NerdWallet's Smart Money Podcast - No-Spend Month, and Making Money While Raising Kids

Episode Date: January 31, 2022

A no-spend month can help you reset your money habits and save cash. To start this episode, Sean and Liz kick off their no-spend month challenge and talk about how you can craft a plan that works for your lifestyle and budget. Then they answer a listener’s question about how to earn more money while raising kids.  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. Timestamps: This Week in Your Money segment: 0:00 - 9:07  Money Question segment: 9:08 - 28:41 Also, we are running a sweepstakes ahead of our new Nerdy Book Club series. You can enter for a chance to win Bola Sokunbi's book "Clever Girl Finance: Ditch Debt, Save Money and Build Real Wealth" by emailing [e-mail] with the subject "Book Sweepstakes” during the sweepstakes period. Include the following information: your first and last name, email address, ZIP code and phone number. Check out our book club page for more info.

Welcome to the NerdWallet Smart Money Podcast, where we answer your personal finance questions and help you feel a little smarter about what you do with your money. I'm Liz Weston. And I'm Sean Piles. Do you want the nerds to answer your money questions? Well, hit us up on the nerd hotline. Call or text us at 901-730-6373. That's 901-730-NERD or email us at podcast at nerdwallet.com. And to get new episodes delivered to your devices every Monday, be sure to subscribe. And if you like what you hear, leave us a review. This episode, Sean and I answer a listener's question about how to earn more money while raising a family. One tip. While there may not be an easy answer, thinking big can help. Before we get into that, in this episode's This Week in Your Money segment,

Liz and I are kicking off our No Spend Month Challenge. We've talked about no spend months in the past, and now we want to bring the challenge to life and get our listeners on board. So here is how it works. For the month of February, don't buy stuff that you don't need. Simple. Okay, we're done. Easier said than done.

Yeah, that's for sure. I've done this just about every year for quite a while now. And I started out when I was writing for MSN and we had this community board and people would share their victories, their challenges with this. But the whole point is to do a reset. You know, with the holidays, you can start spending a lot and then the bills come in in January, and you feel bad about that. And the no spend month is just a way to kind of take a look at your spending, kick out some of the things that you don't need to do and maybe save a little money.

And this year, you want to do it, right? I am planning on doing it, especially because I had a pretty expensive January, mostly through frivolous spending. I'm excited for it. But what's really important to start off with is knowing how to structure your no spend month. And one of the keys is customizing it for your lifestyle, your way of spending money. And there are no hard and fast rules for it. Make sure that you're setting this up so it's actually doable. That's the key part. And for us, we've got a little travel coming and we have some situations

where we may have to spend money. I'm just going to cut myself a lot of slack on that. But I am going to do the stuff that I normally do, which is unsubscribe from all those newsletters that want me to spend more. A lot of sites, basically their whole purpose is to get you to spend. take those bookmarks off, get rid of the email newsletters and try to just think about what do I really need? Because the core, I think of a no spend month is to identify what your necessities are. And for me, we've got a whole pantry full of food. I'll need to get perishables definitely, but I don't need to go out and do a big shop. That's just not going to be in my plan for the next month. I think it could be really helpful to define what discretionary expenses are in your budget. This

is the wants in terms of the 50-30-20 budget, where 50% of your income goes to cover things that are necessities like groceries, 30% go to wants like going out to eat or maybe some random impulse purchase from something online, and then 20% goes towards debt payments and savings. If you go into that wants category, think about where your money is going. Is it all going to delivery? Is it going to an impulse purchase or whatever? That's where you can really dig in and see where you can cut these expenses. Like some of us have gotten into a habit of a lot of either takeout or delivery. And it's not that hard to start making meals at home again. So that's one of the things I'm going to be doing

is setting up some real simple meal plans so that I don't have to, you know, scramble at the last minute, try to find some food to feed my husband. But like you said, it's important to give yourself certain allowances. If you know you have travel coming up, you can build that in.

