93. Trick or Treat? Money Edition

In this festive Halloween-themed episode, we explore the "tricks" and "treats" of money management, highlighting common financial pitfalls and some simple ways to make managing money easier and more rewarding. Whether you're dealing with credit card traps, Buy Now Pay Later schemes, or managing subscriptions, these tips are meant to help you approach your finances with clarity and intention, building towards a legacy of financial peace and stability.

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Transcript

Laura: 0:03

Hello and welcome to the Accelerate Your Legacy podcast. I'm Laura Sexton, your trusted financial coach and money mindset specialist. Join me as we explore the world of money and money mindset while also paving the way for a lasting legacy that extends far beyond money. Together we'll eliminate stress, amplify freedom, and ensure you stop paying for your past so you can start saving for your future. If you're seeking peace in your finances, more margin in your budget, and a legacy that inspires generations to come, you're in the right place. Hello and trick or treat accelerators. I hope that you are having a fabulous Halloween. I want to keep this one pretty short because we are going trick or treating later today and I'm very excited, but first things first this morning, we have a jog a thon, which means that I get to watch my run around a parking lot for about an hour, which is super fun, except One of my kids is not allowed to run because she broke her arm. So it's going to be interesting. It's going to be an adventure. I wanted to talk to you today about a couple tricks and treats when it comes to your money. Part of me is like, do all the tricks first and then finish with the treats. And the other part of me is like, no, go back and forth. So we are going to go back and forth. I think I'm making that decision right now on the fly. The first money trick that I would like for you to avoid is credit card rewards that lead to overspending. You guys knew that I was going to start with credit cards, right? Like you knew that was going to be something. I said, this is a trick. There is. A billion dollar industry that is breathing down your neck every single day saying you need a credit card. You need a credit card. The FICO game is real. Credit card rewards can feel like free money, but many people end up spending much more than they would have if they were using regular cash. Ultimately, you're going to carry a higher balance, pay more interest, or Just overspend. So let's talk about this on both sides. If you don't pay your card off, you are going to have a higher balance and end up paying more interest. That is a terrible trick. But the trick that most people don't see coming is the fact that you will spend more money on a credit card than you will if you were spending cash or using a debit card. Think about it. When you are using other people's money or credit, the pain centers of your brain are not activated. And research shows that you spend 15 to 18 percent more on a credit card than you would if you were using cash or a debit card. I hate to tell you, but if you were getting 1, 2, or 3 percent cash back, but you're spending 15, 16, 17, 18 percent more, you're losing money. That's just straight up true. It's a terrible trick that is being played on you. 70 percent of people never use their rewards. So look, if you are the person and you come to me and you're like, look, I always pay my card off. I never carry a balance. So I'm never paying any interest. I'm just getting all of this free money and rewards. I want to challenge you to take a month off. Take a month off in the month of November. Try 30 days of not using your credit card. This may seem wild, but I can almost guarantee you that you're going to find 15 to 18 percent back in your pocket. Overspending to rack up rewards is a trick. Using other people's money is a trick. You do not need credit card points. And most people never utilize them anyway. So let's move on to a treat to my friends. A very nice money treat is setting up automatic savings and investment accounts. That's right. By setting up an automatic transfer to savings and investment, there's less effort on your part. Your money grows without having to think about it constantly. And the treat is that this is one of the easiest ways to build wealth passively. So if money comes out of your account immediately, if you work for a job where you could have a 401k and you were completely out of debt and you're ready to start investing, having the money come out of your check, going directly into your 401k before you ever see it means that there's absolutely no pain centers in your brain going, Oh, I'm losing money. And it goes immediately into your retirement vehicle. That's absolutely amazing. Yes, please. Let's do that. I think having automatic accounts for savings where most checking accounts will allow you to automatically move money over periodically. So if you have, I don't know if you want to do something like save money for Christmas throughout the year, you can set up where your account. Immediately withdrawals from your checking on the day that you get paid, it will withdraw a certain amount that you set up to move over into a Christmas account. Anytime you can automate, automate payments, automate investing, automate savings, you are making things easier for yourself. Money should feel easy. So let's do that. Let's automate. It definitely is a way that you can passively build wealth. And I think that it's really important to put things like that into place sooner rather than later. Let's go back to a money trick. Let's talk about BNPL. That is the buy now pay later services. This may make purchases seem like they're affordable because you're