Transcript: Savings 101 for the Self-Employed Creative, with Eowyn Levene

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This is Episode 10, Savings 101 for the Self Employed Creative

Welcome to Creatives Do Money. Each week we explore the topics of everyday money management, solo business ownership, and how we’re fueling our creative futures. I’m your host Eowyn Levene, money mentor, longtime self employed massage therapist and watermelon enthusiast, and I’m on a mission to help you build the lasting financial stability that frees you up to do your creative work without hustling anxiously for the next dollar. This episode is sponsored by my Plum Tree Community, the online home for creative solopreneurs who are seeking companionship, accountability and guidance in building financial stability for themselves. To join us, head to, and click Community in the header menu.

Before I get into the episode proper today, and what to just pause and celebrate the double digits. So I and all of my wonderful community that support me in this process have gotten to Episode 10. So there’s such a thing as podcrashing or podfading, I believe that Laura Belgray is to be credited for one of those terms, although I don’t know which one. But it’s a common thing that someone decides to start a podcast and they get to Episode 4,5,6. And the amount of work, the investment, the commitment just gets to be too much. Because it’s really common that those of us who start podcasts don’t really realize what goes into it. So I’m patting myself on the back publicly here and thanking you for listening. Not only are we at episode ten, but we have over 500 downloads and listens for the podcast, which makes me excited for the potential of the listeners who are creatives looking to build financial stability and financial freedom for themselves. I’m rooting for you. I’m rooting for all of us. And my greatest hope is that this is useful and helpful.

Today, I’m beginning what’s going to be a three part series. If you think about our financial life, and our personal finance journey, there’s generating money, managing money, and then investing money. Generating money is not the area that I focus on so much, ever so important, not dismissing that, but my focus is on helping you manage your money better.

So the three part series is going to begin with an introduction to savings and my approach to helping you really maximize how savings function in your life and make the most progress, you can then same thing with debt and debt payoff. We’re going to talk about that in an episode. And then the last episode is going to be a brief introduction. So this is my laypersons introduction, not a financial planner or advisor. But just a basic introduction to how I understand investing when you’re self employed as a creative.

So we’re starting today with Savings 101. And I want to start here because savings, alongside learning how to budget effectively, is the superpower that is going to allow you to build that financial stability that I talked about, and to pay off your debt and to invest money in whatever way fits your life vision. And not only is savings the beginning, but savings is especially challenging. I’m sure you don’t need to tell you that.

But in case you feel like you’re alone in struggling with savings, as of 2016 46% of Americans wouldn’t be able to come up with $400 should they need to in case of emergency. If you raise that dollar amount to $1,000 it’s even more people. So it’s a reality that it’s hard to save and and if you’ve been beating yourself up about not saving more or struggling to make your savings practice consistent, then I just want to let you know that it’s normal. It’s a skill you can develop. And we’re starting with that now.

I think it’s worth beginning with why we want to save. In my mind the primary reason is to stay out of debt. If you’re using credit cards regularly without paying off your balance in full each month, then you know that the struggle is real and the only way to break that cycle have grown credit card debt, paying it down some growing it some more and paying it down is to build a variety of different kinds of savings for yourself. And we’re going to walk through the primary three kinds of savings that you’re going to want to have to build in that stability for yourself when your income varies. So first reason learning to save effectively is so important is to stay out of debt.

And then ultimately, it’s about independence. It’s about stability, it’s being able to predict your financial life despite having variable income. And I know for myself, it greatly reduces anxiety. And I think I get most excited about I’ve talked about this before, and it’s been the focus of conversations, is generosity. When you’ve built that stability for yourself, when you have savings built up, you have more freedom to give and to invest in the Patreon accounts of creatives who you admire and want to support to give to causes that are important for you. So savings is the foundation of all of that.

I also want to just clarify the difference between saving and investing. When I first started getting into personal finance, I didn’t really understand the difference, it wasn’t clear to me. savings is when you have easily accessible cash in your checking accounts. I know that sounds counterintuitive. But yes, we can have savings in our checking account, whether in your checking account, a savings accounts, or a certificate of deposit or cash notes in a lockbox of some kind.