I have some travel coming up. I'm going to visit my mom in Florida in a couple of weeks for her birthday. And I know I'm going to want a couple of souvenirs. I'm going to want to treat her to a nice dinner out. I'm building that into my budget for February. So I'm not totally thrown off. And I feel like I've wasted a week or so doing this no spend month challenge that I didn't even do properly. And as you know, Sean, one of the most important things to do is to identify why you're doing this. Because if you don't have good motivation, if you don't

have clear motivation, the first time that you make a mistake or spend what you didn't intend to, you might be tempted to just give it up. So having a goal, having a reason why you're doing it is super important. And this again, will be really unique from one person to the next. Some people might want to save up some money so they can pay down debt they racked up over the holidays. That's pretty common. As we've talked about, it can be really handy simply to have a reset. That's largely how I'm approaching this because I've found over the past two years or so, whenever we've had a surge of bad news, whether it be a new variant or some other horrible thing happening in this world, I found that my impulse shopping has gone up maybe to compensate for all the horrible things going on. I for sure

had that in January, my purchase du jour was pants. I was all about getting pants that I would wear when I go back out into the world, whenever that is, it was a very aspirational purchase, I suppose, but I spent too much money on pants. So I got to cut it out. And that's why I'm really eager to do this no spend month. Well, and you have an idea what your weaknesses are. And when you do this, you tend to find others. That's the thing that really struck me the first time and every time since that I've done this is that it takes a minute to stop and go, OK, if I'm not going to buy the solution to whatever this problem is, what do I do instead? And I remember back in the day, there was a point where our Internet went out and my normal go to would be go down to the coffee shop, go to a restaurant that has Wi-Fi and work there. Well, how do I do this if it's not possible, if I can't spend money to sit somewhere and use their Wi-Fi?

And I remembered, OK, public libraries, they have Wi-Fi. Again, this is not maybe something I would do in a pandemic, but that was my solution then. And just thinking a little harder about how to solve problems can really help you save some money. I think that having some restraints can really make you get creative and also explore what your triggers are. Like you mentioned, if you're going down to the coffee shop, you're going to maybe buy a croissant and get a latte and these things that seem cheap, but do add up over time.

I am all for people buying their lattes. I'm not going to go down that path. But anyway, it's important to know what would make you want to spend money and then try to redirect yourself. Like if I'm feeling that the world is collapsing, and I want to buy some pants, maybe I'm just going to go for a walk or play with my dog or my cat or my gecko and not focus on the internet for a little bit. I didn't know you had a gecko. I've had a gecko for 20 years, Liz. Oh my God. Yeah, I got him for my 10th birthday, little Ozzy.

I had no idea they lived so long. Me either. But here he is still kicking and chilling. That's awesome. Well, if you do buy pants, don't beat yourself up for it. That's the other part of this is you really don't want to make this a trial or make this another way to shame yourself. It's about discovering your patterns and finding different ways to do things, not making yourself feel bad. It's important to give yourself some grace because no one is perfect. And yeah,

you might end up spending money on something that you told yourself that you wouldn't. And that's fine. It's not a reason to throw in the towel. Just jot down a note. Okay, I spent money on this. And here's why I maybe spent money on that and wouldn't. And that's fine. It's not a reason to throw in the towel, just jot down a note. Okay, I spent money on this. And here's why I maybe spent money on that and move forward. Maybe what could I have done instead, if you want to go that far, but mostly, it's important to just keep on keeping on. I think what can help along this process, because it can be difficult to not spend money on things that you want to spend money on is to find a support system. And here we're talking about accountability partners. These are folks that you can turn to when you do want to spend money and they can say, hey, maybe don't do that. You can talk with them about your successes when you didn't spend money on

something you really wanted to. And they can make all the difference when you are working through something challenging like this. Yeah. And maybe we can be your support system. That's why I really wanted to do this with our listeners. So each week in February, we're actually going to do a little check-in for how the no spend month is going, what challenges we faced, how much money we've saved so far, how many days until it's over with, etc. So if you guys want to get in on the challenge, please feel free to do so. Turn to the nerds and call or text us on the nerd hotline, 901-730-6373. Shoot us a text or a voicemail with how it's going for you. And always you can write us at podcast at nerdwallet.com.

