NerdWallet's Smart Money Podcast - School Supply Shopping Tips, and Breaking Bad Money Habits

Episode Date: August 23, 2021

With supply chain issues and uncertainty about whether classes will be in person, virtual or a hybrid, back-to-school shopping this year poses unique challenges. To start this episode, Sean Pyles and Sara Rathner give the Nerds’ favorite tips for how to save when buying school supplies. Then Sean and Sara answer a listener’s question about how to break bad money habits. To send the Nerds your money questions, call or text the Nerd hotline at 901-730-6373 or email [e-mail].

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 Sean Piles. And I'm Sarah Raffner, filling in for Liz Weston. To contact the nerds, call or text us on the Nerd Hotline 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 shake bad money habits.

But first, in our This Week in Your Money segment, Sean and I are talking about back to school shopping and how to save money this time of year. Yeah, it is somehow that time of year again, some kids are already back in school and whether or not this year is going to be in person, remote or some kind of hybrid. Anyone heading back to school is going to need some pencils, notebooks, and maybe a new pair of pants to give those pandemic sweatpants a break. And maybe a few Lisa Frank trapper keepers, just for good measure. Those are mandatory, of course. Absolutely. As usual, our nerds have dug deep into how to save money on back to school expenses. So we wanted to share some of our favorite tips with you, our dear listeners. That is right. So back to school shopping strategies really fall under three main buckets.

The first one is don't spend money when you don't have to. The next one is about being a clever shopper. And lastly, it's about knowing how to deploy your dollars. So let's start with the first one, which is not spending money if you don't have to. And Sarah, what are your thoughts on this? Yeah, this is a really great lesson for kids and for yourself about being frugal and also maybe practicing a little environmental friendliness. We always say before going to the grocery store, look in your fridge and make sure you're not about to buy something you already have. The same goes for back to school supplies. Look in all the closets, look through last year's

backpack. Kids might have unused notebooks, boxes of pens and crayons that are still good. So any item you already own is an item you can cross off your list. It's also an opportunity to have good conversations with your kids about not getting something new just for the sake of it. I was guilty of this when I was a kid for sure, where even if I had a perfectly fine backpack at home, I wanted a new one because it was new year, new me. And we just don't need to do that anymore. So I think it can open up a conversation like you were saying about being environmentally

friendly and thrifty. Maybe the one exception is the 64 crayon box of Crayola crayons with the sharpener in the back. I mean, okay, that's the one you need new every year, guaranteed. I feel like that's insurance to make sure your kid is cool from day one. Maybe with an existing backpack, you can do something to decorate, put a key chain on the zipper or sew a patch onto it or something to make it feel different, but it's at a fraction of the cost. Yeah. I remember going into eighth grade and I covered the straps of my backpack with duct tape so that everyone knew that I was listening to Nine Inch

Nails nonstop. I feel like people put like rows of safety pins on their backpacks. Oh yeah. I was doing that too. All right. Well, let's get onto another tip. One is about buying only what you need for day one, because there are a lot of things like clothes, jeans in particular, that will go on sale later in the year. So get your kid the pencils, folders, binders that they need. But other things that you won't need day one, you can probably hold off on and get those when they were actually on sale later on. Kids grow.

So those jeans you buy on day one, six months in might be too short. So if you have a kid that's at an age where they're going through a growth spurt, you might want to stagger the clothing purchases. Take advantage of seasonal sales too. If you live in a place with seasons, there might be a good time to buy them a new winter jacket and a bad time to buy them a new winter jacket. So you don't necessarily need to buy all of the clothing at once. Another tip that a nerd highlighted in this thrifty living Slack channel that we have at NerdWallet is about shopping slowly and buying supplies gradually. And this might be something to take in practice next year. So even during the summer, if you see,

oh, scissors are on sale this week, pick up a pair. Glue sticks are on sale a few weeks later, get some of those too. So that way there isn't a mad rush of getting everything all at once. So another thing you could think of is used supplies that are left over from previous school years from people in your community. Facebook has really great buy nothing groups that are divvied up by neighborhoods. So you can search and ask for school supplies on those groups, get things for free,

pick them up from your neighbor's porches. A tip that I got from a friend of mine who's a preschool teacher is to look for creative reuse shops. And these exist in every state. You can get leftover arts and crafts supplies, construction paper, yarn, crayons at a fraction of the price. We have one where I live, but I looked up one in Austin, Texas. They sell a pack of 10 number two pencils for 50 cents and they're unsharpened pencils. These are brand new with pristine erasers. So that's a great deal.