splitting them up into smaller payments, but they often lead to impulse purchases and can result in a pile of debts from multiple services. Y'all, where's the trick? It's the hidden interest rates and fees that hit hard if payments are missed. And maybe you're coming to me and you're like, look, no, I use Klarna and I've never had a penalty. I've never had interest. What are you talking about? Well, just this last week, I talked to a sweet girl. She's 24 years old and she got hit with a 32 percent interest on one of her Klarna accounts. Now, here is the crazy thing about Klarna, about Afterpay, about all of these buy now pay later programs. Let's say that you like to shop at J. Crew or Old Navy and you go on there and they have a buy now pay later button. You can split your purchase up into four easy payments. When they go to Old Navy, what they do is they say, Hey, People that use our service they spend on average 45 percent more per purchase. Do you want to know why all of these websites have adopted buy now pay later? Because people on average spend 45 percent more for a purchase. Now here is the crazy thing. Because Klarna and Afterpay and all of these buy now pay laters are set up in a four payment spread, they don't have to disclose interest charges. Now maybe it's just me, but I think banking industry is playing a serious trick on all of us if they have ways around not having to disclose massive interest rates that are coming. To this girl had a 32 percent interest rate because she missed one payment on something. She had split up into four easy payments, 32%. And it's on everything that's in your account. Not just the part that you missed, or sometimes it's on the full price of the item that you were not able to finish paying off in four payments. The fine print on these Buy Now Pay Laters are an insidious trap. Not just a trick, this is a trap and they are trying to lull you in to a pile of debt through impulse purchases by making you feel like, oh, it's going to be a smaller payment. Friends, if you need to split the payment of your pizza up into four EC payments, do not buy that pizza. Absolutely ridiculous and asinine, do not do it. Now we're going to go over to our money treats. Now you guys knew I was going to start with credit cards and how they were bad, so you know where I'm going with this, right? What is money treat number two? Clearly it's a good budget. A good budget or budgeting app can act as a financial guide, helping to keep you on track with your spending, set your goals, help you find ways to cut your costs. In a couple of weeks, I'm going to have Cortney Kaveh come on and talk about YNAB and how YNAB is absolutely amazing. I use every dollar myself. And so I can help you Turn your budgeting from a chore into a productive habit. YNAB and EveryDollar both have simple connect to your bank account options. I personally am a pen and paper person, and I really enjoy using my pen and paper. However, lately, because of the ease of EveryDollar and I'm watching everybody use it, I'm kind of thinking, hey, maybe I will Maybe I'm just going to treat myself and connect my bank account again and just move the things over because it's so easy at the end of the night to go swoop, swoop, swoop, and put everything into their perspective accounts. And it just really, it's easier because my, my husband can be on the account with me. We share a login, which is totally allowed and in fact, encouraged so that you can both be on the same. Okay, let's talk about a money trick. It's going to be the last one we're going to talk about today, because again, I want to keep things a little bit short. Subscription fatigue. Now, you know what this is all about. From streaming services to monthly box deliveries, it is so easy for your subscriptions to just pile up. Each one seems small, unimportant, but collectively they can drain your bank account. People often lose track of these and they end up paying for services that they almost never use. I found out that I was paying for two Amazon Prime accounts. And I pay attention to this. And so I was very confused because I had gone in multiple times to cancel my Prime membership. Well, I had one personal, which I had gone in and I did it because of some shipping things. I was like, yeah, okay. You know, I'll do the Prime because after a certain period of time, they're like, come back to Prime. We'll let you do it for free for a month. I'm like, yes, let's do it. So I had signed up for that. But I also, because I sell a book on Amazon, if you guys did not know this, I have a book, it's called Season with salt, a devotional for coaches. It is a study in the book of Galatians, and it helps you grow your coaching business with God on your side. So I have this book that I'm selling. And because of the way the book set up was, I was paying for an Amazon prime membership out of my. business account. And for whatever reason, I thought I canceled one and I hadn't. And so I moved over and I was like, Oh, I canceled this one, but I was supposed to cancel the other one. And so I just, for whatever reason, I could not figure it out. I say, for whatever reason, it's pregnancy brain. I have four children and one that was in the ER. I have another one with a broken arm. That's my brain is scattered and all over the place. So sometimes we lose track. And I'm a person that does this for a living. If I can lose track, you can too. But here's the other thing. I have a couple that I've worked with that they had accounts that they were paying subscriptions for that they just couldn't figure out how to cancel. So instead of doing the legwork to find out how to cancel them, they just kept paying them. For years, they just kept paying them because they didn't know how to close them. In situations like this. I would