The new year is right around the corner, which means it’s the perfect time to take a look at our finances and create a budgeting and saving plan for the new year. In today’s podcast episode, we discuss how to create a budget for 2024 based on your goals, using a variety of accessible, financial resources.
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Here’s the recap of today’s 15-minute episode:
Listen below or read the transcript that follows.
Eric Rosenberg:
Hello, everyone. Thanks for tuning in. Here’s your friendly reminder that today’s episode is for education and entertainment purposes only, and should not be considered legal or financial advice.
Hello, friends. Welcome back to The Good Cents by Payactiv Podcast. It’s nearing the end of the year if you’re listening to this as it comes out, and that means it’s time to take a fresh look at our finances. While any time of the year is a good time to get started with your budget, around the beginning of a new year is a great time to look back and check our spending from last year, assess if we stuck to our budget or not, if we already had one. And if you don’t have a budget, it’s time to create one for the new year. If you already have a budget, it’s also a good idea to give it a double check to make sure you’re on the right track.
So, today we have the owner of Dr. Budgets here with us, Kai. He’s going to talk through some of the good and bad habits most people have when dealing with their budgets, and we’re going to, together, give you tips on what to do to get your budget ready for next year. Without any further ado, let’s dive in.
So, Kai, how did you get into this world of helping people manage budgets?
Kai Dickens:
Oh man, I kind of fell into it. I quit a corporate job, decided that I wanted to be a life coach. I realized life coaching is a very hard sell, but while I was there, I met a gentleman that was running a budgeting company. We became very good friends. I coached him. He coached me a little bit, and he just kept asking me to become one of his coaches. And I kept saying no because I didn’t want to deal with numbers. And what ended up happening is I ended up taking on two of his clients, fell in love with it, and then purchased the company about three years ago.
Eric Rosenberg:
Awesome. Well, congrats on being an entrepreneur. It’s fun, the stories we fall into finding a new passion and something we love to do.
Kai Dickens:
Right. I love it.
Eric Rosenberg:
Awesome. So, working with your clients and your budgeting company, what are some of the most common budgeting mistakes you see people making again and again?
Kai Dickens:
I mean a lot of the common mistakes are just people are just going at it blindly, right? They know innately deep down that they don’t have enough money to go ahead and spend and move over, but at the same time, they’re just going to go in and swipe, swipe, swipe, swipe. When it comes to Amazon Prime Day, people get so caught up in the sale. I actually did an experiment this year. I put about 10 different things in my cart. I knew how much they were going to cost so I got to see if Prime Day was actually going to be cheaper. Well, the prices went up for, I think, six of them, and they only went down for a couple of them. So, getting caught in that trap.
And then, when it comes to Christmas, the holidays, it’s forgetting that the little gifts do add up. And that there are so many activities that you’re doing outside of just giving gifts that show up in your actual budget.
Eric Rosenberg:
Totally. On Prime Day, and I have to be careful too, we all have to be careful. Well, there’s a cool website I like to use. I’ll throw it out there. It’s called Camelcamelcamel. You can copy a link to any Amazon item and put it into Camelcamelcamel, and it will tell you the price history, so you know if you’re getting a good deal or not. It’s totally free to use. They have an account you can sign up for. I just use the free version. I think it’s pretty great.
Kai Dickens:
That’s amazing. I’m going to share that with my clients, so thank you.
Eric Rosenberg:
Totally. Yeah. So, let’s dive into some budgeting tips. We want to get ready for next year as early as we can. If it’s already New Year’s while you’re listening, it’s all right. It’s never too late to start budgeting and fix your budget. It’s a lifetime commitment. It’s not just a New Year’s resolution. It’s something we always have to be working on. So, the first tip that I have when I’m working with my budget is to review my spending from last year. How would you go in and look at your money from last year to understand what you’ve spent and start turning that into a budget?
Kai Dickens:
Well, typically what I do, I actually have… Well, unfortunately Mint is shutting down, but we are getting ready to move the business over into Monarch. I like having an app that you go into. We look at the last quarter you’re spending to kind of get a very true idea of what the last two or three months have looked like. And yeah, sometimes there’s holiday stuff in there, sometimes there’s travel stuff in there. But at the same time, it’s looking at the things that are super, super, super important, like those fixed expenses that you actually have to pay. And then, going and looking at your discretionary spending and getting an idea of like, “Hey, was I eating at 7-Eleven too much? Was I ordering from DoorDash or Instacart when I could have just been going out to actually pick up the food?” But I think that looking at three to four months is a really, really, really good place. Sometimes the year gives you a bigger number than you would expect.
