Financially Inclined S1 Ep1: Budgets Transcript

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INTRO

(MUSIC: Fun, upbeat music plays)

Yanely: What’s up everybody. I’m Yanely Espinal. Welcome to Financially Inclined, a podcast from Marketplace. We’re sharing money lessons for living life your own way.

(Title card saying “Financially Inclined” appears)

Yanely: Have you ever gotten an allowance, babysitting money, birthday money or a paycheck, and you feel so pumped to have your own cash, but then a few days or maybe a week later, it’s all gone? Well that might be because you didn’t make a plan for your money, AKA a budget. That’s right. Today we’re talking about how to budget. But wait, don’t turn this off. Stay with me. Making a budget is really empowering. And it helps you make the most out of your money. You’ve probably already seen budgeting videos while scrolling…

(TikTok videos of people talking about how to budget play)

Yanely: There are tons of ways to make a budget and even more reasons why you should make one. But it can be kind of hard to know where to start, which is why I’ve got my friend Berna Anat on the pod this week. Berna used to work at Instagram as the teen community lead, but now she’s a full time financial hype woman on the internet. Berna breaks down a few different methods like zero-based budgeting, 50-30-20 and the envelope method. Plus we get into how to choose the right method for you based on your sign, so all my fellow Virgos out there, you’ll definitely want to take some notes. Okay, let’s get into it.

BUDGETING 101

(Title card for “Budgeting 101” appears and transition music plays)

Yanely: What is a budget? Plain English, you know, we’re out here trying to learn what school did not teach us. So what is a budget? And why is it important to have one?

Berna: Yes, so a budget I like to say it’s an ugly word for a beautiful thing. It really feels like budgeting, and like you say it and you’re like your shoulders go up. But to me, it’s such a wonderful thing. Budgeting in general is just rules for how you spend your money. And it’s your rules for how you spend your money. A lot of people say like, “Okay, I’m gonna learn about budgeting, tell me what I’m supposed to do. Tell me exactly how I’m supposed to do it.” It’s like we can give you you know, guidelines and percentages and tables and whatever. But really a budget is just about what do you want to do with the dollars that you earn? Really, for me successful budgeting is making sure that every single dollar you earn has a job in your life, is serving you in some way. When we don’t have a budget, when we don’t have rules for what our dollars do when they come to us, then they float out of our pockets, that’s when you find yourself on a Friday night, Buffalo Wild Wings, whole paychecks gone, what happened? It’s because you did not have rules for what your money is going to do for you. And so we have to sort of, for those of us who didn’t learn what budgeting is, or like didn’t see any examples of budgeting in our households, I definitely did not, we have to kind of crawl towards that in a way that feels good for us. Some of us might want, “okay, I’m gonna like figure out all the different rules for every single dollar on a spreadsheet.” Some of us might take a different tack. I leaned into budgeting for the very first time by journaling. I opened up a Google doc every other Friday when I got my paycheck because I was like ughh spreadsheets make me want to like peel my skin off. So I’m gonna open up this Google Doc and journal how I feel about my money every other Friday, you know. That makes me want to open up my bank account and see what’s going on. Okay, well, this is how I spent my money the last two weeks, here’s how I want to spend my money. The last two weeks. In my head I didn’t think I was budgeting. I was like, I don’t know, I’m just sort of feeling it out. But that’s budgeting. I was setting rules. I was feeling it out. And I was kind of exploring my relationship with the flow of dollars in and out. So I love budgeting.

Yanely: Okay, so we’ve been talking about, you know, the action of budgeting and how it’s important to do. But there’s a lot of different things that you can see when you go online about like methods for budgeting. So can you tell us what are like the main three or four ways that most people tend to budget?

