← Young and Profiting with Hala Taha
Young and Profiting with Hala Taha
The Money Reset Series: How to Build Financial Habits That Stick | Finance | E2 | Presented by Experian
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Awareness alone doesn't change behavior. What truly changes your life isn't one big decision or a sudden surge of motivation. Lasting financial change isn't about discipline. It's about direction. Your systems. Yeah, fam. Your defaults. We're going to talk about how to make those systems stick. Even when motivation fades, life gets crazy, or old habits try to creep back in, we'll break down the simple structural changes that keep your money moving forward without all the constant effort.
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Whenever you are thinking about your financial future, what you really have to keep in mind is the idea of what are you going to regret in the future.
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The wealth creation journey, if you're not already earning a huge income, begins with frugality.
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Building better habits, making these small improvements. It's really about getting you on a path that can lead to where you want to go.
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It's kind of like you creating that boundary of saying, I can't go, I'm on a budget. It's kind of like the me too
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that you're wanting the four numbers to track. So if you've got a pen, pull it out because I'm going to give you these right now. These are part of my conscious spending plan. So the first is your.
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Hello young and profiters. Welcome to episode two of the Money Reset series, created in partnership with Experian. In this three part series, we're resetting how we relate to money not by doing more, but by building clarity, structure and relief into our financial lives. In episode one, we talked about awareness, seeing your money clearly. Because once you can actually see what's happening, you can stop guessing and start making intentional choices. But here's the thing. Awareness alone doesn't change behavior. What truly changes your life isn't one big decision or a sudden surge of motivation. It's the direction your habits are taking you day after day. Your systems. Yeah, fam. Your defaults. The things that keep working even when you're tired, distracting or busy living your life. And that's what today's episode is all about. We're diving into why systems beat willpower every time, and how small practical changes can completely shift your financial trajectory. You'll hear insights from some of the best minds in this space, including James Clear, Jade Warshaw and Morgan Housel. And when it comes to building systems, some of the most powerful ones are the tasks you don't have time to manage yourself. Things like canceling unused subscriptions or negotiating recurring bills. Experian offers tools like subscription cancellation and bill negotiation, which could help you manage eligible recurring expenses and could help Put money back in your pocket so finances feel more manageable and less overwhelming. Results will vary. Not all bills and subscriptions are eligible. Savings not guaranteed. Paid membership with connected payment account required. See experian.com for details. All right, Yapam, let's get right into episode two. Yap Gang. Just think about it. If willpower was enough, most of us would already have our money totally figured out. We would just decide to do better and stick with it. But real life just doesn't work that way. Motivation fades, life gets busy. And relying on willpower alone usually just puts us right back where we started. That's why lasting financial change isn't about discipline. It is about direction. What matters most isn't where you are right now, it's where your habits are taking you. And that's a core idea in the work of James Clear. He's a behavioral scientist and a bestselling author of Atomic Habits, known for breaking down how small, consistent habits drive long term change. Here's a clip from my conversation with James on why habits outperform willpower every time.