Sounds good. One last thing before we get to this episode's money question, we are running a sweepstakes ahead of our new nerdy book club series that we are launching in a few weeks. In our first book club episode, our very own personal finance nerd, Kim Palmer, interviews Bola Sukunbi, author of the book, Clever Girl Finance, and you can enter for a chance to win a free copy of Bola Sukunbi's book. To enter for a chance to win, all you have to do is email podcast at nerdwalk.com with the subject book sweepstakes during the sweepstakes period, and include the following information, your first and last name, your email address,

your zip code and phone number. And here is a brief disclosure about the sweepstakes courtesy of the brilliant minds on the NerdWallet legal team. The Smart Money Podcast sweepstakes is sponsored by NerdWallet. No purchase necessary. Void where prohibited. Must be a legal US resident 18 years or older. Entries must be received by February 9th. And you can visit nerdwallet.com slash book club for more details. Okay, and now we can get to this episode's money question. All right. This episode's money question comes from a listener's voicemail. Here it is. Hi, my name is Hannah and I am calling because I was wondering if you guys had any tips or insight on to how to make money when you have a baby slash toddler,

because right now we are looking at finances and we can't take on a second job because of the fact that they're not going to have to increase childcare prices. So at the end of the day, we'd actually be paying more for us to be able to try and make more money. It just doesn't financially make any sense. So we're feeling very trapped right now. Both my husband and I working decent income, but we also live in a very large cost of living area. We live in San Diego. And so we are really at a loss with how to make enough to keep ourselves afloat when it feels like we're already working 60-hour weeks and we can't buy another child care provider that would essentially cancel out all of the extra

profits we would make with an additional job. So if there's any other hints or tips or tricks that you've got, I'd love to know. Thank you for all that you do. Bye. To help us answer Hannah's question, we're joined by personal finance nerd, Laura McMullen. Hey, Liz and Sean. And yes, I can definitely relate to this. I write about making money, but I also live in a very lovely and expensive city, Washington, D.C. And I also have a lovely, inexpensive daughter who's a toddler as well. So I get the financial and emotional burden of living in a high cost of living area and having a kid. The thing that really jumps out at me about this question, though, is the fact that these are two people already working 60 hour weeks.

How much more can they be expected to work? It sounds like their household income is just sort of barely covering their expenses. So I think it might be helpful to take about three giant steps back. And what I would do is find a really straightforward budget app or even a spreadsheet or even a notebook and pencil here and throw down all your income and write out of your expenses. Maybe print out your last financial statements and get the highlighter out and see where your money's going. Why is it that your income isn't really covering your expenses all that well? And I have to say, you're not alone.

This is the case for a lot of people here. But I think actually printing this out or looking at a budget app will help you see some themes. For example, where are you spending your money? Maybe there are some obvious cuts you can make right off the bat. This might also prompt some kind of big questions, some big scary questions. If you're

living in a high cost of living area and you're not really covering expenses particularly well, maybe there are some big questions you got to put out there about moving to a lower cost of living area like the suburbs or to a more affordable house if a lot of your income is going toward mortgage or rent payments. It's a big, scary change like you alluded to, but that can be one pretty drastic way to have some more cash in their budget to cover things so they don't have to work more. Yes, exactly. I just spent the weekend in Pittsburgh and I live in Washington, D.C. and I got a lot of big, fat, not so subtle nudges to move to the more affordable Pittsburgh area for this very reason. I get it. Yeah.

