Making Your Escape
Small amounts of money are kind of a big deal.
THERE’S AN EMAIL I keep getting from my bank nudging customers to apply for up to $500 to “help manage unexpected expenses.” It bugs me every time I see it. A $500 loan might seem innocuous to some degree—but is it really?
About a third of Americans have a hard time coming up with $400 for emergencies. I admit that I’m obsessed with this statistic from the Federal Reserve Board, but isn’t it interesting that the bank is offering customers just a little bit more than this amount?
People without savings come from many walks of life. I know because I was one of them: highly educated, working ‘round the clock, low on cash, and swimming in debt. I used credit cards not for splurging but to make ends meet. I’d work hard and get ahead a little, but because I was constantly creating more debt, I kept sliding back more than I was moving forward.
In the crosshairs
Financial services companies work hard to make customers feel like they are winning some kind of prize by being “awarded” loans. Yay! Kazoos and balloons for everyone! It’s all fun and games until your income is interrupted, or your circumstances change.
Some of us are just a smidge away from making ends meet. When you’re culturally middle-class, it’s easy to refuse to see yourself as financially vulnerable—but the fact that you need a $500 loan for “unexpected expenses” is an indicator that you may be living hand to mouth without even realizing it.
It’s no wonder that banks set their sights on people who are right on the bubble: people walking that fine line between being okay and not being okay, those earning a regular income who are still unable to make ends meet. For hard-working people especially, there’s a seductive narrative about needing to “buy time” or wanting a small loan to “tide themselves over.” The reality is slightly more unpleasant: you may be in a financial hamster wheel, and unless you change course, your circumstances could get worse.
They don’t love you
Financial institutions are happiest with customers who have revolving debts—customers who pay interest, and end up paying interest on the interest, and so on and so on, over and over again. They know that life has inevitable hardships, and they hope and pray that we won’t be able to handle them. They salivate over revolving debt and, using our own faulty logic against us, lure us in with small loan amounts that are seemingly “no big deal.”
For many years, I was one of those customers with a slowly expanding, revolving balance. One day, I woke up and found myself knee-deep in debt. For a long time, small loans and charges seemed like reasonable solutions to my problem. I just needed “a little time” to “catch up” and “get myself together.”
In hindsight, I can see how the loans and charges piled up. Each one was a flashing red light on the dashboard of my life, Laurence Fishburne in School Daze yelling “Wake up!” That’s why I find the bank’s promotional email irritating. They are targeting people who are not only financially vulnerable but in denial.
If you’re in the habit of borrowing small amounts of money, there is a longer-term problem to solve. Yes, you may need “up to $500 for unexpected expenses.” And sure, you could borrow it. I get it: it seems like a simple solution to a simple problem. The thing is, it’s not really about the $500. It’s about the ecosystem that prevents you from having and keeping $500. In other words, you’re not earning enough—and, in this moment, you’re spending too much based on what you do earn. Needing to borrow $500 is your flashing red light.
Small amounts are a big deal
The great thing about life is that it’s not static; it’s always changing. A day will come when you’ll be able to save $20, $50—something. Here’s the key: instead of acting like small amounts of money are ‘no big deal’ and don’t matter, consider the fact that if you learn how to have and keep a small amount of money in savings, you can eventually add to it.
This is one of those simple truths we ignore because it’s not sexy. It’s not a lottery win, a million-dollar launch, or a get-rich-quick, hit-it-big kind of idea. Still, starting where you are is immensely powerful. It’s like plugging an appliance into a socket. You may start with only $20, but it’s not really about the $20. It’s about a shift in identity and behavior. It’s about installing new habits, asking new questions, and creating muscle memory. And yes, it gets deeper: eventually, you’ll see that money is just the beginning. Your ability to navigate life (with all of its challenges and pitfalls) grows, and your confidence grows along with it. When you start small, momentum takes hold. When opportunities arise, they are no longer invisible. This is how you begin to make your escape and find your way out of the hamster wheel.
Others may discourage you. Not on purpose, of course, but by default. One of my favorite examples of this is the time someone told me, “You need more than that!” when I shared my goal of wanting to save $1,000. Um, no kidding! How was that helping me when I had double digits in my bank account? It wasn’t.
For the millions of us who know what it feels like to have the trappings of middle-class life with little or no money in savings, there’s a slight shift in perspective required. It’s okay to start small. In fact, it’s absolutely genius. Once you start to strengthen that savings muscle, you’ll get used to having and keeping $20, then $50, then $100, then $200, and so on. This is not saving for a rainy day. It’s something I call “savings as cartilage.” It’s saving for the sake of having, not spending. With time, you’ll train yourself to handle emergencies with solutions that don’t involve borrowing money at all. You’ll delay gratification, have tough conversations (with yourself and others), and generate more income. You’ll spend differently, think differently, and navigate your way out of the Federal Reserve’s $400 club. In short, you’ll become someone who has what you need.
In the coming weeks, I’ll share more about my journey, my messy path out of debt, and my own unique take on money matters. For alerts on new blog posts and upcoming events, join my mailing list. Working on becoming debt-free or struggling to build up money in savings? Trust Yourself with Money is a fine companion. Keep going! I’m rooting for you.
Brigitt Thompson is the author of Trust Yourself with Money: Build Financial Confidence through the Simple Art of Saving, an unconventional how-to guide for learning to accumulate savings at any age. Trust Yourself with Money is available as an audiobook, on Kindle, and in paperback.
