It’s easy to start a financial goal and give up a few months in, especially when the economy feels uncertain. On today’s episode of Good Cents, Eric and Sydney are here to give you the pep talk you need because leveling up your finances is always possible, no matter your financial situation. It just takes consistency and discipline, and that’s where Payactiv is here to help. 

Have financial questions for us? Email  [email protected]. Don’t forget to subscribe wherever you get your podcasts. 

Here’s the recap of the financial goals we talk about in today’s 20-minute episode: 

• Use a credit card less and a debit or prepaid card more.
• Save for three months of expenses for an emergency fund. 
• Budget for the lifestyle you want instead of restricting yourself. Use a free tool like Payactiv to stay on top of your finances in 2023.

Listen below or read the transcript that follows. 

Intro – The Economy in 2023

Eric Rosenberg:

Hello, welcome to the Payactiv Podcast. Here’s a quick reminder that today’s episode is designed for informational and educational purposes only and does not represent legal or financial advice. Thank you.

Hello everyone. Welcome back to the Payactiv podcast. We are so excited to have you with us today. And we’re a little bit into the new year, and it’s one of those times where people have maybe let some New Year’s resolutions go by the wayside, but because it’s still early in the year, it’s not too late to get on track wherever you are in your financial journey.

 I’m actually more of a fan of what I call life resolutions because when you make something a habit forever, hopefully, it will really stick, unlike at the beginning of a year when you say you’re going to go to the gym.

So here we’ll talk about some financial statistics and things going on in the markets because, as we all know, interest rates have been changing very quickly. Inflation has been big in the news. A lot of people are struggling out there. So we want to dive in with some great tips today on how to level up your finances. So let’s dive in with our good friend, Sydney, who we know from a past episode. She is part of the Payactiv team, and she’s going to help us walk through these helpful and useful tips to level up our finances in the new year.

Sydney Ahmadian:

There are so many, and especially just looking at the landscape of everyone and our finances going into 2023 after a really hard 2022, there are so many things going on in the world that are making people nervous. Mortgage rates are around 6% for a 30-year fixed, so it’s more expensive to get a loan on the house. That’s up from 3% in 2020. Record high inflation, our money just isn’t stretching as far as it used to. So that’s funds for gas, funds for food. Everything is costing more and that means that we’re having to make really tough financial decisions. So we’re already in kind of a tricky, sticky place. So I would love to focus on just the most simple, direct New Year’s resolutions that can help anyone going into 2023. So my three sort of areas that I’d like to focus on are credit cards and debt, emergency funds, and how to spend a little bit smarter. So if you could just help me out, Eric, help me understand maybe some thoughts going into those three topics. Let’s start with credit cards and credit card debt.

Goal 1: Use Credit Cards Less and Debit Cards More

Eric Rosenberg:

Yeah. That is a great place to start. I’m going to put my financial big brother hat on because this is something I have talked to a lot of friends about and I talked to my sister about. I have a little sister. She was finishing college and dealing with student loans and credit cards. She’s like, “Oh, what do I do with all these things?” So not knowing what to do is totally normal. If you feel overwhelmed by that topic, I’ll just say, take a deep breath. This is something you can totally handle. So credit cards are a really useful financial tool, but only if you pay them off in full every month by the due date. And a lot of people just don’t have that habit. It’s not in their genes, and they won’t be able to do that either because they like to spend more or they forget about having to pay it back.

And there’s a lot of different reasons for people to build up credit card debt. It happens to the best of people. But if you want to prevent that from happening in the beginning, if you know you’re the kind of person who would build up a credit card balance, you can use a debit card. Debit cards don’t have any possibility of putting you into debt as long as you use them appropriately. We actually have the Payactiv card. It doesn’t let you overdraft. Some banks will let you overdraft, which can cause fees that let you go into debt. That’s why I said you almost can’t go into debt with a debit card. But if you have a good account with a good reputable bank or something like the Payactiv card, there is no way to overdraft. You can’t go into debt when you use debit only. So that is a really useful tool, and it prevents you from making those decisions that you can’t afford that a credit card might let you do without thinking. Credit cards, they make it really easy. Late at night-

Sydney Ahmadian:

It’s slippery.

Eric Rosenberg:

It used to be Home Shopping Network, now it’s late-night cruising whatever your favorite online shopping site is. It’s really easy to click that buy button, and they remember your credit card numbers and debit card numbers. So take a step back. Remember, you don’t have to buy everything. But if you have that inclination, if you know you’re the kind of person who likes to shop and likes to buy it, if you use debit and have an account that will turn down transactions if you don’t have the balance to cover it, then you know won’t go into debt. So that’s a great tool.

Sydney Ahmadian:

Absolutely. Absolutely. Yeah. And so what you’re saying is if you’re depositing your paycheck onto an account that’s linked to a debit card, you can really only spend the money that is right there in your account. And if you do need to use a credit card, let’s say you’re trying to build your credit, maybe just use the credit card for purchases that you know can cover, things like maybe food, gas, groceries, things that are more consistent and regular. For a debit card, let’s say you need to save up for something, it’s really useful and helpful, we’ll go into this a little bit later, but to have a card that helps you set money aside for the future.