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Time will magnify whatever you feed it. So if you have good habits, even if they're little and seem relatively minor, on any given day, you'll continue to put yourself in a stronger position day after day. In many ways, if you have good habits, you're on the right trajectory. And so all you need is time. You just need some patience. But if you have bad habits, time becomes your enemy. And every day that goes by, you kind of dig the hole a little bit deeper. And so this idea that small habits can make an enormous difference, what it really is about is about emphasizing trajectory rather than position. You know, there's a lot of discussion about position in life. How much money's in your bank account? What's the current number on the scale? What's the stock price? What are the quarterly earnings? We have like all these ways of measuring your current position. And then if the measurement isn't what you wanted it to be, or you haven't achieved what you set out to achieve, you kind of start judging yourself or feeling guilty for it, or you feel bad about it. And what I'm encouraging is to say, listen, just for a minute, let's stop worrying so much about our current position and instead focus a little bit more on our current trajectory. And this is why one of the key things I talk about in Atomic habits is getting 1% better each day. Are you getting 1% better or 1% worse? Is the arrow pointed up and to the right? Or have you flatlined? Because if you're on a good trajectory, even if it's a very modest gain on any given day, all you need is time. And if you're on a bad trajectory, even if you're in a pretty strong position right now, it's not going to end well. And, and so building better habits, making these small improvements, it's really about getting you on a path that can lead to where you want to go. I really like that question of can my current habits carry me to my desired future? You know, and if they can, then great. Maybe you just need to be patient and let the days work for you. But if they can't, then something needs to change about your trajectory. And so your habits are one of the things that kind of set you on that path and determine how far you're going to go and whether you're improving day in and day out. And so for all of those reasons, I like to refer to habits as the compound interest of self improvement. You know, the same way that money multiplies with compound interest, the effects of your habits multiply as you repeat them across time. Many of your outcomes in life, many of the results that we also badly want to have, they're kind of like a lagging measure of the habits that precede them. So your bank account is a lagging measure of your financial habits. Your knowledge is a lagging measure of your reading and learning habits. Even little stuff like the amount of clutter in your living room is a lagging measure of your cleaning habits. And so we also badly want better results in life. But the somewhat ironic thing is that the results are not actually the thing that needs to change. You know, it's like, fix the inputs and the outputs will fix themselves. Adjust the habits, and you'll be set on a different path and carried to a different destination naturally. So this concept of getting 1% better each day, it's really a philosophy and attitude and approach of showing up, trying to make some small improvement, and trusting that that little improvement can compound in something much greater over a broad span of time.
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The takeaway here is simple. Real progress isn't driven by intensity or big dramatic moves. It's built through small actions that you repeat consistently. The distinction becomes especially clear with money. Morgan Housel, author of the Psychology of Money, explains why focusing on systems instead of goals can change how we approach our financial lives.
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You should have systems instead of goals, and one example of that is a goal is, I'm going to lose ten pounds. That's a goal. A system is I'm going to work out every day. That's a system. It's very different from a goal and it's a much better and more efficient way to have a new habit to do something. And a system means that it probably should not be extreme. So if you have a system of like I'm going to work out five hours a day, let's say just, just, just using that as an example, you're almost not going to stick with it. And the financial equivalent would be like I'm going to save half my paycheck. Well, you're probably not, it's probably not going to work. So the more realistic it is and the more systematic it is rather than a goal, the, the higher the odds that you can stick with it. The other thing I would talk about here that I think is really important is whenever you are thinking about your financial future and let's call them goals if you want to, despite what I just said, you, I think you really, what you really have to keep in mind is the idea of what are you going to regret in the future. So if you have a savings goal, are you going to regret not saving money? Are you going to regret saving too much money because it came at the expense of a vacation that you could have taken or a new car that you could have purchased? You have to understand what you're going to regret. And what I might regret is probably different from what you might regret. Everybody has a very different situation. So you just have to have a good grasp on what you are likely to look back at a year from now, 10 years from now, 50 years from now and say, man, I wish I had done that differently. It's different for everybody. But I think that's the formula you should have in your mind.
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Morgan's point is that systems only work when they're realistic. They have to fit in your life and the trade offs you're actually willing to make. And even the best system will fail if you don't give yourself permission to protect it. That's why more people, especially younger generations, are embracing a trend called loud budgeting. It's all about being upfront with others about what your financial limits are rather than just saying yes to things you can't really afford. I wanted to understand why this shift was happening and why it was so powerful. So I asked Jade Warshaw, she's a financial coast, she's the co host of the Ramsey show and she explained to me why saying it out loud helps turn boundaries into something you can actually stick to.
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I think it's happening because people are tired of going along with the status quo. I think people are finally realizing that life as we know it kind of sucks. Like, this idea of, I'm just gonna be broke every year and I'm never getting ahead. I think people finally figured out that, like, it's like they used to say back in the day, the revolution will be televised. Like, we need to know. Because then you have the accountability. And it's kind of like you creating that boundary of saying, I can't go. I'm on a budget. It's kind of like the me, too, that you're wanting. Whenever you're going through a hard time, you think it's isolated to just you. But then when you're. When your buddy is like, oh, no, I'm going through it too, you're like, oh, thank God somebody else is, you know, in the same boat as me. So when somebody says out loud, I can't go because my budget that allows it frees up so many other people to go, oh, my gosh, me too. I. I feel broke as well. I'm trying to get my money on point as well. Now suddenly, we can have a bunch of open conversations about it, and it's not quite so lonely. I wish I had done that. Cause back in the day, when my husband and I were paying off debt, I kept a lot of. Not necessarily on purpose, but I didn't talk about it out loud a whole lot until several years in the process. And once I did start talking about it, it was helpful, and it gave me the opportunity to really help other people, which was a benefit for both of us, you know, everybody involved.