Well, that kind of brings me to the next area of how to be a good back to school shopper, which is being a clever shopper. And one that's pretty tried and true is doing some price matching. So check prices before and after you're shopping. Honey, an app that you can have on your web browser. Also Camelizer for online shopping is pretty handy to do this as well. There's also Shop Savvy for in-store shopping. So if you are in stores and you're thinking of buying something, you can look it up on your phone first to make sure you should buy it there or should you wait until you're at a different store later. Another thing to keep in mind is that if you see a good deal on an item, you might want to get it then and there because with supply chain issues that we continue to have, there aren't

going to be as many sales this year. So if you see a good deal on an item, you might as well pick it up. And you could also team up with other parents. If there are bulk supplies you need to buy, especially if you are buying classroom supplies that the teacher asks for, you might be able to go in with another parent who maybe has a membership to a wholesale club and you can get like that 24 pack of glue sticks. That way, if you are going in on tissues and hand sanitizer and all the supplies that parents provide for the class, you can divide and conquer. And that's a lot cheaper too. All right. Well, let's get on to the final area of being a smart back to school shopper,

which is knowing how to deploy your dollars. And one thing that we wanted to mention this year is that people should be cautious with these buy now, pay later services. We're seeing these pop up pretty much anywhere you can shop right now. And they can be a really nice way to break up a larger purchase into more manageable chunks over a few months. This can help if you're buying something like an expensive TI calculator, which are still over $100 somehow all these years later, but just make sure that you can pay it off because they can get kind of expensive these loans with fees and interest. So you don't want to be taking on extra debt to pay for something that you could have paid off in one go. I've seen these deals for $28 bottles of shampoo that you could pay off in four installments of

$7. I mean, maybe not for shampoo, but if you have to buy your kid a laptop, there you go. Right. Well, the flip side of this is using credit cards that give you rewards. I am a huge fan of cashback credit cards for everything. But I have one that I use that gives me 3% back when I'm grocery shopping. And I actually would get a lot of my school supplies growing up from the local grocery store. So if you find a card that can get you points back when you're shopping for things that you need anyway, that can be a great way to get basically free money for things you know you're going to have to buy. And there are lots of retail cards that also earn extra cash back when you shop online

at those stores. And we know lots of parents are still online shopping because it's super convenient. Nobody really wants to drag your kids to the store right now. So wherever you shop, there's probably a credit card out there that earns a pretty generous rewards rate. So shop around for that card first and then use it to buy school supplies. Necessary caveat here, make sure you can pay off whatever you're racking up within the next billing cycle because interest on credit cards like this can pretty quickly outweigh any perks you get from rewards. Couldn't have said it better myself. All right. Well, with that, I think we can get on to this episode's money question. Sounds good. This episode's money

question comes from Alfredo, who left us a voice memo. Here it is. Hey, nerds. So I'm in my mid-20s, and ever since I started earning money in my teens, I developed this habit of spending until I hit zero in my accounts. So for some reason, to this day, I can't get over that fear of checking my accounts before spending and just learning to deal with a low or overdraft account when I get to it. So do you have any advice on how to get rid of that account balance anxiety or how to get rid of this ignorance is bliss mentality? Because it becomes problematic when