Eric Rosenberg:
Yeah, those little savings do add up, like you were saying, going to pick up your food. I know when we order pizza, it’s really convenient to have someone bring it to my door, but between a delivery fee and a tip, I save $10 by going two or three blocks down and picking it up myself. And my time for a less than five minute drive is definitely worth $10. So, all those little things, we got to definitely keep them in mind as we go.
Kai Dickens:
And just buying stuff from Jack in the Box or something. If you go to Jack in the Box, you might get the meal for 9 or 10 bucks. But if you order it from DoorDash, that same meal might cost you about $21. Is it worth paying for two meals? That’s an extra two hours or so that some of us have to put in as far as time in order to pay for that one meal.
Eric Rosenberg:
And if you go to the grocery store and cook something yourself, you might save even more and get something healthier. Those food bills are one of our things… We all have to eat. We can’t cut our food budget beyond a certain point. There’s a point where we just have to buy food. So, think about where you spend the money on the food. But that actually rolls into our next area to prepare next year’s budget, and that’s calculating the monthly bills that I call have-tos. And they’re the absolute needs, like we said, you can’t live without food. You need a place to live, so you’ll have rent or a mortgage. And health insurance is something a lot of us have to pay, we can’t live without that. Our cell phone bills have become a have-to. That’s a literal lifeline. That’s how we’d call 911 or reach our family and friends.
So, there’s some bills we can cut, some we can’t. On those ones we can cut, or even on the ones we can’t though, sometimes it’s a good idea to review your cell phone bill to see if there’s a cheaper option. I know I left one of the big phone companies and found one of the smaller ones that less people use. We pay way less than we used to, about half. The same with our car insurance. We changed companies and saved about half. How would you categorize needs versus wants for people who struggle and think, “Well, I need those Air Jordans,” or, “I need that Prada bag”?
Kai Dickens:
Some of the real conversations that I have is I ask people to remember what it was like the first two months of the pandemic shutting down, the world shutting down. We went from a place where we were paying for a whole bunch of extra subscriptions. Like me personally, I had Disney, I had three gyms, all that were budgeted, but these were places that I couldn’t go anymore. So, we were able to get down to the core, core, core spending, which was… It’s the one that, I mean, you have to pay these bills in order for us to keep living. We also didn’t know if you were going to be able to go back to work. We didn’t know if you were going to have money coming back in, so you knew those.
So, that’s what I’m going to tell everybody to think about. Go back to that timeframe when you’re stressed out about where the next paycheck was going to come in from and those things that you absolutely had to pay. Those are the things right there that are your have-to bills. Making sure that you’re staying on top of your car payment, making sure you’re staying on top of your car insurance, your cell phone bill, so that you can actually get yourself to work and get yourself to appointments, take your kids and drop them off at school. Those things are very, very, very key. Everything else is discretionary and very flexible.
Eric Rosenberg:
That’s a great way to look at it. So, there’s another area of our finances that I like to think of as a must-do. It’s a place you can trim down a little bit if you really need to when you’re on a tight budget, but that’s saving and investing. In the finance world, we sometimes call it paying yourself first. So, before you go out and go shopping or get something fun or even go to restaurants, or anywhere that your expenses could go up, you have to pay yourself and future you will really appreciate it.
So, one area to make sure you’re saving, that’s an absolute must-do is an emergency fund. And if you use the Payactiv app, we actually have a feature built in there. There’s no cost to automatically transfer a certain dollar amount or percentage of your paycheck into a savings account, so you don’t even have to think about it. So, even if you just start at $5, $10 a paycheck, it’s okay to start small, but we’ve got to save for emergencies because you never know when something’s going to happen. Cars break down. If you own a home, your furnace could break or your fridge. We actually had our fridge and our dishwasher go out about two weeks apart last year. So, those expenses come up and they’re a surprise. I was not planning on getting a new dishwasher, I’ll tell you that, but here we are.
