Jen Smith
Appearances
NerdWallet's Smart Money Podcast
Why Traditional Budgeting Fails and What’s Missing from Your Money Plan
This gap for me, Jen, came out of personal experience. My husband and I, when we got married, we decided to pay off all of our debt. And we paid off $78,000 of debt in two years. We followed the traditional financial advice that really said spend on nothing, earn as much as you can, wear yourself out so that you can pay off your debt, and then all your problems will be solved.
NerdWallet's Smart Money Podcast
Why Traditional Budgeting Fails and What’s Missing from Your Money Plan
And lo and behold, all of my problems were not solved afterwards. I had this debt payoff hangover. where I had spent all of my energy and time and thought into this one goal, and I didn't know how to manage money. I thought I knew how to manage money because I'd done this one thing, but I realized I really didn't.
NerdWallet's Smart Money Podcast
Why Traditional Budgeting Fails and What’s Missing from Your Money Plan
And so to compensate, I didn't look inside myself and figure out where those feelings were coming from. I just decided to pursue financial independence and invest as much as possible. And then I lost my job seven or eight weeks before I gave birth to my first son. And I was unable to do any financial goals.
NerdWallet's Smart Money Podcast
Why Traditional Budgeting Fails and What’s Missing from Your Money Plan
And that's when I had to look at what is the difference between this traditional money management advice that people are giving us and the reality of my life is that I spend money I like to spend money, but I also don't want to go broke. I want to be able to save for the future. There's got to be some radical middle between these extremes.
NerdWallet's Smart Money Podcast
Why Traditional Budgeting Fails and What’s Missing from Your Money Plan
That's what Frugal Friends, our podcast, has truly been an exploration of and helping other people come alongside us in this journey.
NerdWallet's Smart Money Podcast
Why Traditional Budgeting Fails and What’s Missing from Your Money Plan
And we don't blame the voices that came before us that focused on these extremes and left out the nuance. We understand it's easier to market and sell extremes, but we are at a place in time where it's time to start recognizing those nuances and really looking into them and embracing them and holding space for them.
NerdWallet's Smart Money Podcast
Why Traditional Budgeting Fails and What’s Missing from Your Money Plan
I just felt like when I was budgeting, I was making perfect budgets, right? I was making them. I knew exactly how much money I had and how much money I could spend, but I could never follow through with this perfect budget I had made. And then I would feel guilty. And I just realized what I really want are the things that money can't buy, but I still need money to pursue them.
NerdWallet's Smart Money Podcast
Why Traditional Budgeting Fails and What’s Missing from Your Money Plan
If we focus first on the values, focusing first on those four and then anything else, if you can't fit them in there, they'll fall somewhere on Maslow's hierarchy of needs. It's like the 80-20 rule. These four are the 80 and the other 20%. It's going to fall somewhere on that hierarchy.
NerdWallet's Smart Money Podcast
Why Traditional Budgeting Fails and What’s Missing from Your Money Plan
And I just want to encourage young people who are making quote unquote financial mistakes, or maybe older millennials like us who are still paying for some quote unquote mistakes we made as young people, that a lot of us will then, because we've made these decisions, internalize them and take on the identity that, okay, I'm just bad with money. I'm a spender. I don't save. I can't save.
NerdWallet's Smart Money Podcast
Why Traditional Budgeting Fails and What’s Missing from Your Money Plan
I will never make enough money. We take on these identities as a result of some of these financial mistakes. I just want to encourage people that your identity is not in the things that you do buy, do not buy, did buy, did not buy, took out debt on, whatever these financial mistakes are. You can learn the skill of spending, the skills around earning.
NerdWallet's Smart Money Podcast
Why Traditional Budgeting Fails and What’s Missing from Your Money Plan
It's never too late to learn from mistakes and to learn new skills to improve.
NerdWallet's Smart Money Podcast
Why Traditional Budgeting Fails and What’s Missing from Your Money Plan
None of them are going to be budgeting, okay? I'm going to give three tips and none of them are make a budget. So get excited. The first one would be to do a 90 day transaction inventory. If 90 days feels like too much, try 30. We just want to look back at all of your transactions for the last 30 to 90 days so that you can start to see patterns. First, we're looking at the past spending.
NerdWallet's Smart Money Podcast
Why Traditional Budgeting Fails and What’s Missing from Your Money Plan
Then we're thinking about current spending. And so for that, I love to start a no spend challenge or at least plan out when to do one. I have read a lot of books and articles about people who do these year long no spend challenges.
