in my life.
Owning Voice 