The Most Toxic Spending Habits

Summary

WSJ Your Money Briefing

Episode Title: The Most Toxic Spending Habits
Date: August 26, 2019
Host: J.R. Whalen
Guest: Emily Shalal, Senior Director of Consumer Strategy and Innovation at Ally Bank

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Overview

This episode of Your Money Briefing explores the most toxic spending habits that can derail personal and family finances. J.R. Whalen and Emily Shalal break down the common pitfalls people fall into—such as denial, impulsive purchases, lack of planning, secrecy around spending, and comparing oneself to others—while offering practical strategies for building healthier financial routines.

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Key Discussion Points & Insights

1. Denial: The First Toxic Habit

• Denial of Bad Habits
  Many people operate in a state of denial about their spending habits, pretending they don’t have a problem.
  • Quote:

    “Just kind of knowledge and acceptance is the first step to making change.”
    – Emily Shalal [02:46]

  • Takeaway: Mindfulness and honesty are foundational steps toward improving money management.

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2. Impulsive and Unchecked Spending

• Impulsivity is Common
  Americans often make purchases on impulse, without thinking them through.

  • Quote:

    “We can get caught up in the moment and really spend money that we're not even thinking about and being very impulsive in spending.”
    – Emily Shalal [03:20]

• Pause Before Purchasing
  Emily recommends specific tactics to curb impulse buys:

  • Review your shopping cart before checkout.
  • For online purchases, wait 24 hours before buying.
  • By implementing these habits, people can save an average of $200/month.

• Quote:

  “For people who can… take the time to really think about those purchases, they can save, on average, about $200 a month.”
  – Emily Shalal [03:48]

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3. Lack of Financial Planning

• Short-Sightedness Is Costly
  Focusing only on immediate needs leads to neglecting future obligations like taxes, insurance, or recurring major expenses.

  • Quote:

    “Just sitting down and thinking about…the money that you need this week…six months from now, really does make a big difference.”
    – Emily Shalal [04:21]

• Advice:
  Ask yourself, “How is this purchase going to impact the expenses I know are coming up but aren’t in front of me right now?”

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4. Secrecy and Lack of Communication

• Hiding Spending Is Harmful
  Concealing purchases from partners, or even oneself, erodes trust and undermines financial health.

  • Quote:

    “You can hide it from yourself, but you can't hide it from everyone forever.”
    – Emily Shalal [05:03]

• Proactive Conversations Matter
  Important to discuss financial situations and goals openly before and after big life steps (like marriage).

  • Schedule a regular “money night” to talk finances in a non-confrontational way.
  • If conversation is difficult, start with a written letter to your partner.

• Quote:

  “One of the things that we recommend is to have a money night once a month…so that you're mentally prepared to have those in a non-confrontational way.”
  – Emily Shalal [05:44]

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5. Comparison with Others ("Keeping Up with the Kardashians")

• Social Media Distortions
  Comparing one’s real life to the curated images on Instagram or Facebook leads to unhealthy spending pressures.

  • Quote:

    “A lot of people look at that and say, ‘Wow, why can't I go on those trips? Or why can’t I make those big purchases?’”
    – Emily Shalal [06:22]

• Reality Check
  Don’t base your spending on appearances; instead, set financial goals based on your own priorities.

  • “Let those maybe encourage you to set a goal…but build your plan around what you truly want to do—not what you think everyone else around you is doing.”
    – Emily Shalal [06:42]

• Clever Rebuttal:
  “So we shouldn't believe everything we read on the Internet?”
  “That's right.”
  – J.R. Whalen and Emily Shalal [07:12]

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Notable Quotes & Memorable Moments

• On denial:
  “Knowledge and acceptance is the first step to making change.”
  Emily Shalal [02:46]

• On pausing before a purchase:
  “Take a second look at your shopping cart before you go…Or…wait 24 hours and come back the next day.”
  Emily Shalal [03:27]

• On family financial conversations:
  “Have a money night once a month where you're not stressed out…so that you're mentally prepared.”
  Emily Shalal [05:44]