Investing on the other hand is where you take your cash, and you put it in a certain kind of account, such as an IRA or a 401k. From there, you invest your cash in the market, effectively giving it away and trusting that you will get that cash back along with interest earned in the form of dividends. But when you invest, you really are giving your cash up to the markets. And it’s no longer easily accessible or under your control in the same way. This makes it sound like I’m anti investing I’m absolutely not. But it’s important to have money in both places. So to have money in form of savings that you can pull from as you need to because there are ups and downs in life. And then investing is where you take a risk with your money. And that allows you to grow it in a way that you can’t when it’s just sitting in a savings account. So at the moment, even good savings accounts are getting at the most 0.5% interest. And on average over the decades, you can expect to get between 7-10% return on investing in the market. So that’s just a little moment to distinguish between the two. Today, I’m just talking about the processes and the kinds of vehicles that we might use to put cash aside.

So the biggest principle of saving is to pay yourself first. This means anytime money arrives in your bank account, you sit down, you look at your priorities, you look at your upcoming expenses. And from there, you decide how much you’re going to put into different kinds of savings, how much you can put towards debt, and how much will be used on expenses. But that process of before spending the money on expenses, deciding what’s going to go towards debt and savings that is paying yourself first side note about automation.

So a lot of advice out there about learning how to save is to start small, which we’ll talk about. I’m down with that. But also to automate. I definitely differ from many personal finance experts when it comes to automation. There is so much out there telling you to use apps and different programs to just forget about your money and let it grow in your sleep. But I think if you’re self employed and your income is variable, and if your money situation has been chaotic, and you’ve been struggling to make progress, if all of those things are the case, which they were for me, then you will make the most progress by choosing not to automate anything at the beginning. You can build habits for yourself and things that you do on the daily and the weekly which is I suppose a form of automation. But, but even when it comes to savings, where so often the advice is just set it and forget it, I recommend beginning not doing that. If you consistently have thousands of dollars arriving in your bank account, then yes, automation may well make sense. But if that’s not the case, if sometimes you get 600 coming in your account, and sometimes you get 6000 and you’re going to want to have a more conscious process in place. So when you’re sitting down to decide what you’re going to do with however much has arrived in the bank account, the most important thing is that you know your numbers, and that you use a budgeting process. So this episode isn’t going to be on how to budgets more just that I bring this up to share that in order to maximize savings. budgeting is really key. And even if you’ve been making progress and putting some money aside, when you start to budget and really use those accurate numbers, and make it an intentional process that you do regularly, your savings are going to grow so much more than you thought possible.

So there are three pillars to savings. And those are the three different kinds of savings that you want to have in place for yourself. The most commonly talked about is the emergency fund or the rainy day fund or the what if or the Oh Shit! or the I don’t know what, whatever you want to call it, whatever motivates you, that one most people are aware of and know they quote unquote, should have.

But I like to start with two other different kinds of savings, which in my experience are the foundation upon which real progress towards emergency savings is made. The first is the checking account buffer. So most of us have this without realizing it. But if you’re going to use a zero based budget, which I recommend, you’re going to want to build in a checking account buffer for yourself. So as the name implies, when you have a zero based budgets, you make a plan for every dollar that arrives in your accounts. And often that means every dollar is leaving your account to a different account or to a cash withdrawal or to debt payoff. So you want to have a certain dollar amount just sitting in your account that remains after you’ve budgeted all your income. So let’s say $600 is deposited into your account in the course of a week, you would have an additional three or $500 just sitting there. So that when you budget, you take that $600, you send 300 of it to your spending account 200 to debt payoff, and 100 to savings. And that leaves that 300 or $500 checking account buffer sitting there still. So the checking account buffer is there for you. When you have an unexpected expense, you forget a relative’s birthday and realize you want to send them something and instead of using your credit card you have the cash there in your bank account available to use. Also, if a bill such as a utility is higher than you budgeted and expected, then you have that extra 10 or $15 just sitting there to cover that bill as needed. And you don’t get hit with an overdraft fee. So that’s the function of the checking account buffer and you want one in your personal checking account. And also in your business checking account. The account buffer really allows you to manage your finances on a cash basis without feeling any anxiety and without getting further into credit card debt.