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This is a shift that so many people are craving. When you stop pretending and start naming your limits, your system finally has room to work. Money stops being something you manage in secret and starts becoming something you can actually design for real life. And coming up next, we're going to talk about how to make those systems stick. Even when motivation fades, life gets crazy, or old habits try to creep back in. We'll break down the simple structural changes that keep your money moving forward without all the constant effort. We'll be right back. Yap fam. Hey, App fam. I know a lot of you are working hard to hit new financial goals this year, but it can be tough to get ahead when subscription creep is quietly draining your bank account. I can't tell you how many times I thought I canceled something only to realize later they were still charging me, or how many times I tried to cancel, but it was so difficult I couldn't figure it out. And if you're like me, you have way too many subscriptions and bills, and you're probably looking for a way to track and manage them all. Lucky for us, Experian handles all that heavy lifting. Check out Experian Experian's subscription cancellation and bill negotiation, two powerful features that can help you save with minimal effort. Experian scans the accounts that you link, finds reoccurring charges, and puts the power in your hands. You can keep the subscriptions you want and cancel the ones that you no longer need or use. Experian can cancel over 200 eligible subscriptions from streaming services to entertainment apps and more. And it doesn't stop there. If you want to also try saving on everyday bills, experienced expert negotiators could help you by finding better rates on eligible bills you're already paying. The best part? You get to keep a hundred percent of your savings. Get started now with the Experian app and let your BFF big Financial Friend do all the work for you. Disclaimer results will vary. Not all bills or subscriptions are eligible. Savings not guaranteed. Paid membership with connected payment account required. See experian.com for details. Welcome back. Now that we've talked about direction and boundaries, let's get super practical. Because the best money systems don't rely on constant discipline. They're designed to make the right choice automatically. One of the simplest ways you can do this is by separating your money before you even have a chance to spend it. That's an approach taught by Tiffany Aluce. She's a financial expert, co host of the Brown Ambition podcast, and the author of Get Good With Money. She calls this a baby budget. And it's a straightforward system that helps your money work in the background so you don't have to fight it. Here's Tiffany explaining how it works.
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Well, first you have to do a little homework in that you're going to figure out how much money do you want to go into your bills account every month? You should have a separate checking account for bills. How much money do you want to allocate for spending? And so that's just like your allowance. Maybe it's groceries, grooming, going out. So that's a separate checking account. So two checking. Then you want to have a savings account for emergencies. So ideally three months or more depending on how quickly you could replace your income if you were to lose your job. And then final savings account is for long term savings. So that's saving to invest later. Maybe you're going to buy a property this year, maybe you're going to purchase a car or whatever. So two savings, two checking. The savings are at a separate bank, an online only bank that's going to generate higher interest. So you're going to look at what interest rates they're offering and choose your bank that way. And then two checking at whatever your bank account is now.
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So you're saying two different banks, you're checking in one bank, you're saving. Why?
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Because if you're anything like me and everybody else in this country, when you go to Target and your checking says there's no money here, holla. You're going to look at your savings and say I know I'm supposed to be saving for that house, but I'm going to make the transfer from saving to checking. And if it's at the same bank, you're going to spend that money in two seconds. If it's at two separate banks, you are going to have to wait 24 hours and get you a sleeping bag to sleep at Target and to wait for that money to transfer over so you can spend it at your checking account. Plus, traditional banks pay nothing when it comes to interest. And an online only bank, right now as I'm recording interest rates for online only banks, some of them are near 5%, you know, versus a 0.1111% that you get like a regular bank. So those are the two reasons why you're going to have separate accounts. So once you figure out for yourself this is how much I want to go monthly to my 2 savings and to my 2 checking, then you're going to go to HR and ask them to split it before you get it. That is your baby budget. So you just have to do that little bit of work ahead of time and then they will put that money based upon what you tell them into your accounts for you. So no longer should your money all land in that one checking account. It should be split. So that way you know, when you get your money and you look at because you're going to make sure that your bills account is not, not tied to any debit card because you can call them and say unhook it. People don't realize that you can do that. So when you swipe your debit card, you know, I'm not spending my bill money because it's not attached. I'm not spending my, my emergency savings and I'm not spending my long term savings. The only thing attached to this debit card is the money I've set aside for, for cash expenses. So that is a, a baby budget, because you don't have to be as disciplined because the money's been split. And then take it a little further. Have your bills account. If you have the money, pay your bills for you automatically. So it's like your life is just totally automated when it comes to your finances. It's a great way to start a baby budget that you can do in, like, literally less than an hour.
