Subtitles section Play video Print subtitles (gentle music) - Hi, I'm Melissa Bell publisher of Vox Media. Welcome to Money Talks, Home Habits, powered by Bank of America. This is a virtual explainer event centered around the new meaning of home and how its purpose has suddenly shifted. Today, we'll be focusing on saving when home and how to manage and prioritize savings during such an uncertain time. People spending more time at home means changing spending and saving habits, but what's the proper way to save? And what are we saving for? For some, the transition to spending more time at home comes with automatic savings. The U.S. personal savings rate jumped to 33% in April, the highest ever recorded. Still in a June, 2020 survey, 23% of Americans reported that a lack of emergency savings was their biggest financial regret. So how can people put any new found savings to good while still at home? An emergency fund should be the foundation of any savings plan. Emergency funds should cover six to nine months of regular household expenses. Saving, however, may not come as easily for those whose incomes have been impacted. That's why it's even more important to set aside time to go through your monthly expenses and identify any that can be reduced, whether you've found unexpected savings in recent months, or have had to cut back, take the time to prepare for the future by reevaluating your savings priorities, today. I'm joined by Tonya Rapley, a financial educator and founder of My Fab Finance. Tanya, it's great to have you here today. - It's wonderful to be here. - One question that is really top of mind for me, is centered around the folks who have been impacted in a disproportionate way because of the coronavirus. What financial advice do you have for them? - Yeah, Melissa thank you for asking that question because as a financial educator and working in this field, I have seen and I've worked with people who even before Corona virus were financially vulnerable and what we are finding are people, particularly people of color and people who might be deemed essential workers who are working in, whether it is required fields, or essential fields such as in the grocery store, farming, et cetera, things that really help ensure that our economy stays voting and our needs are met, are vulnerable as well and they don't often have those protections, but they haven't had them. And that's one of the things that I'm hoping that this kind of starts a conversation of what it looks like to bring people up to, equally before we even have something like the Coronavirus start. And so when working with clients and helping people kind of navigate, okay, what do I do? I'm already financially vulnerable. What can I do to kind of alleviate some of this? If anything, the first thing is we gotta comb through those expenses. What was helping you or what worked before coronavirus might not work now. So what you could afford then you might be able to afford now because maybe your hours have been cut back, or maybe now you have additional health cost, or maybe you're responsible for your childcare and so forth. So you aren't able to go into your office or you're not able to do things you used to do to bring in income. And so we need to cut back on those expenses and we can do that by looking at our budget, looking at what's going out of our household every single month. And then cutting back on the things that aren't necessary. Like during this time we really want to be focusing on those essential items. The next thing is I would suggest that people take advantage of help or assistance that's available to them. I know that sometimes we might not want to or feel like, I got this, but there's any time in history where there's more help available. It is right now. So there are resources available. I know here in Los Angeles where I live, they have a rental assistance program. They're rolling out when everything first started happening, they were forgiving student loan payments for a certain amount of time and mortgage payments for a certain amount of time. A lot of utility companies have been understanding and are working with individuals or working with their customers to look to see what help is available on that side. But then also, if you need any social services or anything of that nature, find out what you need to do to make sure that you're getting groceries and so forth, look into, grocery co-ops or food pantries nearby and so forth so that you can kind of make up some of that difference in what you were spending in groceries and maybe you can reallocate the money from your budget to something else. And then the last thing I really want people to do is really think about stabilizing and what it looks like to stabilize your financial foundation, because that's important. And I know that people might be in crisis mode. It's like, I just can't figure out how to get to XYZ point. You're not alone. There's a lot of people who are trying to figure out how to get to XYZ point, especially when the point has been changed as it has. I don't think any of us expected for 2020 to look this way and to have this experience this year. So alter your plans. It's okay to alter your plans and change your expectations of what was expected for you this year. And just realize that you're not alone. I think that, especially for people who might feel like they are vulnerable or feel even more vulnerable, you're not alone. There are services there to help you and we'll get through this. - Thanks, Tanya. I think that's a great point. One thing that I think you mentioned at the very beginning is how a lot of these issues predate coronavirus, and this moment is perhaps exacerbating them, but also revealing them. Now I would love to bring on some guests who are excited to ask you some questions. - Craig, welcome to the today's discussion. I'm looking forward to what you and Tanya have to talk about. - Hi Tanya, my question is like a lot of other people I've been saving more money than usual in the past few months. I'm not going out shopping as much. I'm not eating out as much and spending money socializing. And I'm wondering if for those reasons it's a good time to spend a little bit more money than I might usually on large purchases, despite the fact that I still have debt that I'm working towards paying off. And I'm wondering if there's a balance of how much more money I can spend on myself and so into paying off my debt. - Oh, that's well, that's good news that you are saving more money. I think that as we've spoken to others and when I'm talking to other clients I work with, that's been a positive byproducts of this entire experience, but what kind of large purchases are we thinking? Like what do you have in mind? - I think there's kind of two categories. One is just splurging a little bit more on clothes. For example, every other month usually I'll make an online purchase and maybe I'm more prone now to spend a hundred dollars more than I would have before. And then the other side is just for example, I'm moving apartments next month. And I have my eye on a few furniture pieces that probably I wouldn't have considered before, but now I'm like, okay, well I haven't spent so much money the last few months. Maybe it's okay to buy these now. - Okay, all right. So furniture and additional clothes. Okay, furniture makes sense to me, but clothes I'm like, where are you going? Like, take me with you. Where are you going? 'Cause I know I'm not going to any places, but so just think about this, so there's needs and there are wants, right? So when it comes down to our needs, that's shelter, that's food, that's clothing and so forth. But then there's once and these things probably do fall into the categories of wants. You have an apartment, you're thinking about how am I gonna furnish that apartment? And we have clothes like, well maybe I want a few different pieces of clothing. So these are wants and there's nothing wrong with wants. But when we're thinking about moving into priority, making wants a priority, then we have to look at how are we doing financially? So dialing back to, okay, moving into this apartment, do you have enough money set aside just in case to cover that rent, because what we don't want to happen is that you spend quite a bit of money on furnishing this apartment. We haven't put money aside and saving for this apartment. And so something happens and now we've got to sell the furniture. We have to move out because we haven't been prioritizing putting money aside to save for that. So there's nothing wrong with spending money on your wants and there's nothing wrong with making it a priority. As long as you have already previously prioritize creating that emergency fund and that savings cushion, so that things were to happen, you'd still be able to pay for those basic needs. How are you doing on that? Have you been able to save, to create that cushion? - I would say I have that cushion, but like everyone else, it doesn't hurt to always save more money. I always want to see that number go up. So I guess I'm looking for what that balance could look like. - Yeah, definitely. And are you currently working? - I am and I'm very lucky to have job security for the near future at least I see my income continue to come in throughout the coronavirus. - Okay, well that is good news. And so you're in a pretty good position. The thing with furniture, it doesn't mean that you're gonna have to buy the most expensive furniture in the store, right. It means that we're gonna shop around for a good deal and make sure we're getting the best deal. And so maybe there's still a way to save on that and still put money aside in savings. It doesn't mean we're gonna blow everything out the water. So keep that in mind, as you're looking at your wants and so forth. I think it is, there's this theory, whereas in like certain major life experiences or purchases lead to more expenses such as moving into apartment and moving into a specific side of town, now you feel like you have to have certain things in that apartment or a certain lifestyle or reflected lifestyle to participate in living on that side of town or maybe it's certain clothes and certain wardrobe.