Or there are other solutions. I would brainstorm with your partner when you're both in a good mood and think, are there ways we can get support from friends or family if we live somewhere else? And then also throw it out there. If you're looking for more income, how's the job looking that you have right now? If you're already having open conversations, have one with your manager. Talk about negotiating a raise, Google that a little bit. I mean, maybe set up some goals for the first quarter to entice your manager to

give you that raise. As we've said over and over, this is a worker's market. It's a great time to negotiate a raise or look for a new, better paying job because there's definitely a labor shortage out there. Yeah, totally. You are in demand. The other thing that might jump out if you're looking at where your money is going, I think for many people, they'll see that a lot of their money might be going toward debts and credit card payments and such. I don't know, Liz and Sean, you're the experts. What would you do in that case? Well, that's something that we didn't really get much from our listener about. So I would be curious to know how much they're putting toward debt payments monthly.

And this also would be a good chance to plug the 50-30-20 budget where you put half of your income towards needs. That's things like rent and child care. 30% go to wants. That's maybe something fun for your kids or a night out. And then 20% of your income is allocated toward debt payments and savings. And if you find that your debt payments are making it so you can't really save that much, and it's beyond the 20%, that's when you might want to think about how you can make your debt more affordable. If you have credit card debt that's a pretty high interest rate,

you might want to look into a zero APR credit card that has a promotional period. You also might want to talk with a nonprofit credit counselor to see if you would be a good candidate for a debt management plan. But I would also say that it might be worth talking with a nonprofit credit counselor just to bounce some ideas off of someone. These folks offer free budgeting help and it can be really beneficial to get a third party's perspective on where your money is going and they will get into the nitty gritty with you. We should also mention that bankruptcy is a possibility if you've got overwhelming debt. from one source to pay another, or you're getting sued, or the collection calls are coming. When things get really bad, bankruptcy can be a way to legally erase a lot of your debt and give yourself a fresh start. Yeah, absolutely. I also want to circle back to ways that our listener can make

more money because that's what they are interested in right now. What are your tips for making money while raising young kids and likely working from home? I suspect Hannah is looking for ways she can make money while on her phone or scrolling on her computer while her kid's toddling around. And sure, you can find the low-hanging fruit. If you look online, you can find ways you can take surveys for money. Those are typically research groups that want your opinions and will pay you for them. You can also participate in user testing where you scroll around apps and websites and tell the developers what you think about it for money. You can also try freelance websites like Upwork or Fiverr. But I have to tell you, those don't typically pay a lot of money. A few years back, didn't you do a number of those surveys for NerdWallet to see how much you can actually make? Yes, yes. A few years ago, my colleagues and I spent about 50 hours taking paid surveys on some of the most popular websites.

And our total earnings combined didn't even break 90 bucks. That's over 50 hours worth. Wow. It was not much and it was not a particularly enjoyable experience. Right. So it's not a very fruitful way to try to have a side hustle or a way to make more money. No, I would not say so. Were there any other downsides to this sort of work besides it not really being worth your time at all? It's more of staring at your phone, staring at your computer, which I don't know about you,

but I don't need to be doing more of that. There's also a lot of spammy spam. We actually created separate emails for the spam to go to. And, you know, we were giving away a lot of private information. It wasn't anything too crazy, but you get kind of numb to the idea of these websites. We don't even know, asking many questions about where we're from and our names and other personal information. I'll tell you, when I sign off of work, the last thing I want to do is stare at my computer or phone more and take mindless surveys where I'm giving away private information. I want to be with my kid, you know, so I don't know that I would recommend these types of ways to make more money. One last thing I would like to tell

our listener and anyone else to avoid is the multi-level marketing schemes. These are also called direct sales or pyramid schemes, basically. And they tend to target working moms, especially moms that are working from home, maybe focused primarily on raising their kids because they present themselves as a way for young women, young mothers to be their own boss, but the vast majority of folks who get involved in them lose money. Actually, a 2017 report from the Federal Trade Commission found that 99% of MLM recruits lose money. 99%. 99% because the way that people make money is by having what's called downlines they sign

more people up hence expanding the pyramid you don't really make money selling whatever product it is leggings hair product whatever you make money by looping more people in and getting their commissions it's not a great way to make money it's a great way to make money. It's a great way to lose money. And lose friends. Yeah, and lose friends by trying to make them all boss babes. But if you want to learn more about this, I highly recommend this podcast called The Dream, where they do a deep dive into MLMs and how they work, how nefarious they are, and why they particularly target women. So I would recommend that too. I also recommend simply doing some Google searching. Do your homework before you sign up for any of these websites. You could simply search the website name plus the word scams.

