Financially Inclined November 3rd, 2023 Transcript

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Yanely Espinal: What’s up, everybody? I’m Yanely Espinal and welcome to season two of Financially Inclined from Marketplace. We’re sharing money lessons for living life your own way. Today we’re talking about saving money. Now I know when I was in high school and even college saving felt so irrelevant, like I was barely scraping by. How was I supposed to set money aside? But don’t worry, because I brought my money BfF, Berna Anat, back to help us out with this one. You might remember from season one when we talked about budgeting, but now she’s here to talk about saving and how to make sure it doesn’t suck. So let’s get into it.

Berna Anat: When you say saving money, I don’t see words. I see images. I see a squirrel. Saving to me is being like a squirrel. Squirrels, you know, they’re year round creatures. But before hibernation happens in everything, they know that like all the acorns and all the good stuff, all their food is going to go away. So what do they do in the spring and the summer? They take the acorns and they hide them and they they hoard them and they put them in a hole in the ground and they bury them so that later when they’re hungry and there’s no acorns around because it’s winter and it’s sad, they can take the acorns out of the ground and be like, great past me took care of future me. That’s how I think of savings. We are being squirrels, putting acorns away for the winter of life.

Yanely Espinal: Love it. Let’s get into the why. Why is it important for people to save their money?

Berna Anat: It’s super important for folks to save money because we want stuff. We want new clothes, we want a car, we want a college degree, we want a house. We want a bag of chips. Wanting is like the first thing that you like remember as a baby. Gimme. That’s mine. That’s mine over there, That’s mine, that’s mine. And so it’s basically saving money is the adult version of being like, Give me that. That’s mine. As a kid, for some reason, I’m thinking about the fact that like in ninth grade there was this like honor Society field trip that I want to go to. But then you had to like, kick in, I think it was like 150 bucks or something to go. And you cannot go unless you raise that money or somebody writes a check. And so I was looking at that $150 and being like, How am I going to get there by like November 3rd, the deadline that I need to be like, yes, Berna is going. When you are starting off savings, what’s so important is to have the smaller goal first, because what’s important is that emotional win. If I could go back in time, I’d be like, okay, slow your roll first. It’s $10, right? Let’s get to the first ten, celebrate. You didn’t spend it on Boba. Good for you. Let’s get to the next 50. Let’s get to the next 75. And like breaking those little things up. The emotional win to me is everything.

Yanely Espinal: It’s so big. It really is. The reason why it’s so hard for people to save the money is because, like you said, you have if you have it, boba dumplings are real good. Dollar pizza looks real good. You sound real good.

Berna Anat: Yes,.

Yanely Espinal: It’s just so easy. So you talked about saving being something that is a goal, right? In order to do that, you kind of have to not use that money.

Berna Anat: Oof. Wow, what a concept.

Yanely Espinal: So how can we create, like, a spending plan that at the same time allows you to not feel like you can’t spend anything because you have to save everything?

Berna Anat: Yes. And that’s it’s so important to talk about because sometimes when we say things like budget and save money, it automatically feels like someone’s trying to take something from you or make you stop or put you on like a financial diet. The scarcity mentality really pops out. For a lot of us, saving money is not the same thing as not spending money. Saving money is just not spending that money, that specific money for that specific goal. So when we talk about savings, I think it’s super important to talk about saving for what? Like when you’re just like, I want to save money because I just think I’m supposed to. And I got to that kind of thinking that sort of like incomplete goal setting, that’s when you’re going to drain the money because then you’re just like, Well, it’s just sitting there like, Yeah, I do want this pair of shoes. I do want this concert ticket. But when you define what it is you’re saving for, then you’re like, Oh, I’m trying to go to this like honor Society Shakespeare trip in November, and so I’m not going to spend that money. Maybe I have other money to save if I got my budget right. I actually do have boba money in this account. I’m going to keep the Shakespeare money separate from myself, though I don’t think of it as like, “Oh man, now I don’t get to spend this money.” It’s like “I just gave this to my future self so she can spend that money” in this thing that I know that I want. So it’s like paying your future self. It’s saying yes to something in the future as opposed to telling yourself no right now.

