Welcome to FinanceGrabber’s Good Cash podcast, the place we reply your real-world cash questions. On this episode:
Questioning methods to set monetary targets you’ll really observe by means of on? Have questions on methods to keep away from end-of-year monetary regrets? The Nerds have you ever lined! Take your New 12 months’s Resolutions to the following stage by establishing SMARTR monetary targets that you could obtain in 2024.
Discover methods for setting lifelike targets in 2024 with hosts Sean Pyles and Elizabeth Renter as they talk about “regrets and resolutions” and share concepts that will help you take your 2023 experiences in stride, study from them, and use them as stepping stones for making a steady monetary future.
They discover among the monetary regrets that haunted many Individuals in 2023, together with overspending and saving too little, and supply suggestions for avoiding frequent monetary regrets, corresponding to taking over an excessive amount of bank card debt. Sean additionally explains his SMARTR framework for setting and reaching targets, which you’ll apply to your New 12 months’s Resolutions or some other aim you’ve gotten in 2024.
Of their dialog, the Nerds talk about: SMARTR monetary aim setting, monetary regrets, setting lifelike targets, budgeting, saving, bank card debt, massive bills, New 12 months’s resolutions, aim setting framework, emergency funds, and retirement financial savings.
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Episode transcript
This transcript was generated from podcast audio by an AI instrument.
Completely satisfied New 12 months, pricey listener. I hope you are recovering from any festivities that helped you usher in 2024. Did you make any resolutions? Right here at Good Cash, we’re not likely into these, however targets are okay, and so is trying again on the errors you made final yr, so that you hopefully do not make them once more.
I like to think about my monetary targets equally to how I take into consideration my well being targets. I am unable to do that all or nothing stuff. It’s very unsustainable and it creates this very unhealthy sample of maximum restriction after which indulgence. So not spending something on takeout may be very unrealistic for me, and I do know that, similar to completely giving up pizza.
Welcome to FinanceGrabber’s Good Cash Podcast. I am Sean Pyles.
And I am Elizabeth Renter.
This episode kicks off our Nerdy deep dive into your cash in 2024. On this particular sequence all through the month, we’ll be taking a look at all the things from investing to the housing market to methods to handle credit score as you progress by means of this yr. Elizabeth, any cash, hopes and desires for 2024?
Properly, I’m planning loads of journey within the coming yr, so I suppose the cash, hopes and desires of that will be discovering the suitable flights and inns to do it in model with out overpaying. I am really planning the strategic opening of a brand new bank card account to assist make this occur.
Very Nerdy, Elizabeth. Properly, I am with you. I would say my primary monetary hopes and desires are to complete up college to develop into an authorized monetary planner skilled. Nonetheless about 10 months to go on that. And as ever, I am attempting to tame the interior beast that’s my want for the impulse buy.
Properly, congrats prematurely on the CFP, Sean. I am really ending grad college this yr, so we are going to completely must toast to reaching these targets after we get there.
Completely, as a result of I’m certain we are going to want it then.
100%, Sean. I like that we’re speaking about hopes and desires right here as an alternative of resolutions. New 12 months’s resolutions appear to be such an overdone hoopla initially of the yr, and it does offer you some early motivation, however that motivation fizzles out by March. So we begin annually with these enormous new yr, new me resolutions, after which life or the financial system will get in the best way and falling brief feels actually, actually dangerous. Life occurs to all of us and we actually should not beat ourselves up with these regrets. However perhaps as an alternative take a look at what went incorrect and methods to alter transferring ahead on any schedule, not simply the calendar yr.
Completely. I imply, I am all for aim setting and having a well-planned method for conducting targets as a result of in truth, aim setting is among the most necessary issues that we have to do in our monetary lives as a result of cash is only a means to an finish. And if we do not know what we wish from our cash or how we are going to accomplish it, making significant progress in life could be fairly troublesome. However that mentioned, the decision framing could be overly inflexible or lead folks to make unrealistic targets that result in self-flagellation when you do not accomplish them.
Sure, for certain, Sean. Hear, targets are my love language, my love language to me. After I whisper candy nothings to myself, it critically typically entails huge targets.
No matter helps you accomplish them, I suppose. However practising self-care and self-love is necessary and we’re going to observe that recommendation right now, though we’re going to look again at some regrets, however solely in the best way that we will study from them going ahead. And we will name it Regrets and Resolutions as a result of that simply scratches the alliteration itch in my mind. However actually it is all about targets this episode. All proper, effectively listener, we wish to hear what you suppose too. Ship us your monetary hopes and desires for 2024. Go away us a voicemail or textual content the Nerd hotline at 901-730-6373. That is 901-730-NERD, or electronic mail a voice memo to [email protected]. Stick with us. We’re again in only a second with some methods to plan a superb yr in cash.
