Financially Inclined September 6, 2024 Transcript

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Yanely Espinal: What’s up everybody, I’m Yanely Espinal, and welcome to Financially Inclined from Marketplace. We’re sharing money lessons for living life your own way. This episode is all about making big purchases. You want to think carefully about spending a lot of money on something before swiping your card or clicking buy, so you can avoid making purchases that you regret later on. Mykail James is the creator of the Check Your B.A.N.K. Method and author of the financial workbook “Money in Your 20s.” She’s here to walk us through how to make better decisions when it comes to making those kinds of big purchases. So to start, I asked Mykail to define what counts as a big purchase.

Mykail James: So I define a big purchase of anything that is half of one paycheck or more, would be considered a big purchase to me.

Yanely Espinal: Yeah, and I like that, because that rule could work for anyone. It’s not like a dollar amount; it’s like this percentage of how much you earn is, if you spend more than that, it’s a big purchase versus spending, you know, like 1% of your income might not be a big deal, but like 5% of your income is a bigger deal.

Mykail James: Yeah, you know, I’m writing my book, and originally we were going with the the dollar amount, and I’m like… $100 you know, I’m not rich, but, like, $100 to me is not a lot, but to some people it is a lot. So I wanted to kind of change it based on, like, how much work you have to actually do to get this money to purchase it.

Yanely Espinal: Let’s say that I have, like, a really big purchase that I want to make, like a new pair of sneakers that just dropped, or I’m trying to buy a new laptop or something, or maybe concert tickets. If that’s something that I’m trying to buy, right, why is it important to kind of pause and take your time and think through that decision before clicking the buy button? 

Mykail James: You want to think through your decisions because you want to be intentional. You want to make sure that the way that you’re spending your money gets you closer to the goals and where you want to be in the next six months, the next year, the next 20 years. All of those little decisions now compound into big decisions that we create for our lives in the future.

Yanely Espinal: I feel like our brains sometimes they like, get in the way when you know you want to do the right thing and make the right choice. So tell us a little bit about how your brain can kind of sometimes get in the way of you making the right decision when it comes to big purchases.

Mykail James: Our brains play tricks on us. You know, FOMO, you always get, you get nervous about like you’re going to miss out, or maybe you’re going to miss the sale, and all of those things. But we have to also realize that the whole idea of spending our money comes from people studying our habits and what we think of, what they are predicting that we’re going to think of. So they have a whole research of trying to figure out how we’re going to buy, we should have some research on how we’re going to spend.

Yanely Espinal: Oh, I like that! And also like what happens when you don’t have a process, or some research or some thought going into what you will and won’t buy?

Mykail James: When you don’t have that process, you’re just spending money, and maybe you accidentally spend money that was really important. Maybe you needed to pay a bill, or maybe you needed to pay your rent. You need a, you need a place to stay! Impulse purchases are purchases that you make in the spur of the moment. You didn’t really think through. You don’t want your impulse spending now to impact anything that you have going on in the future, any plans or things that you need to survive, which is why you need to think through your spending.

Yanely Espinal: And you have a system for this, too, right? Like, you have a whole system that you’ve designed to help people think through whether or not they should make a big purchase or, like, a buy something that’s cost a lot more than they would typically spend. Can you tell us what that system or process is?

Mykail James: Yeah, I have a process called Check Your B.A.N.K. And I love it, because regardless, before you spend money, you have to check that bank. But bank is an acronym in this situation, where B stands for Bring: What does this decision bring to me? Ad it can be good or bad, all kind of things you want to think of. What does it bring? A is Affordable: Can you afford this? And not just right now, but what about the maintenance? What about some of the other things that is going to have to come into it when you’re affording something? Say, for the concert, can you afford to get to the concert? The N stands for Now or later: So can I get it now? Do I need to get it right this second, or can I wait a little bit later when it goes on sale? Something like that. And the K stands for Knockoff. I know the girls call it dupes now, but you know, a knockoff, you know, it doesn’t have to be the exact brand. It doesn’t have to be that that luxury Coach bag. It could be just something that looks similar, and it’s still cute, still has the same impact. So what’s the knockoff or the alternative to the your big purchase that you’re trying to buy.