NerdWallet's Smart Money Podcast
Why Traditional Budgeting Fails and What’s Missing from Your Money Plan
I think 30 days is enough because there's a lot of research that says your dopamine receptors can start to kind of change the way the amount of dopamine or things that give you a dopamine release after just four weeks. I would say plan out when you're gonna do a 30-day no-spend challenge because what that can do for you is it gives you 30 days to say automatic no's to any discretionary spending.
NerdWallet's Smart Money Podcast
Why Traditional Budgeting Fails and What’s Missing from Your Money Plan
And what that does is it just gives your brain space, takes away some decision fatigue, and it gives you space to get creative in how you meet your needs. The goal is to not want less. It's to want different. So that would be the second is to plan out when you're going to start that. And then the third would be start to curate your environment. We're looking at our physical space.
NerdWallet's Smart Money Podcast
Why Traditional Budgeting Fails and What’s Missing from Your Money Plan
How does it make us feel? If one of the ways that I want to hang out with people instead of going to a bar or restaurant is to hang out at home, is my home a place that I feel comfortable inviting people in? Is it a physical problem or an internal problem? Too much time on social media problem? Looking at that stuff in order to curate your environment to set yourself up to succeed with this stuff.
Something You Should Know
Digital Communication Done Right & Buy What You Love Without Going Broke
Hey Mike, thanks so much for having me.
Something You Should Know
Digital Communication Done Right & Buy What You Love Without Going Broke
Well, the title Buy What You Love Without Going Broke was very intentional. We say love because so often we think about what we buy between want versus need. And really the lines are so blurred. So often we will buy things and we will justify them as a need. So a house, for example.
Something You Should Know
Digital Communication Done Right & Buy What You Love Without Going Broke
is a need on the surface but for plenty of decades families of four and five lived in a two bedroom one bath house and they considered that to be enough to to be a need whereas you know i live in a two thousand square foot house with there's just four of us and i love that but i don't need all of it i want the other thousand square feet and so there's no shame in that
Something You Should Know
Digital Communication Done Right & Buy What You Love Without Going Broke
But then also, there are needs that we have as humans that we don't always think about. They're the things money can't buy, yet money is still required to pursue them, like deeper relationships with family and friends, spiritual practices, fulfilling work. And so...
Something You Should Know
Digital Communication Done Right & Buy What You Love Without Going Broke
We're really trying to get away from what common practice in society and just like a long time of referring to want and need and kind of rebranding it, starting fresh with figuring out what you individually love, what you love aside from what everybody is trying to tell you to love.
Something You Should Know
Digital Communication Done Right & Buy What You Love Without Going Broke
I think when we ask people, what is most important to you? They usually have these answers of like family and friends. But then when we talk about spending money, like what do you love to spend money on? We jump straight to things. Like I love to spend money on coffee. I love to spend money on eating out. So there's a disconnect on what we love and what we spend money on.
Something You Should Know
Digital Communication Done Right & Buy What You Love Without Going Broke
So we're trying to create systems and kind of a framework so that when we think about spending money, we have, at least in the back of our head, this motivation to spend it in most alignment with what we truly value. Like when I buy coffee, am I just going through the drive-thru because it's a habit or am I getting coffee with a friend?
Something You Should Know
Digital Communication Done Right & Buy What You Love Without Going Broke
Is it connected to something that is one of those higher needs?
Something You Should Know
Digital Communication Done Right & Buy What You Love Without Going Broke
Right. And so that's where the not going broke part comes in. And so we prioritize. We can want anything, but we can't usually want everything. We don't want everything. So it comes first to honoring what season you're in. There are going to be times in your life where you may not be able to make as much as other times. And hopefully those are just seasons.
Something You Should Know
Digital Communication Done Right & Buy What You Love Without Going Broke
Hopefully we can reframe and believe that it's not a permanent thing. It's a season. And we're always working to be content without being complacent. And then we prioritize like what is most important in our lives and just work on those biggest, highest values, most important values there.
Something You Should Know
Digital Communication Done Right & Buy What You Love Without Going Broke
Right. So before I had kids, something that was really important to my husband and I was traveling. We paid off $78,000 of debt in two years, and we decided to celebrate. We wanted to take a trip to Bali, and we did it. We saved, and that was super important. We were at the time living in a house we had just bought. And we had moved from a 1-1 to a 3-2 and had bought no extra furnishings for it.