use rocket money. I would not stick with rocket money for a long periods of time. When I had an account that I was struggling to close, I used rocket money. I paid a donation. It's donations based and it helped me close out an account that I couldn't figure out how to cancel charges for once that happened. I closed Rocket Money. I didn't use it anymore. I paid the one time fee and it's pay what you would like. So you don't even have to pay large amounts of money, but if they're going to save you 40 a month, go ahead and give them the 40 bucks. Say, thank you for saving me this money. I'm not going to pay it to somebody else. Next month you save me this 40. Thank you for that and move on but don't let that be another subscription that just piles up It's also a good time to go ahead and do a subscription audit Do you need Netflix and Hulu and Disney Plus and Paramount and Peacock? Like do you need all of those? No, probably not. In fact, they are probably just stealing your time that you could be using for other very important things Okay, let's finish up with a money treat And that would be a high yield savings account. Now, look, this is not going to give you an investment return as high as, say, putting money in the stock market, but it does offer a risk free way to earn interest on your emergency fund or your short term savings. These are an absolutely excellent place for those of you that want your savings to work a little bit harder than a traditional account without having to risk any of your principal. The crazy thing about high yield accounts is that they are very much linked to inflation. So as inflation goes up, your high yield savings account gives you more money. Which is great. If you're not in debt. If you're in debt and you're like, I don't want inflation to go up because I'm already struggling. Like that's not good. But as inflation goes down, these high yield savings accounts are actually going to be yielding smaller and smaller percentages. So I just want you guys to be aware of that. That being said, if Regular savings account at your bank is giving you 0. 05 percent back, but you can get a high yield savings account at three, 4 percent back in your pocket. Let's go ahead and do that, but do not fall for the trick. Throw in another one. Do not fall for the trick of going back and forth and searching for, is this one going to be a little bit higher? Is this one going to be a little bit 0. 5% Around thinking that we're going to make more then you're using too much of your brain power. Money's not going to be easy and we want things to be easy right that's why we're automating things that's why we're putting things in the high yield savings accounts. Smooth steady progress is really where we want to be we don't need to be in the middle of the minutia of things. We don't need to be Worried about 0. 5%. We don't need to be. You don't need to worry and stress about all of those things. Money should be easy. Let's automate. Let's put things in investments with great track records so that we don't have to think about it all day. Set up a budget and just stick with it. So you're not trying to constantly finagle things around in your brain and causing yourself fatigue. It's not necessary. Treat yourself to earning interest in a risk free way with this high yield savings account. So just go ahead and treat yourself. Money should be easy. And if for you, money is not easy. We need to have a conversation because, I don't want you to be stressed out about money. If you are, there's a better way to do things. The whole point of this podcast with the tricks and the treats, it's not only to educate you, but it's also to encourage you to think about your financial habits, the tools that you have in place and the different things that you do on your daily money journey that helps. And that hinders you. This is a journey all about legacy building. And I want you to leave behind a legacy of not just money in the bank, but when Somebody asked your kids, what did your mom and dad teach you about money? I want them to say things like money's not all encompassing. Money helps us get things that bring us joy. I don't want them to say things like mom and dad were always stressed out about money. Hopefully today the tricks and the treats that we talked about were ones that got you thinking. And maybe looking at things a little bit differently, and if you need to have a conversation with somebody, I am always here for you. You can reach out to me on Instagram at accelerate your legacy or shoot me an email. Hello at accelerate your legacy. com. I'm here for you. Accelerators. And I really look forward to hearing about the tricks and the treats and the fun costumes that you got to dress up as today. So send me a picture of you and your family out trick or treating out, having a good time, you giving candy out to the kids in the neighborhood, whatever it is that you do on Halloween, maybe you don't celebrate Halloween and that's okay too, because I didn't until I had children. So whatever it is you do today, I hope that money's feeling a little bit easier. I'll talk to you again next time, accelerators. Go out and make a difference. Thank you for investing your time with us today on the Accelerate Your Legacy podcast. Remember, your legacy isn't just measured in dollars and cents, but in the tools, habits, mindset, and reputation you leave behind. Don't just listen to the show, but take action on what you've learned. Share this wisdom with a friend who can benefit and help us spread the word by rating and reviewing the podcast. For questions or encouragement, reach out to me on Instagram at Accelerate Your Legacy or explore the resources listed in the show notes. I will be back with you next week. Until then, build your legacy with intention.