So, when you’re deciding how to save and invest, Kai, how would you allocate funds? Do you use a percentage model? Do you use a fixed amount? Do you use a combination? What’s your favorite strategy there?
Kai Dickens:
So, I like to categorize these as irregular expenses, and you’re going to go through and you’re going to look at some of the things that you might only pay once a year, such as car registration. Some of the others, maybe if you have a credit card, there’s a credit card payment or a credit card fee on it. Hopefully, it’s one of the ones that’s under $100. If you’re paying for something like… Figuring out a list of your things that are irregular, looking at things like, okay, cool, last year I didn’t have to buy tires, but I have been traveling a lot. I might have to put brakes on the car this year, and get an amount for that piece, dividing that by 12 and using that as the number that you put into your savings account. Those are for the irregular expenses that are going to come up.
I even put holiday stuff in there as well, vacation. That way when you take a trip, you’re taking the trip, but you already have the trip paid for. And then, also allocating, hey, you know what? I know I want to start saving for a house, or I want to start saving for this. Giving a small amount there, so that you’re at least putting something towards that every year. And I like to use Ally in order to kind of break some of those out.
Eric Rosenberg:
That’s great. Yeah, I know automatically, either once a week, or every other week, or once a month money goes into my HSA, that’s my health savings account. So, that’s saving for future medical expenses with a tax benefit. Depending on your insurance, you can do that. I save for retirement every month. I save just cash in a savings account, we put money there. Because again, you never know. Sometimes those surprise bills just come out of nowhere and we all have to deal with that. So, that’s never any fun. But having the money is a lot more fun than not when those come due.
So, I know you mentioned mint.com is shutting down. That’s a budgeting app I’ve used for a long time. We actually have budgeting tools also built into the Payactiv app, which is pretty cool. So, again, if you’re on that financial wellness platform, there’s all these awesome free things that come with it, including budgeting software. You’re of course stuck using the Payactiv software, even though we think it’s the best. What other apps would you consider when you’re choosing budgeting software?
Kai Dickens:
See, when it comes to creating budgets, my big thing is pick what’s going to work for you. So, if you are somebody that knows that you’re not going to be able to stick to logging into something, it’s going to have to be on your phone, look for something that’s going to work for you there. I am moving to Monarch. Pretty much they’re the ones that actually help build Mint. It’s a paid app at this point, but they’re actually having a really good sale on it for the first year if you’re moving over from Mint. But I think that it’s a great platform on the inside. But if you don’t want to do something that’s paid and the pen and paper method works for you, the Excel method works for you. My biggest thing is just find something that’s going to work for you that you can stick to and actually check.
Eric Rosenberg:
Any budget is better than not budgeting. So, let’s say your parents say, “Oh, you have to use this budgeting method. It’s all that works.” Maybe that’s all that works for them, but that might not work as well for you. So, what’s most important is pick something that you’ll really stick to and you’ll really follow. Because otherwise, what’s the point? You got to budget, you got to know where your money’s going, otherwise, it’s like you’re driving a car blindfolded. It might work for a few months, but eventually, you’re going to hit a tree or another car. It’s not a good thing to do with our money.
Kai Dickens:
Definitely not. Definitely not.
Eric Rosenberg:
Finally, a question. You work with a lot of different people figuring out their budgets. We talked about common mistakes. Are there any best practices you recommend everybody follows when they’re budgeting or most people follow?
Kai Dickens:
I think one of the best things is to actually look at, like you said, kind of look at your spending. But at the same time it’s thinking about some of the things that might pop up. So, when it’s coming to the holidays. Everybody doesn’t have a Christmas budget, but I definitely recommend you having some type of a budget for the holidays. Whatever number that is that you pick, say it’s 1,000 bucks in your head, I recommend kind of halving that and then kind of playing in that. Creating a spreadsheet, so that you can actually allocate out the numbers by the people or the little things that you’re going to do.
Think about the white elephant parties. Think about the secret Santas. Think about places that you might have to bring a dish, or a bottle, or a set of drinks to, because that all adds up. The holiday spending as far as buying Christmas trees or those little things, all of that is very, very important to think about. And then, take that and just kind of expand that when you’re creating your budget. Think about some of those things that you’re like, “Oh, those birthday parties. Hmm, yeah,” or, “My charity.” Don’t forget to put those things in there because it’s very, very, very, very important.