Berna:Yes, of course. So there are definitely some tried and true practice ways of like how you actually do the thing with your body and your mind and your money and stuff. My number one favorite is the zero-based budgeting method. The idea is that you give all of your dollars a job until there are literally no more dollars left in your checking account, or no more dollars left in like the paycheck that you were just budgeting. Every single dollar gets a job until you get to zero. That’s zero based budgeting. You could also use something called the 50-30-20 method. 50% of say your paycheck should go towards things you need absolutely need to survive; Rent, insurance, you know, bills and minimum payments and all those things. And then 30% of your money should go to your wants. So fun stuff, things that are sort of entertainment, things that are flexible in your budget. And then that last 20% should go towards your like they’re your financial goals; If you’re trying to pay off debt, if you’re trying to build a savings, things like that. The great thing about the 50-30-20 method for me, and the essential thing is that you do not have to stick to those percentages. Maybe your budget looks more like 60-20-20 or 70..etc, and be able to mess with it from there. And then another budgeting method that I think is very kind of undervalued, and we don’t talk about a lot, but it’s so great, actually, for young folks, is the cash envelope method. That means whatever money you’ve got, whether you have all cash, or you take a paycheck, and you just you cash that whole thing out, you’re putting your money into literal envelopes of sections of your life. You might have a adulting envelope, and that’s where your rent and everything money goes, you might have a fun envelope, you have a grocery envelope, a shopping envelope. You’re physically putting the dollars in all those envelopes. One, you can actually see where all your money is going. And two, it’s better to sort of stop yourself from overspending once you’ve gotten to the bottom of the envelope, because like you said, you open the envelope, there’s no more money, there’s just no more money in there. Those are my sort of top three favorite methods.

Yanely: Yeah, there’s so many types of like, ways that you can do your budget and rules that you can follow. Like you have to know what you like and don’t like. And that might mean like you got to kind of think about what’s your zodiac sign does. What does that say about you? Right? Like, are you… if you’re a Virgo like me, you might be super organized, that gives you a hint about what you might like and what you might not like in all of these options. Right? So is that something that you know, people should consider? Or is that like, maybe it just sounds really silly to some people, but you think there’s some value in thinking about your personality type through your zodiac sign and if that can help you pick something that you will succeed with?

Berna: Yes. Oh my gosh, I love this. So as a double Scorpio, but also admittedly a bad Scorpio, I love astrology. I don’t fully understand it. I feel like I should. And I’m doing a disservice to all of the Scorpios out there. So I apologize. But I’m so glad that we’re connecting these two things. Because one thing a Scorpio does love is like diving into the personality connection of everything. And so thinking about this a little bit, it’s like, let’s start with the Virgos right, a Virgo, like you said very organized, you’d like things to be systematized. And so you might be into like, I feel like a Virgo is the type of person that’s like, Wait, somebody hates spreadsheets, I don’t hate spreadsheets, I love spreadsheets. And so let me not, let me not shame the spreadsheet loving Virgos out there. Without the spreadsheet if that’s what makes you excited, and you know that that’s going to make you consistently excited. I know for me, I’m as a Scorpio and Libra moon. I was like, my brain, though, is like very overachiever. And so I was like, oh, spreadsheet makes sense. I’m gonna do it, I’m gonna make a spreadsheet. And I’m going to follow and track this spreadsheet. But after a while, my brain got tired of that because I was like, I’m not really Virgo brain, I’m actually more more feeling, I’m a water sign. I want to feel the feelings. And so journaling, like combining journaling with the spreadsheet actually really helped me. I’m thinking like the cash envelope system is so key, especially for young people, because you might be you might only have cash, you might not have a bank account yet, you might just be dealing in the cash that your sometimes your family gives you or you get from other places. I’m not sure what sign would be into this. But I’m thinking like an earth sign, something that someone that likes tactile things, likes to feel it, you want to see the cash in the envelopes, you want to feel the dollars going from place to place. It would feel good to you to know if you’re going to the grocery store, I’m bringing my grocery envelope. And that’s all I have to… then that’s it like I’ve run out I can’t make imaginary money out of it with my debit card, which I tend to do. And so you really want to connect things in that way and I just I love I love this. I love this enmeshing of my of my interest Yanely, you’re really scratching my itch here.

Yanely: No, it’s so important. You know, I have a friend who’s a Leo and she’s like she admits it. She’s like, I’m very selfish. I’m a very selfish person. And when I go through, like the problem that I have with budgeting is that I put these things to certain buckets and at the end of the day, I’m like, No, I want to use that money for something else for me. Yeah, like it’s like and then she tends to be an over spender because of that. So I think that’s where people like that your your point about budgeting it in cash envelopes can be so helpful because it’s forcing you to realize that this envelope is empty. Nothing in here. So you you know that helps you to understand visually. You can see that it’s empty versus like the emotional part of you comes in a little bit of that selfishness comes in and makes you swipe that card or go online and to make an online purchase. Maybe use Buy Now Pay Later since you probably don’t have the money in your budget right now. Like those are the temptations. So I think that your point about including your personality, you have to do it so that you know that you’re doing something, you’re more likely to be successful doing it over and over again, you won’t quit too soon. But let’s be real, there are going to be some people out there who are going to feel like they hate this. And, and and they’re, maybe they take your advice Burna, and they’re like, “I’m gonna try it for 90 days, like Berna said, I’m going to give it my best shot, I’m going to.” But after the 90 days, they’re like, I’m still here, and I still hate it. What can they do to work through that? Because this is a life skill that we like, we can’t ignore this otherwise, where our money is going to be something that we’re never feeling in control of. So we have to get over that, and what would you say to somebody who feels that way?