Yanely Espinal: Yeah, I love that.

Berna Anat: We spend according to what we want. We’re like pulled by our desires. And so it’s so important to then define that desire. If we’re talking about self control, it’s okay to put that savings account in a different bank from where the rest of your money is. You open your bank account every day or every every time you try to spend money or whatever you see what you can spend, and then your savings is just sitting right there staring at you. Like dancing.

Yanely Espinal: Touch me, Yeah, exactly.

Berna Anat: Touch me! What you need $20 right now? Look what I have. And so it might be good to keep it in a separate bank.

Yanely Espinal: Yeah. Tell us about what you should be looking for when you decide you want to open a savings account to actually put your savings in a place that it’s safe.

Berna Anat: I would want to talk to my younger self about high yield savings accounts. High yield savings account basically just means you get the most free money every month, right? High yield means high interest rate. So an interest rate is like it’s like this weird term for basically extra money. That’s the way that I think of it. When you have a savings account, usually they tell you, okay, your interest rate is a percentage, might be 0.4%, it might be 7%. That means essentially they are taking whatever is in your savings account and multiplying it by that interest rate and then sprinkling that on top of what’s in your savings account. Savings accounts are fine. But a lot of the times, the high yield savings account is sitting right there. What you’re looking for is a high yield savings account that has no monthly fees, that has no minimum balance, meaning that you don’t have to some some account to like you have to have a hundred bucks in here. And if you don’t, we’re going to charge you $10. The point is to save my money, not take my money. These days, with online only checking accounts and savings accounts, it’s so easy to find a high yield savings account. What you should know is that like a regular non-high yield savings account, the interest rate can be like 0.13%.

Yanely Espinal: Yeah.

Berna Anat: It’s horrible. But with a high yield savings account, you’re looking at an interest rates that are more like 3%, 4%.

Yanely Espinal: Whole numbers!

Berna Anat: Whole numbers! Free money, right? You’re getting more free money with a bigger percentage and that’s money you didn’t work for. And again, the high yield savings account, a lot of the time as an option, is sitting right there next to the regular savings account. I would choose the more free money, choose the high yield.

Yanely Espinal: I would definitely choose the more free money. Now, you said a few different terms, so I want to pause for vocab for a little bit because I feel like interest rate gets use a lot. Then we also hear percentage rate or percentage yield. So when somebody is looking for their savings account, what are the terms that they need to look for to know, “oh, that’s the interesting that Bernard was talking about. “

Berna Anat: What you’re looking for is annual percentage yield. They’re telling you what the interest rate of a savings account is if you’re seeing annual percentage rate back up, exit. Now you’re looking at loans. It’s a different thing. You’re looking for annual percentage yield because the word yield basically means give.

Yanely Espinal: What are some ways that you would suggest, especially like teenagers who are trying to save money? You know, there’s so much to save for. Like maybe you want to go to college, maybe want to start your own business, maybe prom is coming up. How do you continue to save money? But while making it fun so doesn’t feel so dull and boring?

Berna Anat: That is my wheelhouse. I remember stumbling upon it on accident when I was. I first signed up for like my account at Charles Schwab and I was like, nickname my account. What are they talking about? I remember clicking on it and being like, nickname my account. And I saw the blinking cursor and I was like, anything? Immediately I was like, What’s the most inappropriate? What’s the weirdest? What’s the song lyric? And then that just made it funny. Then to sign into my bank account, I wanted to sign in to show my friend and be like, Look at this, look at this Jhené Aiko lyric that can’t be repeated out loud. And it just it was like a brain hack. I am a child on the inside. I need things to be fun. One thing I like to do is make a savings poster.

Yanely Espinal: Yes.

