Nobody expects the worst. However, jobs aren't always permanent. It is not possible to be in good health. Bad things can happen. It is important to have a financial safety net in place to protect you and your family as you plan for the future. As an emergency fund, you should save between three and six months' worth of your pay.Alexandra has 45 month's worth of rainy day funds.Alexandra grew up in poverty with her single mother. She was often left without a place to live. As an adult, she worked hard to achieve financial stability. She has been a successful attorney for seven years, as well as her engineer partner. Alexandra is aware that she doesn't have enough money in savings. She should either invest the money in the stock market, or buy the house that she and her partner have been dreaming of. She can't bear to part with the money, as it is the only thing keeping her financially secure.AdvertisementAdvertisementAdvertisementAthena Lent (Slates Pay Dirt columnist, founder of Money Smart Latina) discusses her similar upbringing with Alexandra on a recent episode. She also talks about how that affects her view of money. Alexandra is given advice by Athena Lent on how to improve her relationship with her bank so that she can make large purchases without feeling anxious. This transcript has been edited and condensed for clarity.David Epstein, Alexandra: Your savings seem to function as an auxiliary plan in the event that you lose your house. It also seems to be a source for anxiety.Alexandra: I feel sick thinking about spending money. Money is my security.My dad died when I was young leaving my mom as a single parent. She was a teacher, and earned a very low income. She was also afflicted by mental illness, but she was a great mom and loved her children very much. There was also a lot instability. We didn't always have enough food or could not afford the heating bills. For a time, we lived in hotels and shared our home with relatives. This is why I have always been anxious about becoming homeless, being dependent on others, and not having enough money.AdvertisementAdvertisementDavid: Do you have a tendency to be frugal with large decisions or general spending?Alexandra: I've always been frugal. My boyfriend is an engineer, and was raised in very different circumstances. Although he is a good saver, we have had some arguments about money. I can recall when we first started dating, I wanted to buy a donut but I didn't have the cash. He suggested that I pay with a credit card, but there was a 50c charge. I said no, that's too much money. It is possible that we will need the 50 cents. So, we got into a fight. Although it sounds absurd, I believe that you never know when you will need the 50 cents.AdvertisementDavid: Does this still cause conflict with your boyfriend? Or has he accepted it?Alexandra: He's kind of gotten used to it, and we keep our finances separate. My dad bought a car for my mom in her name, and did other things to punish my mother's bad credit. That's another reason to be afraid. I don't want anyone to have my money.AdvertisementAthena Lent. You've experienced some very traumatic things as a child. Just because you aren't asking for money on the street doesnt mean you have lost your childhood or your experience. It's okay to admit that this happened to me.AdvertisementAlexandra: It feels disloyal, but it is not to my mom.Athena: What do you mean? It's going to happen, and that's okay.Growing up, I was also homeless. When I was in high school, my mom was a single mother and died right in front me. My social security checks were passed from one relative to another. In high school, I lived with friends all the time. It was horrible to be truly homeless. I am sorry for what happened. It's no wonder that you feel hesitant about spending money.A money script is a way to make money. Your belief system is the money script. You tell yourself things about money, and they don't have to be correct or false. It is what you believe. It is a belief that you have since your youth.AdvertisementAdvertisementMoney is associated with your life situation. You ended up living with your mom because she didn't have enough money to pay the bills. Your brain automatically thinks OK, I can't pay my rent or my mortgage so I will have to live with someone. I will assume that your boyfriend is an engineer and can cover your mortgage if you are unable to pay it. If you are unable to pay your mortgage, you don't have to live with someone you love. Your mind will tell you this because it believes what you believe. This is what happened when your were younger.AdvertisementYou don't give yourself enough credit, because you were too busy trying to survive as a child that you are now thriving and it is scary to you.Alexandra: Yes. It's almost as if it will disappear. It feels like it will disappear if I do wrong.David: Athena! I was curious if you had to create your own money scripts in order to get to where are you now.AdvertisementAdvertisementAthena: Oh gosh, did I ever! As soon as I began to make money, I was unable to hold on to it. I knew it could disappear at any time. In the end, I became addicted to shopping. For me, that meant having a new purse every day or spending money on my hair and makeup instead of fixing what was wrong with myself and why I needed the happy hit.AdvertisementAlexandra: Thats so funny. Alexandra: That's exactly how my sister feels.Athena: Because everyone's different. You either will hoard your money, or you'll spend it out of control. That is what I did.David: Athena you responded to Alexandra's money history in a completely different way than Alexandra. How can she change her money scripts and solve the core problem?Athena: Alexandra, you are resilient. You have a job. Your partner is a great friend and loves you. You have survived the most difficult part of your life.To help you improve your self-perception, I recommend that you journal for 30 days. Ask yourself the following question: Why am I so attached to money? You are not being judged. Your brain is capable of telling you surprising things.AdvertisementHow would a healthy money relationship look?Alexandra: Alexandra, that is amazing. It would be having enough money and not worrying about how to spend it. However, I must make sure that I don't live beyond my means.Athena: You can start by telling your self: I have enough money. I'm good.Alexandra: Okay, that's right. I currently have forty-five months of emergency funds, so to speak. I also know that I only have six. Does that mean I can say that I'm OK if I spend the remainder on, let's say, a downpayment?Athena: You claimed you had forty-five months. Nearly four years. You can then spend 12 months in a high-yield savings account to make an emergency fund. After that, you might open a money market account, or an index fund. The index funds will then be available for you to use towards your down payment.AdvertisementAlexandra: That makes sense. That would be a great idea.Athena: I do remember that you mentioned the 50 cents earlier and you were like, "No, we cant afford that 50c!" And I think that you should be more kind to yourself and say, "I'm sorry that I was so worried about those 50 cents. But I don't need to worry anymore about those 50cs." I'm fine. I'm safe.Subscribe to How To! Subscribe to How To!Listen to Alexandra and Athena talk about how to feel more comfortable with shrinking your financial safety net. You can find your podcasts wherever you are.
