NerdWallet's Smart Money Podcast - Beauty and the Budget: How to Stress Less About the Costs of Looking Good

Episode Date: June 26, 2024

Learn about the financial impact of beauty expenses, societal pressures behind them, and tips for managing beauty-related costs. Are beauty purchases worth the financial stress? How do beauty-related expenses impact our budgets? Hosts Sean Pyles and Anna Helhoski discuss the rising costs of beauty products, services, and procedures and how they are leading to financial stress and debt among Americans. They explore the results of a recent survey that highlight the financial strain these expenses can cause and provide actionable tips on managing these costs. They also discuss the societal pressures driving beauty spending, from social media influences to the concept of “pretty privilege.” Then, Sean and Anna break down this week’s financial headlines, including the impending student loan forgiveness deadline, a drop in construction of new homes, and Thursday’s presidential debate. In their conversation, the Nerds discuss: beauty expenses, financial stress, beauty products, budgeting tips, beauty procedures, debt management, beauty survey, societal pressures, beauty spending, financial impact, cosmetic procedures, beauty purchases, social media influence, pretty privilege, budgeting beauty, beauty-related debt, skincare costs, hair care expenses, beauty services, managing beauty costs, cosmetic surgeries, self-care economy, beauty budget, financial planning, beauty spending trends, personal finance, debt for beauty, beauty treatments, beauty industry, financial wellness, cosmetic expenses, beauty product costs, and money management. To send the Nerds your money questions, call or text the Nerd hotline at 901-730-6373 or email [e-mail]. Like what you hear? Please leave us a review and tell a friend.

Welcome to NerdWallet's Smart Money Podcast. I'm Sean Piles. And I'm Anna Helhosky. And this is our weekly money news roundup, where we break down the latest in the world of finance to help you be smarter with your money. We'll go deep into a single topic and then leave you with the latest money headlines. Today, we're talking about the costs of beauty. As anyone who's ever bleached their hair, gotten a wax, or stuck needles in their face to delay the inevitabilities of aging can confirm beauty is pain. But we're talking about a different kind of pain, right, Sean?

That's right. This is the kind of pain that hits you in your wallet. A new report from one of our colleagues at NerdWallet found that the cost of beauty products, services, and procedures are leading to financial stress and even debt among Americans. The survey, commissioned by NerdWallet and conducted online by the Harris Poll, polled 2,000 Americans and found that 75% have made beauty-related purchases for themselves. So when we're talking about beauty-related purchases, we mean tangible things like skincare products, hair products, and cosmetics. But it's also services like getting your nails done, going to the hair salon, hair removal, or getting skin spa treatments.

Those are the basics, but there are additional beauty purchases like getting cosmetic dental work done, non-surgical cosmetic procedures, and even cosmetic surgeries. Now, we know that beauty is subjective, but there are common perceptions of what is and isn't beautiful. And being perceived as beautiful does carry personal and professional advantages. Yeah, those advantages are known as pretty privilege. And three quarters of those who responded to the survey said it's real. About 11% of those surveyed say that cosmetic procedures are a good financial investment. They can help you get ahead. That viewpoint is most popular among younger generations, 17% of Gen Z and 20% of millennials. The investment is about more than just physical appearance.

About one-third of those surveyed also say that beauty purchases are status signifiers. So looking good can be an asset on many levels, and you can understand why people make beauty-related purchases. After all, we saw what happened during the pandemic with at-home haircuts. Oh yeah, I know I gave myself a pretty bad at-home dye job. Yeah, I mostly buzzed my own hair during the pandemic to mixed results. I certainly had some missed patches every once in a while, but I did like saving the $50 or so a month that I was previously spending on haircuts. But the price of attaining and maintaining beauty also gets expensive,

unaffordably so for some. Among those surveyed, some have gone into debt for their beauty. 15% said they used a credit card that they didn't pay off by the date it was due, while 9% used buy now, pay later services, and 5% used a loan product from the provider of a beauty product or service. And it's not just people buying for themselves. The survey found that 57% of parents made beauty-related purchases for their children. You've heard of Sephora kids, right, Sean? Yeah, those are the tweens who are really into skincare, like face masks, serums, scrubs. Right. The beauty purchases that parents make for their kids is most likely to be skincare, followed by hair products and nail salon treatments. So not only are you paying for your own expensive beauty products,

now you've got a budget for your kids to get a facial peel too? Exactly. So let's talk about what people are spending. There are real cost differences between beauty purchases, and the most expensive are, as you might guess, cosmetic procedures. More than one in four of those surveyed say they purchased a cosmetic procedure for themselves. Right. And the most popular is a cosmetic dental procedure, like straightening or whitening. About one in five say that they've made those purchases. And 7% say they've had non-surgical procedures like Botox,

while 7% have had cosmetic surgeries such as rhinoplasty or liposuctions. Now, most people say beauty purchases are worth it, and most people also say it's not okay to go into debt for it. It's a little subjective though, right? Debt is more acceptable when it's used to pay for necessities, and one-third of those surveyed say some beauty products and services are essentials. Interesting, but there are things that you think are essential, and then there's what social media tells you is essential. There's no question that social media fuels beauty spending through ads and influencer marketing. And don't forget the constant bombardment of photos and videos of outrageously beautiful people.