Berna Anat: You know, we love a savings poster That’s literally like if you imagine old school, sort of like fundraisers where there’s the giant thermometer and every time they get some sort of money, they like, fill up the thermometer. That’s exactly it. But you can go online. There are free savings posters where you can put in like the amount and it can make a thermometer for you or it makes like images for you. I had one a while ago where I was saving up to adopt a dog, and so I downloaded just like a savings poster that was an image of a puppy. And it was it was cut up into like $50 deposits. And I wanted to save up enough almost for like an emergency savings for the dog. Every time I deposited, I like, put up on my wall, I would like do the computer thing, the adult thing and deposit. And then I would take a marker or crayon and fill in that little sliver. And it was so fun. As you’re filling up the tracker, as you’re making deposits, make sure that you are making it fun along the way. If it’s like a $500 goal, how are you celebrating 10, 50, 100? As you’re celebrating, how are you incorporating other people into the celebration? Right. Maybe you and your friends are all trying to go on this trip in a couple of months. And so you all make savings posters and you make this a thing of like, maybe it’s a competition. Who can get there first? Maybe every time somebody makes a deposit into the thing, you text each other like money emoji and it’s so motivating, making it like a group activity. Not only is that super fun, but also it’s like it’s kind of sticking it to the idea, like hyper American idea. That’s like, we must be individuals and we can’t talk about our money together and like you have to do it on your own. And money is weird to talk about, but no, it’s actually really fun and joyful to talk about, especially when you have a shared goal. It’s a positive thing that everybody’s working on together.

Yanely Espinal: And you’re more likely to stick to the goals because you have group accountability.

Berna Anat: Yes, 100%.

Yanely Espinal: Right now, social media is poppin with tons of videos about savings tricks or tips and things. And so I want us to kind of take to Tik Tok. I check out a few videos that are giving suggestions for how to save. And I want to get your reaction. So what do you think about these?

Berna Anat: Okay, I’m super excited. Let’s do it. My facial reactions are ready.

TikTok 1: See how long you can last on this no spend challenge. Here are four things that you’re allowed to spend on gas, groceries and other…

Berna Anat: This man is telling you what to do. Interesting. So it’s like the absolute bare basics that only like things that you need to survive.

TikTok 1: But what you’re not allowed to spend money on is clothing, online shopping. You’re going out to eat.

Berna Anat: Listen. Josh, I was with you until you said going out to eat because we all have the financial Achilles heel. We all have. That felt like I was with you. I was with you, and now I need you to back up because going out to eat is my weakness big time. It’s fun to put it in the frame of a challenge. It’s something that you do and there’s an end. For example, a lot of people do like a no spend August, no spend September, no spend October. My fear around this would be then come October, I’m a feral monster. I’m like every single night we are eating. And that that’s where I would also need, like, financial accounting.

Yanely Espinal: Revenge spending, revenge eating.

Berna Anat: Yeah. Or like, maybe this is less spend October now taper it down. So it’s like you can get half of your eating out budget back.

Yanely Espinal: mmm I like that.

TikTok 2: For let’s say you’re trying to save your first $10,000. What we first need to do is save to a baseline. Let’s say the baseline is $5,000. Now, this may take months, but once you hit your first baseline, $5,000 effectively in your head at your bank account needs to go back to zero.

Berna Anat: Oh, Interesting.

TikTok 2: Let’s say you saved up another K, Now you’re at six K, so you actually only have one K. That other $5,000 still doesn’t exist.

Berna Anat: Okay. So he’s doing some like backwards witchcraft math because he’s like, let’s pretend now you save six K and $1,000 over your baseline. So you’re like actual balance is one K. It’s two steps forward, one step back. I don’t know yet why we’re doing this, but I’m going to trust you, Austin.

TikTok 2: Now, let’s say you finally hit your goal of $10,000. Guess what? Your bank account goes back to zero. You are now broke.

Berna Anat: What? No, I don’t want to be. I don’t understand.

Yanely Espinal: I just worked hard.

Berna Anat: I just work so hard. I thought when he was going to say you went to ten K, you did it. My issue is feeling broke all the time when you are not actually broke. Because I feel like that word can do a lot to you. And it might incite scarcity mentality. That could mean that you’re acting out of fear and you’re acting out of like not enough and telling myself that I’m broke all the time.

Yanely Espinal: Wouldn’t help.

Berna Anat: It wouldn’t help. Should we do another video?

TikTok 3: Let’s do the hundred envelope challenge today. This year, in 2023, I am saving for $10,000. You could simply just put it into a savings account. But I have to tell you, it is so much more fun and so much more motivating to visually see your money grow.