Sean, I want I ended the yr with extra within the financial institution, however I feel that is fairly true yearly. I am unable to actually level to 1 factor and say I want I might’ve finished it in another way. So perhaps no true regrets. How about you?
No “regerts.” Properly, I remorse that I’ve to pay my pupil loans once more. However on the entire, I am feeling fairly good about how I managed my funds final yr, though I assume the true check will likely be once I go to file my taxes.
For certain. Properly, apparently, about two thirds of Individuals do have some cash regrets from 2023. At FinanceGrabber, we commissioned a survey with The Harris Ballot in the direction of the tip of final yr. And one silver lining of all of these regrets is that 75% of these folks say they will use them to do higher this yr. And Sean, we had loads of headwinds to cope with final yr.
Yeah, we began off 2023 with excessive inflation after which to fight that, the Fed saved climbing rates of interest, and all year long, all the things from bank cards to mortgages grew to become costlier. So Elizabeth, let’s speak about a few of these regrets folks had. What’s the largest one?
Individuals want they’d saved extra in 2023. Virtually one fourth remorse not saving sufficient for his or her monetary targets and 21% remorse not saving extra for emergencies.
That is smart. American’s private financial savings charge or the quantity of disposable revenue that we save went by means of the roof early within the pandemic, spiking as excessive as 32% in April 2020, however we’re saving so much much less now. In October 2023, the private financial savings charge was so much decrease at practically 4%. So is it potential to say how probably it’s that folks will be capable to save more cash this yr?
Properly, it relies upon. As you mentioned going into 2023, some households nonetheless had that extra financial savings from pandemic stimulus funds and pupil mortgage forbearances. So for those who’re coming into 2024 with much less within the financial institution and better debt funds, it may very well be harder. That mentioned, inflation is moderating. So the prices that have been rising at a fairly appreciable clip one yr in the past have slowed and wages in some circumstances have caught up.
Okay, effectively, let’s give a couple of suggestions for fixing this remorse.
Certain. Properly, I would prefer to focus the most important piece of recommendation on that one in 5 Individuals who remorse not saving for emergencies. That is undoubtedly the place you need to begin. Ideally, you will have a number of months value of dwelling bills put aside in case of emergencies, however that may be a really tall order, particularly for those who’re ranging from zero. So begin small, purpose for a couple of hundred {dollars} after which up it to $500 after which $1,000 and so forth. And whether or not you are saving for emergencies or a house down cost, set particular benchmarks that will help you get there. For instance, that would imply organising a direct deposit right into a financial savings account for $100 out of each paycheck with the aim of getting $1,200 by mid-year. So that you’re setting particular greenback quantities and timelines and it is automated.
Like it. And we’ll speak afterward about how necessary it’s to take small steps whenever you’re attempting to realize huge targets like constructing a stable emergency fund. So Elizabeth, what’s subsequent on the listing of Individuals’ cash regrets from 2023?
Overspending. 22% of Individuals remorse overspending on leisure in 2023. So that features eating out, going out for drinks, going to the flicks and that type of factor. Additionally, about 1 in 10 remorse overspending on journey and 11% remorse overspending on an occasion like a marriage or a commencement social gathering.
We had loads of huge occasions in 2023. I imply between Taylor Swift’s Eras tour and Beyonce’s Renaissance tour, there have been some costly occasions final yr. Though I guess the parents who bought tickets to these concert events don’t remorse spending a single Casadefinance Reader on these experiences. Elizabeth, did you see any costly concert events final yr?
Sadly, no. I presently reside in a very small city with precisely zero venues. So had I gone to a live performance, it undoubtedly would’ve value a fairly Casadefinance Reader. What about you, Sean?
Properly, I did see Diana Ross when she got here to city, however to be sincere, I really don’t know how a lot these tickets have been as a result of my companion purchased them. I type of simply needed to brag about seeing the boss on tour. Anyway, I assume the overspending remorse is not completely shocking. A part of the rationale folks cannot save is that they are probably overspending.
Yeah, for certain, Sean. These issues typically go hand in hand, particularly when costs are rising.
And admittedly, for those who have been overspending final yr, you have been a part of the rationale the financial system saved buzzing alongside. So thanks, however perhaps do not do it as a lot this yr. So Elizabeth, any concepts to make that occur or extra to the purpose, not occur?