The next pillar of savings and kind of savings is the sinking fund or the bucket fund. So the alternate name is just some folks don’t like the name sinking fund, which I understand it sounds like your cash is disappearing and quicksand or something like that. I’m going to use the term sinking fund because that’s what I’ve been using for years. Essentially, a sinking fund is is a pool of money that you have set aside with the intention of spending it sometime in the future. So the ones you hear about most commonly is saving for getting married or saving for a house down payment or maybe for a new car. But you can create sinking funds for everything in your life. You can create a sinking funds for Christmas expenses for a vacation, for birthdays that are coming up for equipment that you want to purchase for your business. I have a fund that specifically building up money that I want to use when I need a new computer or a new cell phone. So the sinking fund builds on what you’ve started with the checking account buffer, it creates different pools of cash that you can pull from when you have a larger expense that usually would go onto a credit card. One of the many things that saved our little families behind during the vagaries of 2020 is having had $600 sitting in account for unexpected vet expenses, our dear cat Olive, she has had so many health problems and managed to have a couple of many health crises while the sirens were blaring here in New York City. So we rushed in an Uber downtown, downtown to the emergency vet and we had one less thing to worry about because we knew that we had cash to pay the bill with which is exactly what we did. And since then we’ve built it back up again.

The last pillar of savings which I’ve already mentioned is the emergency fund. An emergency fund gives you stability and helps you stay out of debt in the long run. It’s a form of self created insurance really. It can feel a little frustrating to have a lot of dollars sitting around, essentially losing value because of inflation. But it’s so necessary and will bring peace of mind. And that often underlines stability.

A question I often get is where to start? And how do I know how much to save for an emergency fund, you’re gonna see different advice out there, I think there’s at least three stages to building up an emergency fund, I’d recommend starting with $1000-$2,000. And just focusing on getting that set aside. Once you’ve done that, then you want to calculate what your minimum expenses are, you want to look at your expenses over the course of you know, two or four months, assess all those expenses, remove any that you can live without, like Netflix or eating out, what are all those things that you just won’t be doing if life gets really hard, total up those essential expenses that you incur over the course of a month. And that’s your minimum monthly expenses. So let’s say it’s $2800. That’s your month of emergency savings baseline. So once you have that $1000-$2,000 set aside, then your next goal is to put aside three to six months of expenses, start with three and move on from there.

And then the ultimate goal, in my opinion, for someone who is self employed, working for themselves full time, is to build your way up to nine to 12 months of expenses. This may sound outlandish to you, and something that you will never achieve. But I promise you, you can and you’ll work your way to it over yours. Because you might have built up three or five months worth of expenses, you might go through a difficult period and spend a bunch of that and then you need to build up again. So it happens over the course of years, and you make progress over time. So those are our three pillars of expenses, the checking account buffer, the sinking fund, and the emergency fund.

So it could be as I’m talking about building a savings up over years that you feel some defeat and some fatigue, all of which I so understand. One of the things I want to touch on today is how do you maintain motivation as you build up savings over time. And these are all the same things that you use to maintain motivation in general over your financial journey.

The first thing I would say is a little bit like laid out for the emergency savings, you want to break down your goals. Let’s say you’re saving up for a new car. And your goal is 7500. To buy a really great used Honda of some kind, maybe you’ll break that down into three pieces or four pieces. And you’ll focus just on saving up the first 2500 and then the next 2500 until you get to that 70 $500 goal. And when you reach each sub goal, each way marker, if you like, you stop and you celebrate, you give yourself a small reward. You tell people about it, you feel excited about it. And you pat yourself on the back for having done a really great job moments to say, Hey, I did this thing. And I’m so far along the way. And giving yourself some kind of a reward really helps cement the activity itself as a valuable one to your brain.