Other best practices, I recommend looking at your finances minimum once a week, going through the transactions, making sure that you’re looking at numbers. You can catch a lot of mistakes there. I’ve caught a $300, $400 mistake by a trainer that was still charging me that wasn’t supposed to charge me. It had gone three months without being charged, and all of a sudden it showed up. And I was able to be like, “No, bro, give me my money back.” But if you can go in on Thursday, if you like to go out over the weekend, know what your number is on Thursday, and then on Monday go back in and kind of check and see what you did over the weekend to give you a balance.
And I think the last thing would be if you struggle when it comes to swiping the card, then I would say take out cash for the discretionary stuff, for the shopping, for the food and dining, those little things. So, you take out 100 bucks, you only get 100 bucks that week. If you spend it by Tuesday, you don’t get to go back to the bank and pull out another 100. If you can make it last, then you might have 120 that you can spend the next week. But until you can kind of get the swiping under control, that’s definitely something that could work.
Eric Rosenberg:
Yeah, those are all great tips. I really like all that. It’s important. Just being thoughtful is a big part of it. So, there’s one last little note I wanted to throw in here, and that is your budget won’t work, as we said, if it’s not one you’ll actually do. You have to commit to your budget. You have to make a mental commitment, and if you are in a relationship, you have to get your partner on board also. You got to commit to do this together. It’s a whole household thing, doing your budget and sticking to it. So, you’ve got to turn that switch in your head right now and say to yourself, if you’re in the car or if you’re on your commute, you’ll be the silly guy talking out loud or silly girl talking out loud, say, “I commit to my budget. I’m going to do this. I’m not going to let money get spent blindly. I’m going to make my money work for me rather than have to work so hard for my money.” How does that sound to you?
Kai Dickens:
I love it. I love it. I mean, that commitment also gets you to your why, right? It’s really looking at your why. Why do you want to be in control of your money? Because we want to have money to do what we want to do when we want to do it, but if we’re blindly spending it, we don’t ever get to really use it on the stuff that we want to, or we don’t get to use it without the stress. So, don’t beat yourself up about where you’re at now. Don’t wait until a month from now to start. Just go ahead and start today. It’ll definitely help you move forward. And you’re going to trip sometimes, but just make sure that you pick yourself back up and get right back on the treadmill, the wagon, whatever you want to call it.
Eric Rosenberg:
Yeah, right. We can’t go backward. Like you said, don’t beat yourself up over whatever you’ve done in the past. We can never go back and change any past things, but we could use those as lessons learned to make solid decisions going forward. Definitely. Well, thank you so much, Kai, for taking the time to chat with us today. I really enjoyed having you on the show. If someone wants to learn more and connect with you, where should they go?
Kai Dickens:
Well, you can go ahead and find me drbudgets.com. It’s D-R budgets.com. That’ll be where the website is. We have a whole bunch of blog articles on ways to save. There’s a cool little book, like a little ebook. And then, if you want to have a conversation more in-depth about this, there’s also the ability to connect into the calendar.
Eric Rosenberg:
Awesome. Well, thank you so much, everyone. Definitely go make sure to connect with Kai around the web. And thank you, as always, for hanging out with us.
Kai Dickens:
It’s my pleasure. Thank you for having me, Eric.
Eric Rosenberg:
Well, thank you so much everyone for listening through to the end. Kai was really fun to talk to and extremely knowledgeable about all things budgeting. Remember, as I mentioned, we have automatic savings1 available, budgeting software, and a whole lot more in the Payactiv app2. If you’re not already using it, head to the App Store for your iPhone or your Android device and give it a quick download and get started. You might get it from your employer as an employee benefit. If you don’t, you can still sign up on your own. But you should definitely ask your HR department to make Payactiv part of your employee benefit plan.
With Payactiv, you can access a portion of your paycheck early and you don’t have the steep interest costs or fees that you would deal with with something like a payday loan. We definitely don’t want to use those. They’re mega budget busters. But if you use the Payactiv app, you can get part of the money you’ve already earned and there’s nothing to pay back. It’s not a loan at all. After all, it’s money you’ve already earned. So, that’s all we have for today. Thanks so much for sticking with us till the end. And until next time, keep living the life you’ve earned. Bye-bye.
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