NerdWallet's Smart Money Podcast: Stop Scrolling, Start Saving — Better Habits and Budgets for 2025

Release Date: January 6, 2025

In the January 6, 2025 episode of NerdWallet's Smart Money Podcast, hosts Sean Pyles and Sarah Rathner delve into the intricacies of setting effective financial habits for the new year. Titled "Stop Scrolling, Start Saving: Better Habits and Budgets for 2025," the episode emphasizes the importance of ceasing detrimental habits and adopting sustainable financial practices to enhance personal finances. The discussion is enriched by insights from personal finance expert Kim Palmer, who addresses budgeting strategies for those with irregular incomes.

Rethinking Resolutions: Start by Stopping

The episode opens with Sean and Sarah challenging the traditional notion of New Year's resolutions. Sarah mentions a statistic she encountered, highlighting that "fewer than 10% of resolutions are actually successfully completed" (00:05). Instead of adding new goals, they advocate for eliminating unproductive habits.

Sarah shares her own resolution to "drink more water," framing it as a measurable and beneficial goal (00:17). Sean complements this by suggesting that resolutions can also involve stopping certain behaviors, a perspective that sets the tone for the episode's focus on reducing rather than adding.

Personal Habits and Financial Impact

The conversation shifts to personal habits that indirectly affect finances. Sarah expresses her intent to curb "mindless phone scrolling" in the evenings (02:32). She elaborates on how excessive time on social media can lead to unnecessary spending, driven by influencers and targeted advertisements.

Sean relates by sharing his own struggle with phone addiction, mentioning an app called Roots that helped him limit his usage during his CFP exam preparation (02:46). This mutual acknowledgment underscores the challenge of breaking ingrained habits and the financial benefits of doing so.

A notable moment occurs when Sarah reflects on the manipulative nature of social media: "It's just manufactured to make you buy things" (03:56). This highlights the psychological tactics that drive impulsive spending, reinforcing the episode's theme of mindful consumption.

Sustainable Spending: Balancing Strictness and Flexibility

Sean shares his experience with imposing strict financial rules, specifically abstaining from buying new clothes for six months (05:08). While successful initially, he found himself splurging once the restriction was lifted, illustrating the pitfalls of overly rigid budgeting. Sarah echoes this sentiment, drawing parallels to college students who rebel against strict parental controls (05:44).

To cultivate more sustainable spending habits, Sean proposes a balanced approach: limiting clothing purchases to one item per month (06:28). This method allows for controlled spending without the extreme deprivation that leads to financial backsliding.

Sarah introduces the "one in, one out" philosophy for managing wardrobe clutter (06:52), advocating for donating or discarding old items when introducing new ones. This strategy not only maintains an organized wardrobe but also curbs impulse buying.

Listener Engagement: Money Questions and Expert Advice

Transitioning from personal anecdotes, the hosts encourage listener participation, inviting them to submit money-related questions via voicemail or text (09:01). This interactive segment is central to the episode's structure, fostering a community of shared financial challenges and solutions.

Question of the Episode: Budgeting with Irregular Income

The primary focus shifts to addressing a listener's query from Sam, a PhD student with an irregular stipend (10:26). Sam seeks advice on budgeting when income is received in large, infrequent chunks.

Expert Insights from Kim Palmer:

Kim Palmer provides a comprehensive guide for managing irregular income:

1. Expense Tracking: Begin by documenting all expenses, both fixed (housing, food, transportation) and variable (entertainment, dining out) (11:37). This foundational step ensures clarity on financial obligations.

2. Budget Allocation: Divide the total income by the number of months it needs to cover. For instance, with a $10,000 stipend over five months, allocate $2,000 monthly (11:37).

3. High-Yield Savings Strategy: Sarah shares her experience of transferring lump-sum payments to a high-yield savings account and setting up automatic transfers to mimic regular paychecks (12:52). Kim endorses this method, emphasizing the importance of letting money work through interest accrual.

4. Tax Considerations: Kim reminds listeners to set aside funds for taxes, especially if they aren't automatically withheld from their income (16:06). This precaution helps avoid unexpected penalties.

5. Budgeting Apps: Utilizing tools like YNAB (You Need A Budget) and EveryDollar can streamline the budgeting process by implementing zero-based budgeting or the envelope system (16:48). These apps facilitate detailed tracking and allocation of funds.

6. Emergency Savings: Establishing an emergency fund is crucial. Kim suggests starting with a modest goal of $500 and gradually increasing it (20:16). Automating contributions ensures consistent savings growth.

7. Expense Minimization: Review and trim variable expenses such as dining out and entertainment to stretch the budget further (18:29).

Sean adds personal accountability by planning to track his clothing spending and document his financial decisions (07:21). This reflective practice promotes mindful spending and long-term financial health.

Key Takeaways and Practical Tips

• Eliminate Unproductive Habits: Focus on stopping activities that lead to unnecessary spending, such as excessive social media use.

• Balanced Budgeting: Adopt flexible financial rules that prevent burnout and promote sustainable spending habits.

• Strategic Saving: Utilize high-yield savings accounts and automate transfers to manage lump-sum incomes effectively.

• Leverage Technology: Budgeting apps can simplify the management of irregular incomes through structured systems.

• Plan for Taxes: Always account for potential tax obligations to avoid unforeseen financial burdens.

• Build an Emergency Fund: Start small and consistently contribute to create a financial cushion for unpredictable expenses.

Conclusion: Empowering Financial Decisions

The episode concludes with a reminder of NerdWallet's commitment to assisting listeners in making informed financial decisions. Sean and Sarah reiterate the importance of addressing personal financial habits and adopting strategies tailored to individual income patterns. By sharing personal experiences and expert advice, they empower listeners to take control of their finances, fostering a sense of financial stability and growth for the year ahead.

For more insights and personalized financial advice, listeners are encouraged to reach out via voicemail, text, or email, and to explore additional resources on NerdWallet’s website.

Notable Quotes:

• Sarah Rathner (00:05): "Fewer than 10% of resolutions are actually successfully completed. Sorry, guys."

• Sean Pyles (02:32): "What do you want to do less of this year?"

• Sarah Rathner (03:56): "It's just manufactured to make you buy things."

• Kim Palmer (16:48): "Whatever system or app works best for you. So you actually think it's fun to log in and check out where your money's going."

Timestamp Reference Guide:

• [00:00] – Episode Introduction
• [00:05] – Discussion on Resolutions
• [00:17] – Sarah’s Water Drinking Goal
• [02:32] – Redefining Resolutions: Doing Less
• [03:56] – Impact of Social Media on Spending
• [05:08] – Sean’s Clothing Spending Rule
• [06:28] – Sustainable Spending Habits
• [09:01] – Listener Engagement and Money Questions
• [10:26] – Listener’s Budgeting Question
• [11:37] – Kim Palmer on Expense Tracking
• [12:52] – High-Yield Savings Strategy
• [16:48] – Budgeting Apps for Irregular Income
• [18:29] – Strategies to Stretch the Budget
• [20:16] – Importance of Emergency Savings
• [22:16] – Episode Conclusion

This summary encapsulates the key discussions and insights from the "Stop Scrolling, Start Saving: Better Habits and Budgets for 2025" episode, providing listeners with actionable strategies to enhance their financial well-being in the new year.