I also love checking out the Better Business Bureau website, BBB.org. And in that website, you can search the name of the company. You can also probably find a Reddit thread or two with people who've done it and try to find some relatively unbiased sources who can talk you through what it's actually like, as opposed to the person who's going to be saying, hey, I made $50 million taking surveys. That's not going to be what I'm going to want to listen to. Right. Well, how can people protect themselves when they are dabbling in this sort of work? You want to take a step back and think about what your time and effort is worth. If you want to take surveys or do user testing or something like that, go for it. As long as

you're safe about it and you do your research. I'd also take some notes either in a notepad or on your phone of all the time that you've been spending, say taking surveys or doing user research. Just dot down timestamps of when you've been working on this kind of stuff. And then set a reminder, say in your phone for, I don't know, six weeks from now, and go back and look at how much time you spent doing this work and how much money you made. And that's some really easy math to figure out your hourly wage. And it might turn out that you're happy with how much you made in that amount of time. And maybe you actually kind of enjoy it, or it feels like you're contributing something and that feels good. But it also might turn out that you hardly made anything and you might want to reevaluate.

I was listening to the woman who's the host of the Dream podcast. She was talking on another podcast about MLMs and all of this. And she was saying that one of her friends is still dabbling in MLMs. And her friend said that she makes enough to cover her cell phone bill as if that was a great marker of the money she was making. And in fact, that's just covering a business expense. Well, what are some of the more fruitful options that our listener could look into? I take advantage of whatever money making assets or skills or stuff you have now that you can leverage. So it's early in the year. Maybe this is the time where you do a purge of all your clothes.

And you can jump on a website like Poshmark or even do a local site like Craigslist or Nextdoor and sell your stuff, sell clothes, sell your things. Or if you have some skills, put them to use. If you have experience in web design, if you're a pretty good writer, if you know how to code, shoot, jump on LinkedIn or Fiverr or Upwork or a website like that, where you're doing more freelancing than you are kind of one-off jobs. I think that those opportunities tend to be more fruitful in the long run. Yeah. They probably pay more too than surveys. But I keep coming back to, this is a lot of extra work for two people who are already working too much. I mean, 60 hours regularly is too much.

I know some people would look at this and go, OK, one of them should stay home. Then they don't have the child care expenses anymore. I have a really hard time with that because when people stop working, they're saving on the child care, but they're losing all the other options they could have. They're losing the raises. They're losing the chances to save for retirement. And it really concerns me when people do that. How do you think about it, Laura? Yeah. Plus it might be harder to jump back into the workforce. Sean, Liz, and I are all writers. And man, if you jumped out of the workforce from 2000 to 2010, your whole job changed in that time as a writer. That's pretty tough.

I can tell you from personal experience, my husband and I considered very briefly not sending our daughter to daycare, particularly given that she's a COVID baby. But the math did not work out. I will also say, and this is a very personal opinion, everyone's going to be different here. After spending the last week or two with my daughter at home, not in daycare, I am very grateful for those daycare workers. What we're paying is a lot and it's worth it. I don't know that I would personally take a 60-hour work week with my daughter over a 60-hour work week of work work.

So that was our perspective, but I could see why people have differing opinions on this. You know, given where we are in the job market right now, and the fact that so many people have been able to argue for raises or create their own more flexible working situations, I'm wondering if one of these parents might be able to work part-time. I know that with my partner's sister, she works part-time and her son's father works full-time. And she has the flexibility of being able to be there with her son for that amount of time that she's not working. She also works from home when she is working. So that makes it pretty easy overall. But that way you kind of can get a little bit of the best of both worlds. You are continuing to be in the workforce.

