Life Kit Podcast Summary: Financial Habits to Leave Behind in 2025
Episode Title: Financial Habits to Leave Behind in 2025
Host: Marielle Seguera, NPR's Life Kit
Release Date: December 31, 2024
As we approach the new year, many of us are reflecting on our financial behaviors and seeking ways to improve our monetary well-being. In this insightful episode of Life Kit, host Marielle Seguera delves into five financial habits that listeners should consider abandoning in 2025 to foster healthier financial lives. Drawing from expert interviews and practical advice, this episode serves as a comprehensive guide to starting the new year on solid financial footing.
1. Mindless Buying: Curb Impulsive Purchases
Key Points:
- Mindless buying refers to purchasing items without intention or adherence to a budget, often leading to unnecessary debt and clutter.
- Alicia Berman, a beauty and fashion marketing professional, shares her personal experience of overspending, which led her to adopt the No Buy Challenge.
- The No Buy Challenge encourages individuals to refrain from purchasing non-essential items for a set period, helping them recognize and control their spending habits.
Notable Quotes:
- Alicia Berman (04:15): “I left the store with a $600 winter coat that I just didn't need and couldn't afford. Like, it was a mess. So that was kind of my, like, breaking point.”
- Marielle Seguera (05:10): “It's about pausing and deciding how to spend your money in a way that improves your life.”
Actionable Advice:
- Create a No Buy List: Identify items or categories where you tend to overspend and make a conscious decision to avoid purchasing them.
- Set a Yes Column: Allow spending on items that genuinely enrich your life, such as experiences or necessities.
- Pay Down Debt: Use the money saved from reduced spending to pay off existing debts.
2. Lifestyle Creep: Prevent Your Spending from Rising with Income
Key Points:
- Lifestyle creep occurs when an increase in income leads to a proportional or greater increase in spending, negating the benefits of higher earnings.
- Paco De Leon, author of Finance for the People, explains how even modest income increases can spiral into unnecessary expenditures.
- Yanelli Espinal, financial educator, emphasizes the importance of saving additional income rather than succumbing to increased spending temptations.
Notable Quotes:
- Paco De Leon (06:20): “They might start going out to sushi for lunch in the middle of the week. This kind of thing can snowball...”
- Marielle Seguera (07:00): “Try automatically pushing that money into a rainy day fund or towards some debt.”
Actionable Advice:
- Save or Invest Extra Income: Allocate any raises or windfalls directly to savings or investments.
- Monitor Spending Habits: Regularly review your expenses to ensure they align with your financial goals.
- Understand the Hedonic Treadmill: Recognize that increased spending may only provide short-term happiness without long-term satisfaction.
3. Unnecessary Subscriptions: Trim the Fat from Your Monthly Expenses
Key Points:
- Many individuals subscribe to services they rarely use, leading to wasted money each month.
- Eric Deggans, NPR’s TV critic and media analyst, advises conducting a subscription audit to identify and cancel unused or unnecessary services.
- Utilizing bundled services or accessing streaming platforms through existing providers can reduce costs.
Notable Quotes:
- Eric Deggans (08:40): “Come up with a strategy before you actually say I want the streaming service or I don't want that one.”
- Marielle Seguera (09:35): “Remember, if you sign up for a free trial and you want to cancel it, set a reminder so you actually follow through.”
Actionable Advice:
- List All Subscriptions: Review credit card and bank statements to identify recurring payments.
- Evaluate Usage: Determine which subscriptions are genuinely beneficial and which can be canceled or downgraded.
- Set Reminders for Trials: Avoid being charged for unwanted services by marking trial end dates on your calendar.
4. Ignoring Credit Card Debt: Tackle Debt Proactively
Key Points:
- Ignoring credit card debt can lead to escalating interest charges and financial instability.
- Alicia Berman introduces the concept of balance transfers as a strategy to manage and reduce credit card debt by moving it to a card with a 0% interest rate.
- John Kiernan from WalletHub emphasizes the importance of understanding credit card terms and making timely payments to minimize interest.
Notable Quotes:
- Alicia Berman (11:51): “If you do it right, you can take the amount of your current balance that you can't pay, reduce the interest rate to zero so you're only paying the principal.”
- Marielle Seguera (12:42): “If you don’t pay your full statement balance every month at the due date, you’re going to start accruing daily interest charges.”
Actionable Advice:
- Consider Balance Transfers: Transfer high-interest debt to a card offering a 0% introductory rate, but be mindful of transfer fees and repayment timelines.
- Pay Statement Balances in Full: Avoid interest by paying off your credit card's statement balance by the due date each month.
- Set Up Automatic Payments: Ensure timely payments to prevent missed dues and additional fees.
5. Forgetting to Negotiate: Leverage Negotiation in Everyday Finances
Key Points:
- Many people overlook the power of negotiation in various financial situations, from customer service disputes to everyday bills.
- Joan Moon, founder of Moon Negotiation and negotiation coach at Harvard Kennedy School, advocates for a win-win approach to negotiations, benefiting both parties involved.
- Negotiation can lead to significant savings on medical bills, utilities, and other recurring expenses.
Notable Quotes:
- Joan Moon (14:04): “A win-win is when you talk about how you and I are both going to benefit from the solution.”
- Alicia Berman (17:05): “I can get 30 to 50% off just by asking that. If I pay you right now, what can I get lowered off this bill?”
Actionable Advice:
- Adopt a Collaborative Tone: Approach negotiations with the intent to find mutually beneficial solutions.
- Prepare a Menu of Options: Present multiple solutions to avoid deadlocks and encourage cooperation.
- Persist in Negotiations: Be prepared to negotiate with different representatives to achieve the best possible outcome.
- Negotiate Medical Bills: Request itemized bills, verify charges, and ask for discounts or payment plans when necessary.
Recap and Final Thoughts
Marielle Seguera wraps up the episode by summarizing the five financial habits to abandon in 2025:
- Mindless Buying: Avoid impulsive purchases by adopting intentional spending practices.
- Lifestyle Creep: Prevent your spending from increasing with your income by saving or investing extra earnings.
- Unnecessary Subscriptions: Regularly audit and eliminate unused or redundant subscriptions to save money.
- Ignoring Credit Card Debt: Actively manage and reduce credit card debt through strategies like balance transfers and timely payments.
- Forgetting to Negotiate: Utilize negotiation skills in various aspects of life to secure better deals and reduce expenses.
By addressing these habits, listeners can pave the way for a more secure and prosperous financial future. For those seeking further guidance, Life Kit offers additional episodes on creating a financial self-care routine and understanding credit card basics.
Additional Resources:
- No Buy Challenge: Sign up at npr.org/dryjanuary
- Life Kit Newsletter: Subscribe at npr.org/LifeKitnewsletter
- More Episodes: Explore at npr.org/LifeKit
Production Credits: This episode was produced by Bria Suggs, with visual content by Beck Harlan and digital editing by Malika Grebe. Meghan Keane served as supervising editor, while Beth Donovan was the executive producer. The production team included Andy Taegle, Claire Marie Schneider, Margaret Serino, and Sylvie Douglas. Engineering support was provided by Carly Strange and David Greenberg.
Life Kit continues to offer valuable advice to help listeners navigate the complexities of modern life, ensuring that everyone has the tools they need to thrive.