• On comparing to others:
  “Don't base your level of spending on what you think others are doing.”
  Emily Shalal [06:35]

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Timestamps for Important Segments

• [02:15] — Introduction to toxic financial habits and why they matter
• [02:46] — The problem of denial and the first step to change
• [03:20] — How impulsive spending happens and a method to curb it
• [04:21] — Importance of planning for future expenses
• [05:03] — The dangers of hiding spending from yourself or your partner
• [05:44] — How to communicate about money effectively with a partner
• [06:22] — The pitfalls of trying to “keep up with the Kardashians” and social media-driven spending
• [07:12] — Not believing everything you see online

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Tone and Language

The conversation is practical, direct, and encouraging. Both J.R. Whalen and Emily Shalal offer actionable advice without judgment, emphasizing mindfulness, communication, and goal-setting.

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Summary

In this episode, listeners learn that unhealthy financial habits—denial, impulsivity, lack of planning, secrecy, and social comparison—can have ripple effects beyond the individual, especially within families. Through honest self-reflection, careful planning, open communication, and ignoring the illusions of social media, people can take control of their finances and avoid the “most toxic spending habits.”

Transcript

[Charles Schwab Announcer]

This episode is brought to you by Charles Schwab. Decisions made in Washington can affect your portfolio every day. Washington Wise from Charles Schwab is an original podcast that unpacks the stories making news in Washington. [e-mail] Washingtonwise.

[Charlie Turner]

This is your Money briefing from the Wall Street Journal. I'm Charlie Turner in New York. In a moment, J.R. whalen will discuss the most toxic spending habits with Ally Bank's Emily Shellal. First, here are some money headlines. Stocks took a beating Friday after China imposed new tariffs on the U.S. also that day, Fed Chairman Jerome Powell issued a word of caution on the limits of the Fed's capabilities. The Fed has to contend with a global slowdown, worsening trade tensions, and in Mr. Powell's case, a drumbeat of criticism from President Trump. Mr. Powell, in his remarks in Jackson Hole, Wyoming on Friday, made it clear that the Fed is ready with more rate cuts if trade tensions worsen the economic outlook. But as the Wall Street Journal's heard on the street notes, Mr. Powell also said that when it comes to trade, there are limits to what the Fed can accomplish and investors should be mindful of that. The trade tensions got even worse late Friday as President Trump said he would raise tariffs to 30% on some Chinese imports. With their industry facing rising competition, financial advisers across the US Have a new side hustle. College counseling. Those who offer guidance on stocks, bonds and mutual funds view the rising cost of higher education as their best opportunity in decades to keep clients and gain new ones. They aren't just pitching tax advantage strategies, they're writing financial aid applications, rearranging assets, consulting on college applications, and even helping the children of clients pick majors and internships. College aid isn't the only way advisors are fighting to stay relevant. Few tasks are off limits in their bid to keep clients from bolting to low cost alternatives. Alternatives. One prominent wealth management advisor set up an agreement with clients over how to divide the eventual remains of their parents after they were cremated.

[J.R. Whalen]

If you're single and struggling with your finances, you're likely only hurting yourself with bad money habits. But if you have a family, your financial missteps can impact your spouse and kids. So what are the most toxic money mistakes that people should be mindful of and how can they solve those problems? Let's bring in Emily Shalal. She's senior director of consumer strategy and innovation at Ally bank and she's on the line with us. So Emily, one of the biggest bad habits people have is pretending that they don't have any toxic money habits.

[Emily Shellal]

What we have found with people is that just kind of knowledge and acceptance is the first step to making change. And so a lot of people go through the month and they know that their spending may be, you know, a little more than it should be, or that they're doing things that they shouldn't. And just having that realization and sitting down and being mindful of that is the first step to. To having a better financial life in the future.

[J.R. Whalen]

And then keeping an eye on spending is really important. And especially we all have things we have to spend money on, but it's important to put a lasso on wasteful spending.

