My Most Important Savings Account Isn’t For Me — It’s For My Neighbors

published Apr 11, 2021
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My loved ones think I’m rich. I’m the first of us to go to college, get a master’s degree, and have a professional (albeit not-so-lucrative) career in journalism, so there’s a flawed assumption that I’m rolling in dough. When a relative is short on rent, they ask me for help. When a child needs money in their school lunch account, they want me to make a donation. When someone loses their job, there’s this expectation that I will hold them down. 

And here’s the thing: I usually say yes, briskly withdrawing money from my savings account or skipping student loan payments to support my community. “Compassionate,” I’d tell myself, “that’s what I am.” But after a frank conversation with girlfriends about our net worth, I realized I was terribly behind on my financial goals. A big reason: I have helped loved ones out… to the tune of $20,000 in the last two years. Something had to give.

I knew that I wanted to continue to be supportive, but I also realized that it was time for me to establish some money boundaries if I was ever going to buy a house, save for retirement, and pay off my student loans. My solution: Creating a mutual aid account. By putting a little money aside each month to be used to help my community (something I feel is both my duty and purpose), I’ve been able to assist when and where it’s needed without giving more than I can or abandoning my own goals and obligations along the way. 

What are the benefits of a mutual aid account?

If giving back is important to you, creating a mutual aid account will only improve your service. When a neighbor is in need, you know one way you can help. When you’re moved by a GoFundMe campaign, you’re able to donate what you can without thinking twice about it. If a natural disaster suddenly devastates a town, all you have to do is find the grassroots organizations that are doing the work and consider if you want to send them goods or funds. There’s no need to glance at your budget, do complicated math, feel guilty about not being able to give, or beat yourself up for spending money you needed because you’ve already set the cash aside to help. 

Additionally, it allows you to create money boundaries with your loved ones. Money expert Cindy Zuniga-Sanchez says this is important for two reasons: it helps you maintain healthy relationships, and it ensures you’re achieving your financial goals.

“It’s an amazing thing to give and give generously, but you have to give smart and find a way to balance this with your own financial goals,” the money coach and litigation attorney tells Apartment Therapy. “Paying off your debt, investing, and having a retirement fund will ultimately enable you to help your loved ones even more.”

How do you build a mutual aid account?

It’s totally up to you and how you want to utilize your mutual aid account. If you wish to create a community emergency fund, you can open a savings account and put money away each month. (Some banks charge fees depending on your account’s minimum balance, so read the fine print before you open the account up.) If your neighbor confides in you that they need legal assistance or a child at your kid’s school needs life-saving surgery, you can help within your means. With this kind of account, you’ll make big contributions once or twice a year. 

You also don’t have to open a bank account at all. If you prefer to set money aside for smaller monthly offerings, a good ol’ piggy bank will do just fine. You can also budget your aid into your money checking account spending.

How much money should you distribute?  

Again, this will look different for everyone, and it might change depending on your fluctuating income (hey, freelancers!). For years, I made the mistake of giving exactly what was asked of me, even if I couldn’t afford it. I don’t recommend that. Instead, follow this three-step process proposed by Zuniga-Sanchez: 

First, determine the amount that you will set aside each month for this account. She suggests five to 10 percent of your monthly income, depending on your debt and savings goals. 

Next, she advises to look at your budget to gauge if you’re able to allot that amount of money each month. If not, consider decreasing spending in another area or, if you’re unable to, go back to step one and lower your percentage until it’s one that works for your budget. 

Finally, Zuniga-Sanchez suggests separating this money from your checking account and emergency savings account, so that you always know how much is available for giving back and avoid accidentally dipping into other funds. 

Remember: Depending on how you want to structure your mutual aid account, you can give that monthly contribution to a different cause each month or you can save it and confer a larger sum when a family or community emergency strikes.

How do you decide when and how to distribute the funds? 

As you might have guessed, it’s on you. Personally, I give when my community asks for support and when I simply feel moved to help. With my loved ones, money boundaries allow me to always be there for them without abandoning myself. But they don’t need me all the time. Sometimes, I distribute monthly funds to causes I care about, whether it’s a social justice or conservation group doing important work locally or communities impacted by natural and political calamities in my homeland of Puerto Rico. Other times, I’ll help people directly. 

When a friend obtained permanent residence in the United States, I tapped into my mutual aid account to help her fund a trip back to her home country, which she hadn’t returned to since she left as a kid. When my nail tech needed to escape a terrible relationship, I used that month’s budget to help her secure an apartment. When I overheard the stranger ahead of me at CVS tell the pharmacist she couldn’t afford one of the prescriptions for her ailing mother, I purchased it with money from my account. How and when you decide to distribute funds is totally up to you, your income and the issues and stories that move you.