I get an overdraft account alert and that could have easily been avoided if I knew not to spend the night before. Love the pod. Thank you so much. To help us answer Alfredo's question on this episode of the podcast, we're joined once again by personal finance nerd Kim Palmer. Hey, Kim, welcome back to the podcast. Hi, thank you so much for having me. It's great to talk with you. You know, our dear listener Alfredo is having a hard time taking control of their finances and it seems like it's giving them a little bit of anxiety. What are your thoughts on the situation? Well, I think this question really gets at the emotional

side of money that can be so hard to talk about. So I'm really glad that he asked it. I think it's a common thing that a lot of us struggle with. I think that in general, when we're talking about spending and saving money, it can just bring up all this anxiety and stress to such a big degree that it can actually stop us from making any decisions at all. Right. And in this moment, when people are feeling like this, I think it can really help to pause and drill down into what exactly is making you so anxious. Is it that you're not going to have enough money to cover groceries?

Is it that you're not going to be able to buy whatever it is to look cool or something? What is driving the anxiety about not looking at your finances? I think that's a really important question to answer. Yeah, it's so true. A lot of things that seemingly have to do with money sometimes have to do with lots of other stuff too. So Kim, how do you think Alfredo can begin to overcome this? Well, my favorite strategy,

and this is something I do myself, is to basically set aside some separate time in your life to focus on money. So maybe it's on a Saturday afternoon at four o'clock, you put it on your calendar so you know that you're going to be working on your money. You are mentally prepared for it. You clear your schedule so you don't feel like you should be doing other things. I think sometimes extra stress can come if we're feeling distracted or you're trying

to work on your money issues or to do's while you really should be working or doing something else. So clear your schedule and then just try to make it as relaxing as possible. Maybe you put music on, maybe you clean your home up first, whatever helps you feel relaxed. And if you have a partner that you need to coordinate money issues with, invite them and make sure you give them a heads up so they're mentally prepared to have this conversation too. And then basically you can just start tackling what it is that you have to do. Maybe you have a list. Maybe you want to start by opening up your credit card or bank statement and studying it and

you can go from there. I think that's a great idea, providing some structure so that way you can make it easy for yourself to start building the habits of proactive money management. And with Alfredo, I think it might be a good idea for them to start just by pulling all of their bank statements and see what they've spent money on for the past month, maybe even three months if they're feeling really ambitious, to get an understanding of how much they have coming in, where their money is going, so they can understand how they might direct their money a little bit better. Now that's an exercise I really like, especially if you take the judgment out of it first. Pretend you're looking at a total stranger's bank statements and just write down where their money is going. And that way, when you have some

data for one to three months of spending, you're not beating yourself up for where your money's gone. You can actually look objectively at where your money's gone and just make different decisions if there are things about your habits that you want to change. But it's really important not to judge yourself. That's a really good point. Throughout this process, I think it can be helpful to also define some overarching longer term goals to know that you're working towards something because, you know, I actually used to be a lot like Alfredo when I was in my mid 20s. And I found that what gave me a certain amount of anxiety about not looking at my account

is that I knew I was spending money, probably a lot more money than I needed to on things like going out, on buying new clothes, on seeing my friends. And I wasn't putting a lot of money toward things like saving up for a down payment on a house or an emergency fund or investing. And so in the back of my mind, I knew that I wasn't working on these other financial goals. And that made me not want to see how much I was spending in other areas. Yeah, one trick you can do, I'm a huge fan of reverse budgeting for that, actually, you set your goals, and you put money aside for those goals first. And then whatever's left after you've paid your bills is money you can spend on the stuff that you want. So then you still have room in your budget for the fun. But you know that

you're fulfilling all of your obligations first. And you know, I think at a certain point, at least in my experience, I hit a moment where proactive money management became just a practical necessity in my life. Because as I mentioned, in my early 20s, I was a lot like Alfredo, I wasn't really looking at my account balances. And then one year, I received a much larger tax bill than I was expecting. And that was a huge wake up call. And it really made me drill down into my budget to make sure I could cover all of my expenses. And from then on, it helped me get into better habits overall. Because I had that one moment of having to be an adult and sort out