Berna Anat: Hold it. What if something happens to this beautiful esthetic box? Like that box goes missing or it gets stolen? There’s definitely some risk to keeping this much cash in your home.

Yanely Espinal: Because it’s creative and it’s fun and it’s tactile and it works hitting a certain number. So like, okay, every time I hit this number, I’m going to go ahead and deposit it into my savings account.

Berna Anat: Mm hmm. That actually sounds like a really satisfying way to save because you’re feeling the tactile, like, Wow, there it is. The cash is thicker. I feel the cash growing, growing, growing. And then that almost like you taking it to the bank. That’s your celebratory moment like that. I feel like I would bring friends. I’d be like, We’re gonna go do this and we’re going to eat or go to the beach or something like that. Like that really makes it a moment and. Banks are if they’re FDIC insured, right? That basically means is Federal Deposit Insurance Corporation. Basically it’s the government being like, hey, this bank will keep your money and if you need it, like it’ll always be there, which then means your money is protected. This plastic box in your house that is not insured necessarily, there’s no one looking after it except for you.

Yanely Espinal: All right. Let’s go ahead and give a couple of bullet points. What are a couple of bullet points that really summarize like the top ways that you can make saving fun?

Berna Anat: I would say number one way to make savings fun is to set yourself up for that small goal that you’re like, I think I could hit that pretty soon. Good. Stop there. Set that goal because number one thing we’re looking for is that that small goal, that initial win where you’re like, Wait, I can do that. That felt good. Let me do it again. Number two is be very intensely specific and personal about your savings goal. You’re defining exactly the dollar amount. You’re defining exactly when you want to see that amount of money in your bank account, you’re defining which bank account are you getting a high yield savings? Is it going to be in this bank over here? Is going to be online? Is it going to be cash like we saw in the TikToks? Define what it is. And then like we were saying before, get really specific and fun with a nickname. Name the goal, make it weird, make it inappropriate. Who cares? You’re the only one looking at this. No one’s judging it. This is yours. So make it something that you want to you want to look at and click on and like, remind yourself of every day. Make it community, make it fun with other people. Have people who are going to keep you accountable, have other people who are doing the same savings goal as you. Or maybe you’re all going for the same number at the same time, but everyone’s buying something different. Maybe you’re using things like a savings poster to color in every time you have a deposit and you’re texting each other every time you deposit, make it community oriented, make it a fun group activity. Man, if I did that when I was a young person, it actually would stop me from so many feelings of like financial shame and isolation that I carried into being an adult. It would have stopped it right then and there. So I wish I did that.

Yanely Espinal: Thank you so much, Berna. This was amazing.

Berna Anat: Oh, you’re the best. I thank you for having me and for making this show again. This is literally healing for me. I kind of forgot we were talking to other people, so I hope anyone listening is having a good time.

Yanely Espinal: Okay. You heard Berna. You probably won’t hit your savings goals if you don’t find a way to make it fun for you. So this week, your challenge is going to be to create at least one savings goal. There’s no goal that’s too small. Then choose one of Berna’s a savings tips to help you get there. Also, if saving for college is a goal that you’re interested in, you should definitely check out my episode about scholarships with Youssef Hasweh. That episode is a great double feature with this one and it is packed with gems that you don’t want to miss. Happy saving.

Yanely Espinal: Financially Inclined is brought to you by Marketplace from American Public Media in collaboration with Next Gen Personal Finance. I’m your host Yanely Espinal. Our senior producers are Hayley Hershman and Zoë Saunders. Our video editor is Francesca Manto and our graphics artist is Mallory Brangan. Our producers are Hannah Harris Green and Hayley Hershman. Gary O’Keefe is our sound engineer. Our intern is H Conley. Bridget Bodnar is the Director of Podcasts. Francesca Levy is the Executive Director. Neil Scarbrough is the VP and General Manager of Marketplace. Our theme music is, by Wonderly.

Hannah Harris Green: Financially Inclined is funded in part by the Sy Syms Foundation, partnering with organizations and people working for a better and more just future since 1985. And special thanks to the Ranzetta Family Charitable Fund and Next Gen Personal Finance for continuing to support Marketplace in its work to make younger audiences smarter about the economy.