In those moments of celebration, you also want to make sure you genuinely feel the abundance. And instead of feeling the lack of not having reached your goal yet, you really say hey, I have this amount of money sitting in the bank. Here’s what I could do with it. Here’s how I could help myself, here’s how I could help others should I need to and you feel that you’ve taken care of yourself and you’ve planned ahead and you’re being an adult. It’s also worthwhile to focus on the process as opposed to the goals. So the sound conflicting, but they’re not. So when you celebrate you celebrate your waymarker. But you also celebrate the fact that you have been consistently engaging in savings behavior for this many months or this many years. And that’s part of what you thank yourself for.

Another way to keep yourself motivated is use visual trackers. So if you follow me on Instagram or you’re part of the community, you already know I have a whole bunch of visual trackers that feature leaves, because yes, I’m a nature lover. But sitting down with some kind of a visual tracker, like some version of coloring in a pattern or a picture and having different segments that indicate different way markers on your savings journey. So sitting down and coloring in something on one of those trackers is a form of reward itself. You get a little hit of dopamine, it helps you see your progress visually, which makes it even more real than looking at a bank account balance often. And it’s also just a way of making the process fun. Coloring is known to be relaxing. So hey, that’s a bonus. Yeah, so I’m a fan of visual trackers. And if you haven’t tried it already do.

My last tip for maintaining motivation is community, having people around you who are also working really hard to put savings aside who are taking it seriously and putting an effort in talking to them about your money journey, and sharing wins and asking for help. All of these things are available in the Plum Tree Community, which you’ve heard me talk about already. If so, yeah, find yourself a community of people similar to you and similar life circumstances, who are aiming for some version of long term savings and financial stability. It’ll help keep your spirits up when you’re feeling discouraged. And you’ll be inspired by what other people are doing. Also, although side note, remember not to get stuck in comparison.

We’re going to wrap the episode up with some just general tips and ideas of how to be most effective with savings. But before we do that, I want to talk briefly about how to free up more money to go towards savings. So often folks feel like they haven’t made progress with saving money, because there just isn’t enough around to save. And I challenge you to just look at your life as a whole and see if there isn’t something else that you could be doing.

The first area to look at is high interest debt. So anything with an interest rate higher than, you know, seven or 8% is debt that you want to really prioritize paying off. Because when that debt is gone, you’ll no longer have that minimum monthly payment. And the addition of the interest added to your principal, paying off high interest debts will really jumpstart your savings. So you’ll go through an assessment process over the months and years, figuring out how to allocate money towards debt versus savings. And that’s about how much income is coming in. That’s about your life circumstances. But in principle, focusing on getting yourself out of debt will free up money to put towards savings. We’ll talk more about that in my next solo episode when we talk about debt.

The next thing to do to free up more money is to cut spending, which never sounds fun. But you may find that hundreds and hundreds of dollars are available to you when you didn’t really realize they were some of the most impactful areas to look at in terms of cutting spending.

One is entertainment. There is so much entertainment available for free, there just is it’s a fact. And you might not cut these expenses out forever. But in the short term cutting subscriptions, especially duplicate subscriptions, like having Netflix and Hulu, or magazine subscriptions, purchasing books that are new, going to live events, okay, that’s not so much a feature anymore. But purchasing events, we have online events now, all of those things can be caught and you can still entertain yourself, I promise.

The next area to look at is food. Restaurant spending is huge. And is life changing to let go of, and then groceries. So really getting clear on how much you’re spending whether you really need to be spending for the expensive cereal or the fancy cheese. This is an area to really take a look at. If you don’t like cooking at home, there are so many resources available for free. teaching yourself how to cook, learning how to meal prep, learning how to cook food that’s nutritious and not too expensive. You also can just ask me, I have tons of experience cooking at home in this way. I’d love to share more about that.

Another area to touch on is personal care. So this looks like hair care, haircuts, skin care, money parties, if you go in for that kind of thing. All of these things for six months, a year, two years, you can do without you really can.

And then the last area that can be a real doozy is education, purchasing courses, buying books, I don’t question the importance or the value of these things. But if you’re really looking to make up for some lost time, and to jumpstart your savings and to really build some momentum for yourself, cutting spending in these areas will create progress that you can’t imagine until you actually do it.