Yanely Espinal: Can you tell us an example of a time where you actually used the Check Your B.A.N.K. method yourself for something that you were gonna buy, and like how you thought through that process and how it helped you out?

Mykail James: I love a concert, and Beyonce was coming into town. I had to go to the Renaissance concert. My mom and I are huge Beyonce fans. We have never gone to a Beyonce concert live, and I knew that the tickets were going to be pretty expensive. So let’s go through the the framework, right? So B, what does it bring? It brings me closer to the Queen, you know? It brings me closer to Beyonce, and it gives me this experience, and also it also brings me and my mom having this kind of mother-daughter event together. We really don’t get a lot of time to do that together, so that was a lot of good things that Beyonce was bringing. A, can I afford it? So that’s why, in this instance, I set a $500 limit. This is how much I can afford, all in $500. And N, do I need it now or later? This was a now decision, because the tickets were going fast. You had to see me on Ticketmaster, going crazy. And K, is there a knockoff or alternative? Now, I could have gotten cheaper seats. There were cheaper seats a little bit higher up, but I knew that the type of experience that I wanted to set for me and my mother were a little bit closer. And I didn’t get the $500 seats because I couldn’t afford to get two of them. And is there a knockoff Beyonce? I just don’t think so. So I’ve already got the CDs, and I can already hear her on streaming, so there was no other alternative for the live event. So those are the kind of things that I had to think about before buying those Beyonce tickets. Because I’m not, I love Beyonce, but I’m not going to go broke for Beyonce now! [laugh]

Yanely Espinal: Beyonce definitely not going to go broke for us! 

Mykail James: Okay? [laugh]

Yanely Espinal: So I feel like, sometimes when you make these big purchases, you feel a little bit like guilty sometimes, or you just feel like, Oh man, like, I just spent way more money than I normally would. You know, so how can we go through the process of making big purchases, but without feeling that guilt all the time? Or even sometimes.

Mykail James: Sometimes you are going to feel buyer’s remorse. And I think that it’s okay to sit in that feeling. Buyer’s remorse is feeling bad for spending money. It can also feel like anxiety around spending money. And after you have bought something, you no longer find the beauty or the excitement from it. It’s okay to change your mind after you’ve spent your money. I think what, number one, make sure you understand any return policies. Any money that you spend, there is a way to make it back, even if you can’t sell it right back to the place that you you purchased it from. Some chances are, somebody else may want that exact same thing and will pay the exact same price that you paid for it. So don’t ever feel like any any decision or any money decision that you make, you are stuck with. There are always a way that you can turn it around, get out of the deal. But if you ever feel bad about spending money, take it back to the store.

Yanely Espinal: I don’t know, for some reason why there’s a little bit of a culture around like, oh, I don’t know if I feel right like exchanging or returning something, because, you know, I, you know, I bought it already. And it’s like, no, if you, if you haven’t used it, or it’s not exactly what you expected when you bought it, like, and you’re within your policy, like, go ahead and return it! Because the reality is, there are other ways you could be using that money. 

Mykail James: Absolutely. 

Yanely Espinal: It makes sense to say, hey, don’t, you know, don’t be scared to return something just because you feel like, Oh, I’m gonna, I’m gonna look a certain way. No. So what? Get your money back.

Mykail James: Sales associates do not care. I worked in retail for like, 10 years. We don’t care.

Yanely Espinal: right? Get your money back!

Yanely Espinal: All right, you heard Mykail, whether you use her B.A.N.K. system or another approach, it’s important to really think through big purchases before you make them, so you can avoid buyer’s remorse and set your future self up for success financially. You can find Mykail on social media at bougiebudgeter and on her website, bougiebudgets.com. You got this. I’ll see you next time.

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 Producer is Zoë Saunders. Our Video Editor is Francesca Manto, and our Graphics Artist is Mallory Brangan. Our producer is Hannah Harris Green. And our intern is Marika Proctor. The podcast was edited by Courtney Bergsieker. Gary O’Keefe is our Sound engineer. Bridget Bodnar is the Director of Podcasts. Caitlin Esch is Supervising Producer. Francesca Levy is the Executive Director. Neal Scarbrough is the VP & General Manager of Marketplace. Our theme music is by Wonderly. Catch you next time!

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.