Something You Should Know
Digital Communication Done Right & Buy What You Love Without Going Broke
So two of the bedrooms, most of the living room, one of the bathrooms, completely empty. But we decided it was more important to us at that time. We wanted to take the trip. We wanted to travel. And we knew it wouldn't be forever, that it was a unique season in our lives. Now that we have kids... putting systems into place that make life easier is much more important.
Something You Should Know
Digital Communication Done Right & Buy What You Love Without Going Broke
All the way down to buying the pre-cut veggies at the grocery store. So I spend a little bit more money there on those things. So it makes my life easier. For somebody else, it could be house cleaning every week or every other week. So it's honoring the season I'm in in my life and knowing that it's not forever.
Something You Should Know
Digital Communication Done Right & Buy What You Love Without Going Broke
and choosing the things that I want to spend my money on versus feeling like almost a societal pressure to be doing and spending on everything.
Something You Should Know
Digital Communication Done Right & Buy What You Love Without Going Broke
It's checking in with my financial goals. So everyone is going to have different financial goals. Looking at your financial goals and figuring out what is the thing that I can do now instead of doing everything. There are so many good things you can do financially. What's the one thing that I can do that makes future financial goals and future things easier or unnecessarily?
Something You Should Know
Digital Communication Done Right & Buy What You Love Without Going Broke
I don't always think it's a personality thing. Marketing has been so carefully crafted to make it so easy to buy. And they've crafted these problems that never existed before just so they can sell their product or service as a solution to these created problems. So the way that we're consuming isn't always a... Needs versus wants versus personality issues.
Something You Should Know
Digital Communication Done Right & Buy What You Love Without Going Broke
So I think part of it comes down to knowing how you're being marketed to and knowing that so you can take a pause before you buy something. So if you want a good baseline to start out at, we call them the four Fs. Family, faith, friends, fulfilling work. And so you can start there and you can usually tie a lot of your purchases back to something like that.
Something You Should Know
Digital Communication Done Right & Buy What You Love Without Going Broke
But really taking the time to ask yourselves, to get curious with yourself. And starting with like a 90-day transaction inventory and looking at your transactions and asking, what was I trying to get at when I made that transaction? Not why, because if you ask yourself why questions, it kind of puts you on the defense side.
Something You Should Know
Digital Communication Done Right & Buy What You Love Without Going Broke
So getting really neutral, taking out the judgment and just looking at your transactions with curiosity and looking at what was I trying to get at by making this purchase?
Something You Should Know
Digital Communication Done Right & Buy What You Love Without Going Broke
The way I see it happen most is when we're trying to buy our self-esteem. So I see so often people will go out and buy new cars because their car, they do. They need another car because the other car is breaking down. That's a good decision to go buy another car. And we'll justify buying a brand new car because they need it or the safety features or I deserve it.
Something You Should Know
Digital Communication Done Right & Buy What You Love Without Going Broke
And in reality, of course, yes, you want to be safe. And yes, of course, you deserve it. But does it financially make sense to you to get a brand new car, which it's $200 more a month, or get a three-year-old car, which saves you that? Maybe a little bit more in interest, but it still saves you overall in the long run. And we...
Something You Should Know
Digital Communication Done Right & Buy What You Love Without Going Broke
We go out and we buy these new cars or these shiny new cars because we think, I deserve it. When people see it, they're going to have more respect for me because they're going to think that I have a job and I'm a functioning person in society versus driving a beater. And we're trying to buy... our own self-confidence, feeling good driving in a shiny new car, and by other people's respect.
Something You Should Know
Digital Communication Done Right & Buy What You Love Without Going Broke
And then we quickly find it doesn't work like that. And so then we're off to the next thing. And so if we truly knew what we were trying to get at in the first place,
Something You Should Know
Digital Communication Done Right & Buy What You Love Without Going Broke
then we could much more easily justify saving the money on the car and investing our time and maybe even our money into things that truly increase respect of others and self-confidence in ourselves but we don't we just we just so easily fall into the cycle that has been given to us by automobile marketing, makeup marketing, skincare marketing, fitness marketing, what have you.
Something You Should Know
Digital Communication Done Right & Buy What You Love Without Going Broke
And it just doesn't take, we don't think critically about that downfall that, oh, it didn't work. So maybe I should think deeper about myself and what I'm really trying to buy. No, instead we'll just think, okay, what's the next thing I can buy? This didn't solve my problem. What's the next thing I can buy? And maybe that'll solve my problem.