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Tiffany's point is simple. The system does the work so you don't have to. When your money is already sorted before it hits your checking account, temptation has far less room to operate. And that same principle applies beyond budgeting. Real change happens when you shape your environment. So bad habits are harder to repeat and and good ones are easier to stick with. Instead of relying on willpower in the moment, you build friction ahead of time. James Clear breaks this down in a really practical way. If you want to break a bad habit, don't rely on willpower. Design your environment so the habit becomes harder to do.
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Building a good habit. Make it obvious, make it attractive, make it easy, make it satisfying. If you want to break a bad habit, then you just invert those four. So rather than making it obvious, make it invisible. Unsubscribe from emails. Don't keep junk food in the house. If you're trying to follow a new diet, don't follow a bunch of food bloggers on Instagram. You know, like, reduce exposure to the queue. Um, rather than making it attractive, make it unattractive. I will say this is the trickiest one, the hardest one, when it comes to breaking bad habits. And I think it's better to focus on some of the others rather than making it easy, make it difficult. So increase friction. Add steps between you and the behavior you can imagine. You know, if there's a bag of potato chips right next to you in the pantry, that's a lot easier to eat than if they're three miles down the road at the grocery store. So the more friction between you and an action, the less likely it is to occur. As another example of that, one of my little habits that I try to break is checking my phone all the time. And it's tricky because phones are useful and, you know, they can serve a purpose. And so what I've come up with is I leave my phone in another room until lunch each day. Now, I can't always do that, but I can probably do it 7 out of 10 days. And I have a home office, so my phone is only like 30 seconds away. But I never go get it. And I always think that's so interesting, you know, like if it was right next to me, I check it every three minutes. But I. So I wanted to check it in that sense, but I never wanted it so bad that I would walk 30 seconds down the hallway to go get it. So introducing a little bit of friction can often reduce the habit to the desired degree. And then the final version for breaking a bad habit is rather than make it satisfying, which is what you want to do for good habits, make it unsatisfying, layer on some kind of cost or a consequence to the action. So to break a bad habit, make it invisible, make it unattractive, make it difficult, make it unsatisfying. And again, there are many ways to do each of those four things, but that gives you kind of the big picture view.
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What James just laid out applies directly to money. Once you understand that behavior follows design, the question becomes how do you build a system that lets you spend without stress or second guessing? Because for a lot of people the problem isn't spending itself, it's the guilt. The constant mental math, the feeling that every purchase is somehow wrong. That's where Ramit Sethi comes in. He's a personal finance expert who helps people stop obsessing over every expense and start spending with intention. Here's how he approaches what he calls a conscious spending plan.
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The four numbers to track. So if you've got a pen, pull it out because I'm going to give you these right now. These are part of my conscious spending plan. So the first is your fixed costs. Your fixed costs should be 50 to 60% of your take home pay. And fixed costs would be your rent or mortgage, utilities, car payment, gas, insurance, anything that is fixed and you're paying it off. Even debt payments, that would be 50 to 60%. Okay. The next would be your investments. So what percentage of your take home are you putting in investments? I recommend 5 to 10% to start. Of course, I'd like to see that number bigger, but that's a good start. Savings, same thing, 5 to 10%, that would be money that you don't need for about one to five years. And finally, my favorite one, guilt free spending, which is money you get to use for whatever you want. Handbags, you want, travel, you want face cream, you want to go out for drinks with your friends. 20 to 35% of take home, all those, if you just do those things, you're going to be in great shape. It means you do not need to track the price of asparagus because it's already baked in. You do not need to worry about inflation. It's already baked into your plan and you can get all these and a template for the conscious spending plan on my website.