Properly, Sean, the reply to this remorse is the very unsexy panacea: a funds. Hear, some folks love a funds. They’ve spreadsheets outlining their spending limits and the place all of their cash goes. Here is taking a look at you, Nerds. However you do not have to go that far if you already know that is unrealistic for you. As an alternative, set a funds for the belongings you want budgeting assistance on. When you overspend on eating out, set a weekly restrict for that. When you overspend on journey, set an annual journey funds. Typically the thought of a capital B funds is tremendous off-putting, however you may profit from these very particular focused spending limits too.
Yeah, folks’s eyes, or I assume within the case of a podcast, folks’s ears, can glaze over whenever you speak about budgets, however I like to think about them extra as a dialog that you just’re having together with your funds. You might be determining what cash you must work with, the place you are going to allocate it and figuring out methods to reside your values by means of your every day spending. And I discover that actually empowering, personally.
Sean, as a Nerd, you’ll. That absolutely tracks.
Sure. Truthful sufficient. Properly, let’s transfer on to remorse quantity three.
In 2023, 16% of Individuals remorse not decreasing or paying off their bank card debt and 16% remorse taking over an excessive amount of bank card debt.
And that is simply perennial. I imply, that is one thing folks battle with and are available to remorse yr in and yr out. What can be your prime issues to bear in mind in 2024 for those who’re combating this?
Properly, you are completely proper, Sean, however we did see bank card debt shrink throughout 2020 and 2021. In order we spent down that extra financial savings and launched into revenge journey in 2023, we could have seen people return to counting on playing cards the best way that they did earlier than the pandemic, and now we’ve got excessive curiosity to go along with it. So for those who’re taking over extra debt, it may very well be harder to pay it off. So first off, for those who’re hoping to pay down debt, I would refer again to my earlier suggestion about making very clear targets, particular quantities and timelines. However for those who’ve begun utilizing bank cards in lieu of an emergency fund, the issue may very well be larger. In that case, it’s possible you’ll wish to look into debt aid choices like consolidation or debt administration to assist establish sources and formulate a plan to get your funds again on observe.
Properly now that we have handled remorse, how about some resolutions or let’s name them targets, although I nonetheless love the alliteration of regrets and resolutions. Elizabeth, you talked about earlier within the present that you do not actually prefer to make resolutions and I do not actually both, frankly. Are you able to speak a bit about why, particularly within the realm of non-public finance?
Sure. So I like to think about my monetary targets equally to how I take into consideration my well being targets. I am unable to do that all or nothing stuff. It’s very unsustainable and it creates this very unhealthy sample of maximum restriction after which indulgence. So not spending something on takeout may be very unrealistic for me, and I do know that simply completely giving up pizza. If I prohibit myself this manner, I will not simply fall off the wagon, I’ll completely crash the wagon and burn down your entire village. I am going to have fun not having takeout for a month by splurging on takeout that prices twice as a lot.
Yeah. One excessive to the opposite.
Proper, precisely. And then you definitely’re coping with the remorse of all of it too. So I attempt to discover steadiness between what is going on to get me nearer to my long-term goals whereas not making my life depressing.
Sure, I’m additionally all about going sluggish and regular whereas giving myself room to simply be human and mess up each infrequently. Additionally, Elizabeth, one thing that our listeners won’t know is that you are a aggressive powerlifter, so you already know a factor or two about sticking to formidable well being targets.
Sure. Inside purpose that you just’re not lifting an excessive amount of weight, hopefully injuring your self. However going again to the decision versus aim factor, I feel the time field of a decision as one thing that you just deal with for just one yr or realistically, perhaps a single month earlier than you completely neglect about it, could be actually limiting with regards to monetary targets. The decision framing can lead folks to count on enormous and dramatic adjustments of their funds so much quicker than is definitely potential. The reality is that it may possibly take years to construct up that stable emergency fund, to not point out how lengthy it takes to avoid wasting for retirement, however that isn’t to say that you could’t take steps right now or tomorrow and the following day to higher your funds. In actual fact, these steps that you just do take right now are in all chance the one issues that may get you there.
You are completely proper, Sean. These incremental adjustments and development actually do construct up over time, whether or not we’re speaking about cash or energy lifting. You simply preserve plugging away and settle for generally that that path will not be going to be linear.
Yeah, for certain. Properly, we type of went by means of some recommendation for not repeating the regrets we’d’ve had in 2023. How do you concentrate on that as totally different from aim setting?