You're getting career advancement, but you aren't working 40, 60 hours a week. I'm hoping that more companies in the future will offer or soon will offer part-time options because a lot of them don't. But I think the current labor shortage is making a lot of companies rethink that and think about ways that they can retain people. Again, I think if they work part time, I don't think it would solve their particular issue because it does seem like their income is not meeting their expenses. So it might not really help that much to cut back on the child care. It's hard to know. I mean, we don't have a lot of the details of this, but I like the idea that you need to think out of the box, you need to think about different solutions. I like that we're making this point that right now,

I think workers need to be pretty honest, respectful and honest with their managers. Like we've said a few different times with this labor market, you got to speak up if you need something. I know a few different friends within my circle who have now started working four-day weeks rather than five. If you want that kind of stuff, whether it's to live in a less expensive city and work remotely, or if you want a shorter work week or more flexible work week or some sort of stipend for childcare, your employer is not just going to offer that up, but you do have leverage here. So speak up and be respectful, put time on the calendar to try to make that up. But you do have leverage here. So speak up and be respectful, put time on the calendar to try to make that happen. There's something to be said about striking while the iron is hot. And this conversation about the great resignation seems to be very active at the moment. We don't

know what the world and the market will look like in six months. It seems likely that this moment is going to last for a little while, but you just don't know. Given that there is so much momentum and that a lot of people are having these conversations with their bosses, I would say do it sooner than later. Liz, I want to ask you about this too, because you worked while raising your daughter, right? Oh yeah. And what was that like for you? Did you have any sort of debate around, am I going to step back from the LA Times, which is where you were working at the time, correct? Actually, I had stopped working there and started working for MSN. So I'd switched to online at that point.

And one of the reasons I did that is I wanted more flexibility. Working in a newsroom, it's very difficult to do that and raise a child. People do it all the time, but I just looked at what that would look like and I didn't like it. So you pivoted your career. But I never once thought about staying home full time. We were privileged and lucky enough to have a wonderful nanny that we inherited from a cousin. So she had been with the family for a long time and it just made life possible because I don't know,

Laura, now that you've tried to work from home with a kid, you know what that's like, right? Oh man, it is terrible. I'm sweating right now. There's six inches of snow outside. There's a bunch of snow outside and I'm sweating because I just heard my daughter and husband walk in from outside and I'm just frazzled, just continually frazzled. I'm not my best worker self when I've got my daughter at home. That's the truth of it. Well, that also could be one check in the column of moving closer to family if possible, because going back to how my partner's sister has her situation. She lives less than 10 minutes walking from her mom, from her son's grandmother. And let me tell you, grandma's over there almost every day

dropping the kid off at preschool, getting snacks fixed up and Garrett's sister wouldn't be able to do it without her. I can tell you that. Yeah. There's a lot of families like that, that really provide a lot of help and it can make all the difference in the world. It seems like maybe the answer to our listeners question is that there aren't a ton of super easy ways to make more money given their current circumstances, but it might be best to look at ways to minimize costs where you can, maybe by moving and also maybe get more help if you can from your family. And get more money.

Yeah, and get more money. Well, thank you so much for talking with us, Laura. Sure thing. And with that, let's get on to our takeaway tips and I can kick us off. First up, cut through the chaff. When it comes to quote unquote side gigs, keep expectations realistic and beware of scams. Next, know what you're worth.

Understand the hourly rate of any work you do, whether it's selling items online, working a remote job, or taking surveys. Lastly, assess your overall picture. If your income is barely covering your needs, like childcare, there may be a bigger problem. Dig into where exactly your money is going and prepare to make some tough decisions. And that is all we have for this episode.

Do you have a money question of your own? Turn to the nerds and call or text us your questions at 901-730-6373. That's 901-730-NERD. You can also email us at podcast at nerdwallet.com and visit nerdwallet.com slash podcast for more info on this episode. And remember to subscribe, rate, and review us wherever you're getting this podcast. Here's our brief disclaimer thoughtfully crafted by NerdWallet's legal team. Your questions are answered by knowledgeable and talented finance writers, but 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.