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When your spending is intentional, something interesting happens. Cutting back stops feeling like punishment and starts feeling strategic. You're not saying no to everything. You're creating room. Room for flexibility, room for opportunity. That's where frugality, used in the right way, can become really powerful. Not as a lifestyle of deprivation, but as a temporary lever that gives you options. Scott Trench is a real estate investor, author of Set for Life, and former CEO of BiggerPockets. He shared with me how dialing back early can unlock freedom and opportunity later.
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The wealth creation journey, if you're not already earning a huge income, begins with frugality. Don't live a life of frugality where you're just miserly the whole time. But if you never actually dial it back and get started, you may find it very hard to get on the other side of the equation and actually have the opportunities to build wealth. With an example, if you spend $50,000 and make 55, it's going to take you nine years to save one year of spending, right? You're never going to feel comfortable taking a $30,000 a year job, for example, that could be at a startup that could be worth millions one day. If you spend $25,000, a very, very frugal lifestyle. Terrible, right? For that, for that. Huge sacrifices compared to what you're capable of. Well, if you do that for just one or two years, you're going to rack up 50, 60 thousand dollars in cash. And that job that I just discussed is going to look like a real opportunity rather than a risk or threat. And so I think that's the biggest one I'd have there. It does not preclude you from building more income. Time management. Scalable careers becoming the best in the world are more important than that. But many will find that that's the true blocker to actually jumpstarting their path to being world class.
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What you heard today really shows that progress with money doesn't come from being perfect. It comes from building systems that support you. Systems that guide your spending, creates boundaries and gives you options instead of stress. Yap fam, thanks for being here. And I'm trying to make these episodes super actionable so that you can actually change your financial trajectory. So before episode three, here's what I want you to do. This is my simple challenge to you Step number one Set up one money system. So pick an area where you're currently relying on Willpower and turn it into a system. That might mean setting up automatic payment for your credit card bills or automated savings, or creating a simple rule like every payday x amount of money moves into my savings account. Keep it realistic, keep it simple, keep it something that you can actually stick to without thinking. So automate something, something that you're doing currently that you're relying on willpower, you're relying that you remember every month and just automate it. All these apps and tools have automation capabilities. Now use them. Step number two Separate your money so it's harder to mess up. Follow Tiffany Lucci's baby budget idea and separate your money before you spend it. Create a bills account and a spending account and if possible, keep a savings account in a separate bank so it's harder to transfer impulsively. The goal is simple. Your money should be sorted before you even touch it. Okay, that will really help and it will make you feel like you have less money to spend because your money is separated and accounted for. Number three Add friction to one bad spot spending habit. Identify one habit that is draining your money, like online shopping or food delivery or impulsive purchases and make it harder to do so. Unsave your card on your computer, delete the app, unsubscribe from emails, or add a 24 hour pause before you can buy something above a certain amount of money. Small friction can make a big difference. And step number four Practice one clear money boundary. Pick one situation where you usually overspend and practice saying it out loud. Something like I'm on a budget right now or not this week I'm prioritizing my finances. Saying it out loud turns your plan into a real boundary. Better yet, say to somebody else, not just yourself. Lastly, step number five Create quick breathing room. Look at your recurring expenses and choose one quick win. Cancel one unused subscription, negotiate one bill or pause one expense expense you don't care about for the next 30 days. Experian has tools like subscription cancellation and bill negotiation that can help manage eligible recurring expenses and reduce effort on your end. If you do these steps, you've already won because you've stopped relying on motivation and started building structure and systems that support you. And once those systems are in place, you can create space. In the next and final episode, we're going to focus on relief. How to create breathing room quickly and feel more in control without overhauling your entire life. And remember, some of the most helpful systems are the ones you don't have to manage yourself. Tools from Experian like subscription tracking, bill negotiation and automation can help reduce friction and keep your progress moving in the background. All right, Yap fam, you can catch this full episode and video on YouTube. You can also find me on Instagram at Yap with Hala or LinkedIn by searching my name, Hala Taha. I'd love for you guys to drop a a review, a five star written review on Apple Podcasts, Spotify, Castbox. Wherever you listen to the show, I love getting your reviews. They mean the world to us. I'll see you guys back for episode three. Until the next episode, let your systems do the heavy lifting. And this is your host, Hala Taha, AKA the Podcast Princess, signing off.