But the Payactiv card, what I love about it so much is that you get rewarded for using it. So not only does it a way for you to prevent creating a debt hole for yourself, if you live in a state that has Murphy USA gas stations, you’ll get 50 MDR points every single payday. So you get rewarded just to get paid. Those 50 MDR points can go towards gas, which isn’t essential for many people who need gas to get to work.

Eric Rosenberg:

That’s pretty cool.

Sydney Ahmadian:

And then on top of that… Right, isn’t that awesome? That’s what I love about this card.

Eric Rosenberg:

Free gas just for getting a direct deposit. So we were talking about avoiding debt. That’s an important part of personal finance. Outside of maybe buying a car or a home, if you get a reasonable interest rate, most people want to try to avoid debt, especially high interest debt. But even better than being debt-free is having savings, is having a net worth that’s growing, seeing yourself getting on track to wealth. And that’s how we start. It starts with that first dollar. Even the most wealthy people in the world often started not as the most wealthy people. So it takes effort, it takes time, it takes thought, but we can start small and use it kind of like a financial snowball to build, again, good habits that you can stick with for a long time.

Goal 2: Save for a Rainy Day

Eric Rosenberg:

So again, an emergency fund is an extremely important part anyone’s finances. I’ll give you a couple examples, and some of these have happened to me recently. So let’s say you are driving down the street, and your car breaks down. This happened to me once and it was an expensive repair. It was like $1,200. There was no car accident involved. Cars just break. And if I hadn’t had an emergency fund, I might have had to use a credit card. I might have had to have gone into debt to pay for that. But because I had emergency savings, I was able to transfer the money from that emergency fund into a checking account where my debit card was and I could pay for it directly without any debt. So car breakdowns, that’s a really common scenario.

Another one, if you own your own home, furnaces, refrigerators, dishwashers. My dishwashers on the fritz right now. I think we have a new one coming soon. So we’re starting to save up because we know this isn’t going to last forever. It’s a probably eight year old dishwasher. So we’re not going to repair it when it goes down the next time. We’re going to replace it. And how are we going to pay for it? Because we’ve saved for it, we’re not stressing about it. We’re not worried about it. So emergency funds are to cover all of those things that you don’t expect or those one-time things that you might see coming but didn’t have savings put aside for that. That could even be maybe you slip and fall on the ice and have to go to the hospital. That’s a $500 copay from your health insurance for an ER visit.

Sydney Ahmadian:

Yeah, absolutely.

Eric Rosenberg:

Maybe your kid absolutely gets sick at school. There’s so many things that could happen. So just saving up for an emergency, it’s key. And something that’s really cool that you can do when you’re saving for an emergency is automate it. Now, Sydney, I know Payactiv has really cool automatic savings features. And I love using tools like this because I can put money away every payday without thinking about it. If you were setting up an emergency fund in your Payactiv account, what steps would you take, and how would you think about funding it yourself? What would you do?

Sydney Ahmadian:

I actually use this feature myself. So with direct deposit set up to your Payactiv card, which is the best way to do it because then your paycheck is coming in, that’s the source for the actual emergency fund, then you’ll just go into the app and create a goal. So let’s say your goal is to set aside three months of expenses for this emergency fund, like if something were to happen to your job. Then you’d be good, right? You could cover rent, food, all the things. So that’s a great first goal for people to set up with this tool. So I would create a goal for an emergency fund. Let’s say it’s $9,000 to cover three months of expenses. So from there, SmartSave will actually tell me how much is safe to set aside and how much is safe to spend based on this goal. And I can play with the tool and see how long it will take me based on how comfortable I am setting certain amounts of money aside.

So I might not be comfortable setting aside $500 a week if I’m trying to get to my goal faster. I might be more comfortable with a hundred dollars a week or $20 a week or $5 a week. And SmartSave will show you how long it will take you to reach your goal. And I just think that’s such an intuitive and helpful way to set money aside. And then once it’s all set up, you don’t have to touch it. You don’t have to do anything. All you have to do is continue working, continue getting paid, and your goal will grow with you.

Eric Rosenberg:

And I love that you mentioned everyone does isn’t going to feel comfortable saving the same amount because all of our finances are different. Personal finance is personal. How much you earn is going to be different than your next door neighbor. How much you can save is going to be different than your coworker, and that’s okay. So it’s best to save as much as you comfortably can, whatever that number is for you. But if you don’t feel like you can save a lot or if you’re really struggling, if you’re paycheck to paycheck, just start with something small like a dollar or $5 because just getting something saved, you won’t miss the money.

Sydney Ahmadian:

You won’t miss it.

Eric Rosenberg:

And you’ll see that savings account grow. And you won’t miss it because it didn’t come into your checking account, basically. It didn’t come into that debit account where you can tap into it and spend it when you’re doing your regular shopping. It’s already gone, paying you for your future. So it’s money you have put away, and you don’t have to think about it. So whether it’s a dollar, $5, just start, and you can always grow over time.