Something You Should Know
Digital Communication Done Right & Buy What You Love Without Going Broke
So it starts with that 90-day transaction inventory. When you're finding patterns, you're going to see transactions on there that just did not get you what you wanted at all. For me, the first time I did it, I realized it was beer, like breweries. That was a thing that my friends were doing very frequently. And I realized I don't like beer enough to keep doing that.
Something You Should Know
Digital Communication Done Right & Buy What You Love Without Going Broke
I would much rather meet with my friends somewhere else and even spend my money elsewhere than keep going to breweries and drinking a beverage that I don't really like. And so for me, beer and breweries became the first thing on my easy no list. If people are going there, then I can easily say no. Or if I really do want to meet the need of connection...
Something You Should Know
Digital Communication Done Right & Buy What You Love Without Going Broke
Then I can go there and just not buy anything. Nobody looks at you weird. It's totally fine. Nobody's going to like criticize you for sitting there not buying anything because everybody else is buying something. So that's kind of how you can come to this easy no list. And there should be at least looking through that inventory.
Something You Should Know
Digital Communication Done Right & Buy What You Love Without Going Broke
You could pick three to four things right off the bat that you can put on your easy no list. And then you can also pick three to four things you can put on your easy yes list. It's just as important to have both of those lists. And the more you do it and the more you get acquainted with what you value and what you don't, your no list becomes longer.
Something You Should Know
Digital Communication Done Right & Buy What You Love Without Going Broke
Yeah, because it's not an inherently bad thing to go to a brewery with your friends, especially since connection is one of those big higher needs. But when you can think about these higher needs and prioritize getting them first, and then you don't become like at somebody else's whim and how you achieve your higher needs.
Something You Should Know
Digital Communication Done Right & Buy What You Love Without Going Broke
You're always living in a season, and sometimes it's a short season, sometimes it's a longer season. So it's just a great idea to do an annual check-in.
Something You Should Know
Digital Communication Done Right & Buy What You Love Without Going Broke
Yeah, we felt that, my husband and I did, because we were paying off $78,000 of debt with an income of around $88,000 combined. So we went very, very hard. And I don't necessarily recommend that to other people. It was a miserable time for most of it, but I learned a lot. And it's where I started to figure out this idea of values-based spending.
Something You Should Know
Digital Communication Done Right & Buy What You Love Without Going Broke
Because I had essentially cut out all discretionary spending in order to achieve this one goal. And because we only had one goal, we were able to achieve it much faster than if we had had competing goals. But I realized on the journey that what I wanted wasn't the coffees I gave up. It wasn't the dinners I gave up or anything else. But it was the reason I was going to those places.
Something You Should Know
Digital Communication Done Right & Buy What You Love Without Going Broke
It was the connection with friends. And as a newlywed with no kids, that was really the most important value to me at that time. And it was what made me most hesitant to pay off my debt too, because I didn't want to give those things up. I didn't know why. But I was like, I don't want to live under a rock. I want to go to happy hour. I want to do all these things.
Something You Should Know
Digital Communication Done Right & Buy What You Love Without Going Broke
So when I realized what it really was that I was missing after giving up all of that, then I was able to pursue that instead of giving up. the happy hours and the dinners. And so I started inviting friends over to my house and we would all bring a bottle of wine, which obviously isn't free, but far less than happy hour. Or we would do coffee at home. We would do game nights.
Something You Should Know
Digital Communication Done Right & Buy What You Love Without Going Broke
We would go, we would find free events on our city's website. So free movies in the park, fun runs at the running store, stuff like that. And when I started doing stuff like that, when I was engaged in that, it made paying off debt not as miserable.
Something You Should Know
Digital Communication Done Right & Buy What You Love Without Going Broke
I was still sad when I would see my friends on social media buying new cars, buying houses, all of this stuff that I had decided wasn't my current goal. But... I was getting what I actually wanted and that made it better. And so I would say to anybody else that has a lot of debt, look first to your needs, your higher needs, your core values, and see if you can get those.
Something You Should Know
Digital Communication Done Right & Buy What You Love Without Going Broke
without spending as much money as you currently are. And then whatever you're saving is money that you can afford to put towards debt. And if you made debt pay off your only financial goal for the next year, what could you accomplish?
Something You Should Know
Digital Communication Done Right & Buy What You Love Without Going Broke
Yes, thank you so much, Mike.
Something You Should Know
Digital Communication Done Right & Buy What You Love Without Going Broke
So there's a disconnect on what we love and what we spend money on. I think when we ask people, what is most important to you? They usually have these answers of like family and friends. But then when we talk about like, what do you love to spend money on? We jump straight to things.