Berna: Yes. Well, there are a couple things that I would want to advise them. The first thing I would say is, dude, same. Like when I first learned about budgeting, it definitely wasn’t a like, a sound of music, the hills are alive,like me and budgeting living happily ever after. Absolutely not. It was like, how do I make it so that I, one, understand why I hate it and two, start to enjoy it. I would say for that first part, understand why do you hate it? What is it bringing up for you? It’s a very, very, very valid feeling when you start approaching your money for the first time to immediately feel all kinds of negative stuff come down. Because money is woven into our lives in such an intensely complicated way. And we learn about money in a lot of the times negative ways when we’re so young. And so as like, once we get older, and as adults, when we start to approach budgeting, it’s not a neutral subject for any of us. And so a lot of stuff is going to come up. And this is sort of like, I would sort of package this in the area of like financial therapy and like financial kind of unpacking your feelings, but start to actually like, just gently question yourself. What feelings are coming up when I think about money? What memories are coming up when I think about money. I like to have people ask themselves, what was your first experience with money? Most likely it was in your family with your caregivers. What did money feel like in your household? When you saw, if you ever saw any like instances of money being handled or mishandled, how did that feel? And how might that have contributed to the way that you feel about money now? Maybe you feel the exact same way as your caregivers about money and it’s freaking you out, or you went to the opposite side of the spectrum, because you didn’t want to be like them. Either way, we are all carrying financial baggage. We’re all carrying financial trauma. And it’s such an important thing to examine. It’s not the kind of thing where it’s like you have to heal yourself before you start budgeting. But because I know if my therapist taught me anything, it’s that nobody is all the way healed. And we don’t have the time. But it’s good to start unpacking that. And you start to separate like, this is not you know, money is not necessarily all scarcity, or all evil, or all negative or all bad. These are just the feelings that I’ve attached to it. And the more I examine that, the more I can put a little space between me and those feelings, even though they’re totally valid, and actually start to budget.

And then that second part is what am I missing then from my budgeting process? One thing that I found that I was like, wow, once I found this in my budgeting process, I will never leave it behind. But a lot of people don’t talk about it is the community of budgeting. So we do so much money management on our own, and a lot of us are taught, especially if you’re raised within the American dream or first gen in America like it’s so individualistic. Everything is you pulling yourself up by the bootstraps, you learning this on YouTube, you reading the books, you listen to the podcast. But if you start for me when I started to incorporate community, I started to talk to people about my budgeting methods, I started to learn about other people’s budgeting methods, I found other creators who could teach me about other budgeting methods, it like it lit a whole different fire in me because it felt like I was doing this with people. And that broke so much of the negative feelings that I felt because one of the biggest negative feelings we feel about money is shame and isolation. Once I started to talk about my budgeting, and just literally just airing it out verbally with other people or feeling like I found community online, it made budgeting feel completely different. I would say like, get up out of your little like budgeting clamshell and find community.

OUTRO

Yanely: Okay, you heard Berna budgeting is super personal. So it might take multiple attempts at a budget before you find the method that works for you and your personality. I know for me, zero-based budgeting works pretty well. But I didn’t start that way. I tried a few different apps out before, eventually, I stuck with a simple spreadsheet. The earlier you get into the habit of making a plan for your money, the more you’re going to work that budgeting muscle and then eventually managing your money is just going to start to feel second nature like brushing your teeth or drinking enough water. If your family is covering most things for you right now, then an easy way to start is to pick something that you really want to save up for yourself, like an expensive game coming out in a few months or an outfit for your prom. Then you can work that into your budget.

So here’s my challenge to you: I want you to give yourself a chance to practice this. Maybe you can talk to your best friend or someone in your family about what method you want to actually try because having that accountability buddy will really help you stick with this. Then you can pick a financial goal that you really want to reach in the next few weeks and use the budgeting method of your choice to get there. You got this happy budgeting!