Nothing makes you feel insecure quite like social media. Yep. The survey found that 75% of Americans say social media has made beauty spending worse, and 12% feel pressure to spend more on beauty purchases than they'd like to. I know I've been suckered into late night ad-fueled makeup purchases. Yeah, I'm right there with you. I follow the over 30 skincare subreddit and people are always posting about what they call their holy grail products. That one thing that fixed all of their perceived issues with themselves. And I will admit that I have purchased more than one of those items myself while scrolling in bed before going to sleep. Yeah, I feel like the self-care economy

has fueled a lot of spending in the name of treating yourself. It turns anything into self-care, eye cream, nail polish, face masks, lip plumpers, not to mention spa days. Yeah, it certainly seems to have fueled an explosion in bath bomb purchases. Sean, do you want to share the most expensive beauty related purchase you've ever made? Okay, so it's not a single thing, but it's more cumulative purchases. But I really do not want to know how much I've spent on Supergoop sunscreen over the past couple years. I mean, their products are so good. And I promise you listeners, this is not an ad. Although Super Goop, if you are listening, hit me up. I would love to talk about an ad partnership. Only half kidding there. But Anna, what about you? Super Goop is not paying us a dime, but I also love their sunscreen. But as far as purchases go,

this isn't the most I've spent on a single beauty related purchase, but it is the most recent. And I'm about two weeks away from getting my Invisalign off. Oh, that's right. So would you say it was a worthwhile investment? It really was. And I also feel I need to note that this is also not an ad for Invisalign. I will say I was trying to be cost-conscious about it. So I compared a few different dental providers to find a well-reviewed one that also offered a deal. And I ended up spending nearly $2,000 less than I might have somewhere else. Another good reminder for listeners to shop around. And try to avoid going into debt for the sake of beauty.

If you follow the 50-30-20 budget plan, beauty purchases fit into the 30% wants category. A beauty-related procedure might be medically necessary, and if that's the case, see what your insurance will cover and whether you can use your HSA or FSA to cover at least some of the costs. For any procedure that is not medically necessary, I'd say make a plan to save. Up next, a few money headlines from the last few days. Calling all student loan borrowers. There is a big deadline coming up next week if you are hoping to get your loans forgiven. Yeah, the Education Department is giving borrowers through

June 30th to consolidate federal student loans in order to qualify for a one-time only income-driven repayment account adjustment. The adjustment will count past periods of repayment to get borrowers closer to forgiveness through the IDR program. It's worth noting, Sean, that the Education Department has already approved $51 billion in loan forgiveness through the IDR account adjustment. So if you want to be part of the next wave of approvals and you have loans that qualify, you'll want to consolidate by that June 30th deadline. Borrowers will need to take action depending on the type of loan that they have. So check out the Federal Student Aid website or nerdwallet.com for more information about eligibility.

One more note for borrowers. Any account adjustment will be automatic once you consolidate, but you won't see it reflected on your account until September. People trying to buy homes just can't catch a break, Sean. They really can't. Government data released last week showed that new construction, known in Census Bureau speak as housing starts, declined 19% in May compared to one year ago. It's the biggest dive since April of last year. Here's another sobering stat from that government data. Building permits,

which are the first indicator of future homes to come, were also down by nearly 10% in May compared to a year ago. This all means that fewer homes are being built. Fewer homes equals more competition among buyers, which drives up prices. And don't forget that this is a market where mortgage interest rates are still elevated. Indeed. Next week, Smart Money will be diving deeper into the state of the housing market with Norwald's very own home and mortgages expert, Holden Lewis. One more reminder for listeners to tune into the first presidential debate on Thursday, where you'll see President Biden and former President Trump go head to head for the first time.

Well, this year, anyway. It's a rematch. And with less than five months until the election, the presumptive candidates are likely to touch on quite a few topics related to the economy and ultimately your finances. We'll be watching to hear how the candidates plan to handle inflation, taxes, tariffs, immigration, social security, and Medicare, the federal deficit, student loans, the job market, and more. Should be a real barn burner, Sean.

It'll be a real something, that's for sure. The first debate of the season will be on Thursday at 9 p.m. Eastern, 6 p.m. Pacific Time. It's hosted by CNN, but will be simulcast on several networks and streaming on those networks' websites. That's it for this week's Money News. We always welcome your money questions and comments. Turn to the Nerds and call or text us your questions at 901-730-6373. That's 901-730-NERD or email us a voice memo at podcast at nerdwallet.com. And remember, you can follow the

show on your favorite podcast app, including Spotify, Apple Podcasts, and iHeartRadio to automatically download new episodes. Today's episode was produced by Sean and I and edited by Rick VanderKneife. Sarah Brink mixed our audio. Here's our brief disclaimer. We are not financial or investment advisors. This nerdy info is provided for general educational and entertainment purposes and may not apply to your specific circumstances. And with that said, until next time, turn to the nerds.