M is for Money

FNBO Direct is my favorite online bank and the one where I choose to keep most of my money. To encourage everyone to start saving they recently ran the Pay Yourself First Challenge, a six month long savings competition. Out of thousands of applicants, five finalists were chosen to compete - saver to saver. As an incentive, FNBO Direct matched the competitor’s savings dollar for dollar and threw in a vacation for the winner. Financial columnist Liz Pulliam Weston reigned as expert in residence, offering advice and guidance for the finalists. Each competitor had their own goals they were working towards, like a new house or a new baby. Challenge winner Kristen has a selfless plan, to pay for nursing school and establish a clinic to serve the poor of the Dominican Republic. I had the opportunity to ask Kristen a few questions about the Challenge and her plans for the future.

Kristen,

First, congratulations on reaching your savings goals and winning FNBO’s Pay Yourself First Challenge. Your dream of helping the impoverished people of the Dominican Republic is admirable and I wish you continued success. I have a few questions for you about savings, goals and participating in the challenge.

1. A competition is a great way to motivate yourself. Do you think you would have achieved your savings goal without the added incentive of the PYF Challenge?

With our own personal approach to savings, yes, but the added bonus of matched savings (and the possible grand prize $) really got us moving to explore creative ways of earned extra income on the side. I think our savings lifestyle grew a little during the challenge, but the challenge really encouraged us to learn new ways to bring in the alternative revenues.

2. How has participating in the challenge changed your outlook on earning and saving money?

Since we will be returning to the Dominican this fall some of the lessons we learned will have to be applied within the context of that country’s economy. In the D.R., it’s actually quite hard to spend very much money, and the stark reality of poverty around us, brings selfish spending into perspective.

Through the challenge we have learned that saving money shouldn’t be something that consumes our thoughts, rather, we should educate ourselves enough to create systems that serve us. If we have a broad understanding, it makes it easier to spend our time on life, not on thinking about money.

Obviously through this challenge we have learned that saving is rewarding. In a very big way thanks to FNBO Direct!

3. Many people struggle to begin saving. What wisdom can you share from this experience to motivate people to save?

I would say that the average person struggles with saving because it boils down to denying instant gratification in order to gain larger long-term gratification. The incentives of self interest made it hard to stay on task.

A somewhat radical idea would be to save for something completely selfless. Get the focus off of personal goals and save towards something to bless someone else. With a goal like that, maybe the vipers of self interest would be kept away from their daily snaps. You could try and save $35 a month to support a child in a developing country. Or something like that. That would get the focus off of self. The rewards are that 1) you would learn the discipline of saving, while 2) gaining an outlook on life that is less pointed towards self, but to others. I think both of those are key in becoming a saver.

As much as possible, I would encourage people to look at life with the end in mind. Where do they want to be in one year, five years, etc. Not just what do they want to have, but who do they want to be. Attaining the discipline of saving is a vital ingredient in making those dreams come to life.

4. From the challenge - what savings habits will you continue, and more importantly what habits will you be dropping now that it is over?

We will definitely continue with the budget. My husband Michael has already created budgets for when we move back to the Dominican in 2010, and 2011. He is kind of funny like that. Also, we’ll continue keeping an eye on new ways to cut expenses, talking finances through as a family, and giving generously.

In the Dominican it will be hard to continue producing secondary incomes due to a stressed local economy. Most likely that element will weaken or drop all together due to recessions both here and there. Most likely we will also, slack up just a bit on keeping track of daily expenses. Now that we have Quicken, we can record our spending with less time and have an even better look at how we are doing in meeting our monthly goals.

5. What are your savings goals going forward and how do you plan to achieve them?

As a part of our ministry in the Dominican Republic, we are saving towards building a community center where we live and work. Out of this facility, we will be able to offer many benefits to the community, basic health care being one of them. Many of the funds will come from our own family budget, but we have the added advantage of being able to raise support for the center, which throws a whole different element into the mix.

For personal savings goals, we would like to purchase land in the Dominican by the beginning of 2011 to begin building our home. We are also saving for our five year anniversary to Alaska next year. You could say we are somewhat of savings goal freaks, with about 15 categories in our budget. But just a little bit each month starts to add up over time. And when a windfall happens, it feels great to boost up the areas that are lacking instead of spending it right away.

Kristen, thank you for taking the time to answer my questions and much luck with your future endeavors.

Miss M


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