From my perspective, regrets and setbacks are actually simply issues that occur in your method to a aim. You are going to have intervals of progress and intervals that do not go fairly such as you needed. Typically these setbacks are your doing totally and different instances they are not. However they typically do not upend your skill to realize your targets altogether. Possibly I needed to divert a few of my month-to-month financial savings in the direction of an surprising automotive restore, or perhaps I went over my journey funds. Does that imply I will not hit my financial savings or spending targets? Not essentially. It’d set them again by a couple of months, but it surely does not quash my targets. They’re nonetheless attainable.
Yeah, it is all about giving your self grace and specializing in that long-term. All proper, effectively let’s counsel a couple of monetary targets that folks might endeavor to realize over the approaching yr. What can be your first suggestion?
Properly, Sean, I’ll give the mother recommendation that we most likely all want to listen to, and that’s attempt your greatest. Set a aim to simply attempt your greatest, however do not simply give that lip service. Actually attempt your greatest. And the factor I like about this aim is that it appears to be like totally totally different for various folks. For some, setting apart, $50 a month for six months right into a model new emergency fund will likely be their baseline aim. And for others it is perhaps bumping up their retirement contributions to, I do not know, 12% of their wage. In both case, you possibly can hit a tricky month and must adapt, however do not in that scenario simply throw up your fingers and exclaim, “Yeah, all bets are off. I assume I am going to attempt once more subsequent yr.” Hold going. Simply preserve doing the perfect you may. What about you, Sean?
Properly, I touched on this earlier, however I would suggest folks spend time getting extra acquainted with their relationship between their spending and their values. It may be simple to simply spend in a method that is not tremendous considerate or not aligned with the values that we hope to embody every day. So going again to that funds dialog you are having with your self, take into consideration what you need out of your life and what sort of world you wish to reside in. After which ask your self in case you are directing your cash accordingly. That is a query that I attempt to ask myself so much, and the reply is not at all times going to be sure, but it surely’s one thing to be aware of. Okay, how about yet another?
Properly, I like what you simply mentioned, Sean. Being extra aware of the way you spend may help preserve you from these overspending regrets. And constructing on that, I would counsel taking steps to actually decelerate whenever you’re spending. When you simply loaded up a cart at a web-based retailer, make a apply or a aim of simply strolling away and coming again tomorrow. Give it a day earlier than you try. I do that and often discover I’ve mindlessly thrown issues within the cart that I actually do not wish to spend my cash on.
Yeah, I really like that. And as an individual of the ADHD expertise, I can generally get hyper fixated on a purchase order that I wish to make, but when I construct in that buffer of a day or two, I am going to discover that I really don’t need that factor in any case. And if I do not purchase it, which means I’ve more cash for issues I really do care about. In order we make these options for resolutions/targets, how about we offer some recommendation for methods to really make them occur? What do you do on that entrance? Any private suggestions, Elizabeth?
Yeah. Properly, for the large targets, I inform any person, I’ve a critically huge concern of trying like I fell brief. And by telling somebody what I am attempting to realize, I construct in that accountability. Sean, I do know conducting targets is one thing of a pet matter of yours. So what about you?
Sure, I do additionally love an accountability companion. I’ve made my life companion, Garrett, my accountability companion for my CFP coursework. I am going to inform him that I’ll do X project. And even when I do not really feel like doing it, simply understanding that I instructed him that I might do it may possibly push me to truly get that work finished and do it in a method that is significant. So I am studying what I have to study.
Precisely. Sean, so that you wish to give us the rundown of methods to really accomplish targets this yr?
Sure, I might like to. So we use the SMART aim setting framework right here at Good Cash, maybe not completely shocking, and I add my very own twist by making them SMARTR targets. So for individuals who will not be acquainted, SMART is an acronym for Particular, Measurable, Attainable, Related, and Time-Sure. And the additional R that I add on the finish is for Rewarded. And I am going to clarify why in a little bit bit.
I am excited to listen to this, Sean. So stroll us by means of the way it all works.
Okay, beginning with the S, particular, make your aim very clear and tangible. For instance, perhaps you’ve gotten a aim of investing extra this yr. Okay, nice, however what does that actually imply? Are you going to max out your IRA or 401(okay)? Or get arrange with a robo-advisor account? The extra exactly you may envision your aim, the simpler it is going to be to map out the trail to get there.
That makes good sense. You’ll be able to’t accomplish a aim if you do not know what it’s.
Yeah, precisely. So now onto the M, measurable, you want a method to quantify your targets and observe the progress that you just’re making. So to proceed that investing instance, if you wish to max out your IRA, the utmost you may contribute in 2024 is $7,000 or $7,500 for those who’re 50 and older. Work out how a lot you would wish to contribute every month to hit that aim.