Sydney Ahmadian:

Just start. So Eric, when we’re talking about credit cards, credit card debt, emergency funds, which do you think we should be prioritizing first? Is it the credit cards and credit card debt, paying that off, or is it setting money aside for an emergency?

Eric Rosenberg:

I’d try the best you can to balance prioritizing both. I’d start with probably a smaller savings and a higher payment towards your credit cards if that’s your situation. But I wouldn’t neglect savings. I would maybe make it that start small number, maybe that $5 a paycheck goes towards savings just to get something happening. Because credit card interest rates are often 20% or higher, paying those off as quickly as possible should be a top priority because that will give you more money every month that you get to keep for savings or groceries or rent or putting away for next year’s holiday shopping, whatever the things are that you want to save for. If you’re spending it on credit card interest, it’s not money you have. So definitely prioritize paying off credit cards as quickly as possible.

Sydney Ahmadian:

And you mentioned spending. We mentioned that a little bit earlier in the show too. So our three resolutions, let’s recap, are credit cards and prioritizing using a debit card instead of a credit card, emergency funds, setting money aside as regularly as possible. And our third one is just spending smarter, making conscious spending decisions, having a budgeting meeting maybe once or twice a month with yourself. So Eric, what are some of your tips for 2023 specifically in regards to budgeting?

Goal 3: Love Your Budget

Eric Rosenberg:

Yeah, so we had mentioned a few times inflation has been high. Depending on where you live, you might be seeing eggs for eight, nine, 10 dollars for a dozen eggs. And that’s a lot of money we weren’t spending before. Here in California, our gas bills are through the roof. So we know that bills can go up. So that’s an important thing to think about when building a budget. So sometimes we have to make some audibles as they’d say in football, and we got to make some decisions on the fly to change our budget. But we can’t do that unless we start with a good budget to follow.

And that’s actually another really cool thing I like about the Payactiv app. There’s a tool built in where you can set how much you want to spend in each category. And remember, a lot of people get afraid of the word budget because they feel like it tells them what they can’t do with their money, but that’s not really how a budget works. I like to think about it more like a spending plan because you create your spending plan. It’s your plan. So how to put a budget together for 2023, look at your monthly income is how I would start, your expected average monthly income. And then you can divide up, look back at what you’ve spent in the last year. What’s your average spending on groceries? What’s your average spending on gas? What’s your average spending on maybe medical expenses? Whatever categories make the most sense for you, those are the ones you want to track.

And like I said, medical expenses, for some people that’s high every month. Some people it’s very, very low. So some people might want that as a budget category where some people might just lump it into an everything else category. Some people go to restaurants regularly, and that’s a big priority for them. But remember, restaurants can be very expensive compared to groceries. So for me, I like to break out restaurants from groceries. I don’t just lump food together because I know it’s better if I buy groceries and cook at home for my finances. So think about things like that, and make sure that that total spending for each category in your spending plan isn’t higher than your income. Otherwise, you have to make some adjustments.

And through the year, hopefully we’ll see the price of eggs go down. Hopefully the bird flu will end, and that will go down. But we’ll probably see other products that you buy get more expensive. So be ready to make adjustments to your budget if you have to to cover those needs for you or your family, and make sure those are covered first. And then hopefully, there’s something left over for a little fun. But make sure you put that in your budget too.

And if you do that, then you can spend money on that fun category guilt-free. You’ll say, “Oh, I put away $50 this payday to go do fun things.” And if that’s movies or concerts or video games, whatever you like, that’s okay if you budgeted it and you can afford it. So think about that. Try to budget for the things you need first, but also leave a little bit aside in a wants category because we all have to have a little fun. We can’t just be stoic and save every dollar and everything.

The Wrap-Up

Sydney Ahmadian:

Of course. Of course.

Eric Rosenberg:

So that’s what I would think about for 2023. Be ready to make changes to your budget because we’re going to see unexpected changes and costs. But remember, we got to live a little and find a way to balance your wants and your needs.

Sydney Ahmadian:

I love that. Eric, thank you so much for wrapping us up there. And I just want to say as my final note, budgeting and spending tools should not cost an arm and a leg, right? That just doesn’t make any sense, right? So Payactiv, our tools are a hundred percent free to the user. Our SmartSpend tool, our budgeting tool, is free and is very similar to other tools out there on the market that cost money. So if you’re looking for a free tool to get your finances under control that makes a lot of sense, try Payactiv. Download our app. It’s in the app store. And who knows, see what 2023 holds for you.

Eric Rosenberg:

Yeah, it’s better to have a budgeting app that pays you than one you pay for. That’s the way I’d like to think about it.

Sydney Ahmadian:

Absolutely.

Eric Rosenberg:

So thank you all so much for listening with us. If you have any financial New Year’s resolution, send them to us on Twitter or any of the other Payactiv social channels. Were out there. P-A-Y-A-C-T-I-V. Search for it on your favorite search place, and you’ll find us. We’d love to hear your resolutions and help you get there. So thank you so much for listening, and good luck with those resolutions. Good luck getting out of debt and mastering your money in 2023 and beyond. Thank you so much, and thanks for hanging out with us today, Sydney.

Sydney Ahmadian:

Thanks, Eric.

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