Don’t be the awkward cat lady.

You know who I’m talking about. It’s the 103 year old woman that lives down the street. In a very tiny one bedroom house. She keeps mostly to herself and has 18 cats. Yeah, 18 cats.

What you DO know about the “cat lady” is that she uses a garbage bag as a rain jacket. She hangs her clothes out to dry on a clothesline. She has had the same haircut for the last 50 years. And she never wears jewelry. What you DON’T know about the cat lady is this… She has $12 million in the bank.

Okay, maybe I’m stretching the truth a little, but if you google “millionaire leaves money to pet” at least a half dozen news stories turn up. It leaves me thinking, “What kind of person would leave millions to their animal?” The answer… a freakin’ frugal fruitcake.

I’m not sure if you read this story, but last week an uber-frugal woman left her $4.5MM fortune to her hometown of Long Beach, WA. Here’s a snippet…

Verna Oller was a very simple, but very kind and giving woman, a friend said. She rarely spent money and when she did, she was frugal. With no formal education, Oller spent much of her time at the library learning how to invest. From this, she made a fortune and before she died at 98 years old, made sure that $4.5 Million was left to the town of Long Beach, Wash. Her wish was for the money to go towards building a swimming pool for children, scholarships for students and grants for teachers.

Homegirl was so frugal she used pieces of cloth as shoelaces!!!. Her kindness is admirable and it sounds like that money will do a lot of good, but I think this story teaches a life lesson far more valuable than frugality or generosity: You have to have a plan when it comes to your money.

A friend of mine is debt free with a decent chunk of change in his savings account (over $20K). Lately, he has been asking me for my opinion on whether or not he should buy an iPad, a Kindle, a Macbook, or nothing. His struggle is not in trying to determine which device will best suit his needs, but in his inability to cope with spending money. He feels like his purchase is excessive. He’s unknowingly becoming the awkward cat lady.

This is why I think everyone needs a plan when it comes to managing their savings. When you budget each month, you probably assign every dollar of income a category (food, car maintenance, rent, etc). Maybe you have $500/month earmarked for savings. While it’s good that you are dedicated to saving money, you need to consider getting specific. What EXACTLY are you going to be doing with that $500/month?

This is my tentative game-plan….

Pay off my student loans (almost check) and then….

Save $10,000 for my emergency fund (check) and then….

Save $5,000 for wedding expenses (check) and then…

Save $1,000-$3,000 a year for vacations (ongoing) and finally….

Accumulate $100,000 in savings for down payment, furniture, and a SUV (not even close)

Every dollar I make, that I didn’t spend, now has a purpose. Having a defined plan not only helps keep me focused on my goals, but also allows me the freedom to spend my money, guilt free! I don’t have to wonder “Should I take a vacation this year?” since I will have saved money for that specific purpose. Once I accomplish all of these goals, I will make new ones. I imagine things like “Build emergency fund up to 2 years of income” and “Save for kids first car” will come in the picture down the road, but right now, those things aren’t a priority.

Before I turn the mic over to you, let me clear one thing up, my savings plan has nothing to do with investing. It’s strictly discretionary savings, i.e. leftover money after I’ve done things like contribute to retirement, kids college, etc. And one other thing. If your life goal is to save as much as possible so you can give it all away when you die, more power to you, but I personally think their is nothing wrong with enjoying some of the finer things in life.

So reader, Do you have a defined savings plan? If so what are some of the things on your agenda? If not, how do manage the money in your savings? Anyone ever know someone that was so frugal it was frustrating?

Financial Puberty

It was 5th grade. I was a young ninja about to embark on an epic journey. A journey in to the unknown. A journey in to the land of cracking voices, armpit hair, and a world where girls towered over their male classmates. That’s right, it was a journey through puberty.

I was 10 years old. Sitting in sex education, with a bunch of 5th grade boys, when my teacher uttered a word I never thought I would hear him say. He said “Class, we are all a bunch of mature men right? Well being that we are all mature I’m going to say a word, and when I say that word I expect each of you to act like adults. Today, we are going to talk about a man’s penis.”

Whoa, hold the phone! Did my teacher really just say the P word!? Surely he didn’t mean to say that….did he? Turns out he did. Not only did he use the P word about a bajillion more times, but we also watched movies, read textbooks, and had discussions about a whole slew of things I knew nothing about…

“Wait, what? What happens to girls every month? Ewwwww.”

The whole idea of puberty, adjusting, and changing was brand spankin’ new to me and I couldn’t believe I hadn’t been privy to any of this knowledge before. Fifth grade sex education was my wake up call to adulthood.

Well just like I had an “awakening” to the physical changes I would endure over the course of my life, I have also had a financial awakening. That’s right, I’m going through financial puberty right now and I’m proud to admit it.

All through high school and college I knew nothing about money, nor did I have a desire to learn about it. Sadly, I graduated college not even knowing how to transfer money from my savings account to my checking account. I was financially prepubescent.

But just like I went through sex education in 5th grade, my day of financial education also came. It was after a conversation with a good buddy of mine. He opened my eyes to the beauty of money management, the power of compound interest, and the importance of saving. I began financial puberty in late 2007.

I’m not fully developed just yet, but I am definitely on the right path. Just as puberty lasts a good ten years, I can’t expect to know everything there is about money in just a couple years. It is a continual process. One that I am excited about completing. Hopefully in another five or so years, I will be on the tale end of this financial puberty gig and can put my finances on autopilot and coast through life.

Do you remember going through sex education? How old/what grade were you in when you went through it? Did it make you giggle every time your teacher talked about genitalia (or was I the only one that was that immature)? When did you begin financial puberty? What caused it (a conversation? a book?)

p.s. Please forgive my crazy analogies. I’ve now compared puberty to finances, debt to unicorns, and checking accounts to wiping your butt. I have no idea where these ideas come from. I’m sorry.