[Emily Shellal]

Just like every typical American, we can get caught up in the moment and. And really spend money that we're not even thinking about and being very impulsive in spending. And so one of the things that we have found works really well is just to kind of slow the roll when it. When you're making a decision about whether you want to spend money on something, whether that's in a store, and taking a second look at your shopping cart before you go through the shopping line to just make sure that everything in there are things that you really, truly need, or putting something into your cart online, and then waiting 24 hours and coming back the next day and making sure that you still really have the same kind of feeling about that purchase. Because a lot of times you get caught up in the moment and. And you'll spend money, and then immediately you'll have buyer's remorse, and it may be too late to do something about it. And what we found is that for people who can do that and take the time to really think about those purchases, they can save, on average, about $200 a month.

[J.R. Whalen]

And sometimes when people spend like that, they lose sight of things in their lives they're going to have to spend money on down the line. Maybe they haven't had the whole planning process out in their head when they have an impulsive moment at the checkout counter.

[Emily Shellal]

Yep. And just sitting down and thinking about your, you know, the money that you need this week, the money that you need in your next paycheck, the money that you need six months from now, really does make a big difference. And just, you know, thinking about, when are my taxes due? If you own a home, when am I going to have to pay on my insurance? Or if you're not escrowing money, when are all of those bigger ticket items that aren't right in front of you every day, when are those things going to come up? And are you making sure that you're planning for those and just thinking about that will help you actually create the plan. Because you're going to be more mindful the next time you have that impulse buy in front of you to say, how is that going to impact some of the things that I'm not thinking about right here now?

[J.R. Whalen]

And it's never a good idea to hide any of your spending.

[Emily Shellal]

No. And you can hide it from yourself, but you can't hide it from everyone forever. And so one of the things that's the best is to really be mindful about the conversations that you need to have, whether that's before you get married and sitting down with your potential spouse and being very honest about where you are financially, what your goals are for your money in the future, how you want to spend your life in retirement, what you think about in terms of the education for your future children. But having those conversations on a regular basis are very, very important to just having that level of transparency to create the right kind of financial mindset. And the time to do it is not when you've had a stressful day at work and your spouse walks in the door and you say, now is the time to talk about that purchase that you made yesterday. Because those conversations are never going to go well. So one of the things that we recommend is to have a money night once a month where you're not stressed out, you know, going into it, that you want to have those conversations and that you're mentally prepared to have those in a non confrontational way. And if you think that you can't get through it verbally, one of the best ways to start is to just sit down and write a letter to your spouse or significant other and then share that letter with them ahead of time so that you're not starting from a place of conflict.

[J.R. Whalen]

That's not a bad idea. And then one of the other things you mentioned that is a bad habit is keeping up with the Kardashians. What do you mean by that?

[Emily Shellal]

So a lot of times we're living in a Facebook and Instagram kind of world where everyone is showing what they want the world around them to see, which may or may not actually be reality. But a lot of people look at that and they say, wow, why can't I go on those trips? Or why can't I make those big purchases? Or why am I not at the beach this weekend? And. And a lot of times those really should just help you set a plan in place because they may or may not be factual. And so don't base your level of spending on what you think others are doing. It's let those maybe encourage you to set a goal and maybe you want to go on vacation six months from now, but build your plan around what you truly want to do and not what you think everyone else around you is doing. Because the reality is if you could actually dig into their finances, probably not what you think that they are.

[J.R. Whalen]

So we shouldn't believe everything we read on the Internet?

[Emily Shellal]

That's right.

[J.R. Whalen]

All right. That's very good advice. That's Emily Shalal. She's senior director of consumer strategy and innovation at Ally Bank. Emily, thanks so much for coming on the show.

[Emily Shellal]

Thanks so much.

[J.R. Whalen]

And that's your money briefing. I'm JR Whalen in New York for the Wall Street Journal.

[Charles Schwab Announcer]

This episode is brought to you by Charles Schwab. Decisions made in Washington can affect your portfolio every day. Washington Wise from Charles Schwab is an original podcast that unpacks the stories making news in Washington. [e-mail] WashingtonWise.