Okay, so we’ve reached the general tips and ideas section. These are just going to be some suggestions or some ideas to help you on your savings journey.

The first is to start really small, putting $5 a week away for savings and really doing it every week is more powerful than putting $100 away this week, and not having anything to put into savings again for a couple months. So start small and make it regular. If you’re feeling overwhelmed by whatever dollar amount you have in mind, just divide that by five and start there.

Next is just don’t compare yourself to others. This is always a recipe for disaster. So I know this isn’t news to you, but consider it your friendly reminder, your journey is yours. And if you listened to Episode Two about thought work, an extension of those principles is that everybody experiences a wide variety of things in their life. And happiness isn’t about your circumstances. How happy and content you are is dependent on how you think about things. So don’t assume that because others are further ahead that they’re happier and more content with their lives. Just stay in your own lane, work on improving your own life.

Next tip is to use windfalls to jump ahead. The most common example would be a tax refund. But often if you’re self employed, you don’t get refunds. But there might be other windfalls. Maybe they are gifts from family members. Or maybe you get a large payment from a client at a time when other income is pretty steady as well use those moments to put that $1000-$2000 aside for your starter emergency fund, or to fully fund a couple of your sinking funds so you can put more to the longer term sinking fund each week when you budget.

The next tip is don’t wait until you’ve paid off all your high interest debt. Despite what I said previously, before you start saving, it can be good to build up the savings habit with those small amounts, even when you’re putting most of your effort and attention into paying off high interest debt.

My next tip is to reduce spending temptation. Most often this looks like unsubscribing from brand newsletters, and unfollowing them on social media, create a document for yourself. And anytime you see something that looks really wonderful that you want to purchase in the future, copy a link to whatever web address, put it in that document, tell yourself you’ll revisit in the future.

This is closely related to another tip, which is create a 24 hour spending rule for yourself. This looks like for any non essential spending. And this is non essential spending that isn’t covered by whatever fun budget you have as part of your planning process for your money. So if you put aside $20 or $30 a week for yourself, when you budget to just spend on whatever, I’m not talking about expenses that come from that. So for other non essential spending, tell yourself that you’ll sleep on it and wait 24 hours before you decide whether or not to buy that thing. check in with yourself again after that 24 hours has passed and see if you really want it and if you can really afford it.

The penultimate tip is to keep savings out of sight. That might be an envelope in a lockbox that you don’t visit very often, it might be making sure that your long term savings are in completely different financial institutions. So in order to access them, you know, there’s going to be a two business day delay before a transfer might reach your spending account. Anything to decrease the reminder that there’s cash there available for you to spend, it’s a little bit like using your phone, if you put it in an out of the way place, you’re much less likely to compulsively check social media on your phone.

The last tip I’m going to leave you with as sort of a game or a challenge, which is anytime you opt not to spend money -so maybe it’s to… maybe it’s that you’re at the grocery store and you see something super tasty that you want to put in your basket, but it’s not on the list, and you choose not to purchase that thing. Maybe it was $15. Once you’ve checked out of the grocery store, you take a moment and you transfer $15 from your checking account into one of those savings accounts. So that money that you would have spent has now gone to savings. There was a period where I was doing this for you know, $2 coffees, or $4 almond croissants when I was trying really hard not to spend frivolously anymore in a way that I had previously, I would make these transfers each time. So anytime I resisted spending something that wasn’t in alignment with my intentions, I rewarded myself by increasing my savings and it worked really well.

Okay, we’re gonna wrap it up there today. I really hope something from this episode has been helpful has sparked some ideas for you, or maybe will change how you do things. If that’s the case, let me know one way or another. And if that community support thing was meaningful, come find me in the Plum Tree Community via

Special thanks to Michael P. Atkinson for help with producing this episode, and for composing the beautiful music that I use. If you enjoyed listening today, please take a moment and subscribe. It makes a real difference in the life of this little podcast and leaving a positive review makes an even greater difference. In the meantime, wishing you all money, business and life success, whatever that means to you.