So fast psychological math. Completely not utilizing a calculator right here. If you wish to hit that $7,000 quantity, you’d have to contribute about $583 every month after which observe your progress all year long, perhaps on a spreadsheet or in a journal.
Yep. Okay. And that brings me to the A in SMARTR targets, attainable. For lots of people contributing $583 a month right into a retirement account simply will not be possible. So in that case, what’s a extra reasonably priced possibility? Look into your month-to-month revenue and bills, that entire budgeting dialog we have been speaking about, and see how a lot you possibly can really contribute. Possibly it is $200 a month, so you’ll contribute a complete of $2,400 to your IRA over the yr, which continues to be superior.
Very superior. Okay, Sean, we’ve got the particular, the measurable, the attainable. What about the remainder? That is testing my spelling as a lot as something.
Sure. So the R and the T stand for related and time-bound. You need your monetary aim to be one thing that is really related to your life targets, your passions, and your values. When you’re contributing to a retirement account since you suppose it is what you need to be doing and it isn’t one thing you really care about, you are not likely prone to meet that aim. And with time-bound, that’s whenever you put a time field in your aim. So to spherical out this instance, if you wish to save a specific amount for retirement within the calendar yr of 2024, you’d have the month-to-month steps that you just take to fulfill your annual aim. And on the finish of the yr, guess what? You probably did it. Purpose achieved.
Yay. Congratulations. However wait, Sean, you talked about that R, your completion. What’s that every one about?
Sure, I am so glad you did not neglect that, Elizabeth. The ultimate R is for Rewarded. Because the baby of behavioral psychologists, I’m a giant proponent of optimistic reinforcement and making the method of conducting your targets as satisfying as potential. As a result of the extra you want doing one thing, the extra probably you’re to maintain doing it. So construct in rewards as you’re taking the small every day or month-to-month steps in the direction of reaching your aim.
I really like that concept. So when somebody makes that month-to-month deposit into their IRA, perhaps they exit for ice cream or do a shot of tequila, no matter makes them comfortable.
Precisely. Yeah, simply do not go too wild. You do not wish to blow your retirement financial savings funds on that prime shelf tequila. So that’s the SMARTR framework, and it may be actually useful as you accomplish targets over the approaching yr. But additionally as you are working away to avoid wasting for retirement or no matter, I wish to encourage you, listener, to present your self grace for those who’re not capable of fulfill all of these targets this yr. Like Elizabeth mentioned, life occurs. You may need a giant expense one month that sucks up the cash you’ll’ve put towards retirement. That is okay. Take a breath, regroup, and simply decide up the items subsequent month. It doesn’t matter what, simply please do not be harsh with your self. It’s merely not value it. Strive your greatest. That is all you are able to do.
Properly mentioned, Sean, do your greatest and preserve going. You won’t see different folks struggling in the direction of their targets, however they’re. Bear in mind all these Individuals who had cash regrets final yr? This is not a linear course of. Typically issues are laborious and generally they shock you with how effectively they go.
So what we have discovered right now is that A, lot of individuals have cash regrets from 2023. B, you should utilize these to vary habits in 2024. And C, make some SMARTR targets as an alternative of resolutions with regards to your funds.
I prefer it, Sean. So what’s subsequent for this 2024 look forward sequence?
Properly, Elizabeth, we’re going to try what this yr would possibly usher in investing. Not that anybody can predict the markets, however that is type of the purpose.
If in case you have a effectively diversified portfolio and also you’re investing for the long-term, like for retirement, there is not any actual purpose to emphasize in regards to the ups and downs of the market within the brief time period. And sure, on this occasion, once more, one yr is the brief time period.
For now, that is all we’ve got for this episode. Do you’ve gotten a cash query of your individual? Flip to the Nerds and name or textual content us your questions at 901-730-6373. That is 901-730-NERD. You may as well electronic mail us at [email protected]. Additionally go to nerdwallet.com/podcast for more information on this episode. And keep in mind to observe, charge and overview us wherever you are getting this podcast.
This episode was produced by Tess Vigeland and Elizabeth. I helped with modifying. Kathy Hinson helped with fact-checking. Kaely Monahan combined our audio. And a giant thanks to FinanceGrabber editors for all their assist.
And here is our temporary disclaimer. We aren’t monetary or funding advisors. This nerdy data is offered for normal instructional and leisure functions and should not apply to your particular circumstances.
And with that mentioned, till subsequent time, flip to the Nerds.