my money. And I'm wondering if you guys have had any similar moments in your life where you've realized, oh, wow, here's a big shock to how I thought things were going financially. Now I need to readjust and be a little bit more proactive with my finances. Definitely. I had a wake up call myself. It was a few years ago. And I was going through a very high expense time in my life. So I had two young children in daycare. I had a mortgage and I just was overwhelmed with all of my expenses. And basically, I realized that her my husband, I realized that we just weren't saving money. And we also couldn't really explain where our money was going. I mean, we had those big costs. Then it also just felt like we had some leaks that we couldn't really

understand. And so we basically, we were scared enough about this and stressed enough that we sat down and we basically put all of our expenses into a giant spreadsheet and just figured out where those leaks were. And actually, out of that experience, we ended up cutting some of our cable subscriptions and we actually shopped around for a new auto insurer. And it ended up saving us money and just helping us feel like we had more control where we previously had felt very out of control. Right. I think that your example is so great because it really highlights how something that feels anxiety inducing can be managed pretty simply. You and your husband got together, you figured out the nuts and bolts of where you were spending money,

you trim some of those expenses, and then afterward you were able to save more and you felt more in control of your finances. Yes, it definitely made us feel better, even though we were still going through a financially stressful time. At least we were taking control where we could, and it just helped us feel like we were going to get through it. Yeah. And what about you, Sarah? Has that ever happened to you? Yeah.

I mean, something that has helped me over the years is having online savings accounts that each have a different purpose. These accounts are so quick to open, So I'll have the emergency savings one. I'll have the home repair fund because I've owned a house for about two years and everything's going to break. You know, even just savings for medical expenses for my pets, things like that. Within the last two months, I received a bill for medical expenses that were less covered by my health insurance than I thought. And not long after, our dryer broke. And so really, we were staring down about $2,000 in unexpected costs in a pretty short period of time. And you can't just not pay your medical bills, and you can't just not have a dryer. So we had to pony up the money to pay for these things.

And that's where having these like named savings accounts has been really helpful just for the mental math of like, okay, well, this amount of money is coming out of this account, this amount of money is coming out of this other account. And then here's sort of a monthly transfer into each account. So I can replenish the money that we spent on these emergency expenses. And I think that can help with some of the scarcity mindset that happens when you aren't really proactively managing your money. I at least felt like I was almost always going to be running low on cash, despite me not ever wanting to check my bank account.

And knowing that you have deposits going into various accounts helps me a lot because I do the same thing as you, Sarah. It helps me feel like if something does happen, if my car does break down or if one of my pets does need to go to the vet for an emergency medical situation, I will be able to cover that because I've allocated those funds over time and it doesn't totally wipe out your general emergency fund. Yeah. And it kind of helps you feel like you can still do the things you want while paying for the emergency stuff. So if your car needs repairs unexpectedly and you have a trip planned for a month from now, hopefully, if you have money in your travel fund and you have a trip planned for a month from now, hopefully,

if you have money in your travel fund and you have money in your car fund, you can fix your car and still go on your vacation without having to make too many adjustments to your vacation budget. So it gives you the freedom to do the things that you want while taking care of all those emergencies that are bound to pop up one day or another. I also like your example, Sarah, because I think it speaks to how there are tools that help us with all of this. So just by having those different buckets or different savings accounts, it lets you feel more organized. And I think there's other tools that banks can offer. For example, setting up alerts that let you know if you're approaching a low balance or if a big payment is coming up. Opting into those kinds of automatic tools, I think, can just take some of the burden, the mental burden off of all of this management. And so if you enable

those alerts, if you find them helpful, I think it can be really useful if you're getting an alert. So when your balance is below $100, then you don't have to be constantly checking it to see if it's gotten that low. So I really like customizing those alerts and signing up for them when it's helpful to you. Right. One thing I think that also might be helpful is finding some sort of online tool like the budgeting tools that we have at NerdWallet.

Also, I'm a big fan of You Need a Budget, which helps you in great detail organize where your money is going, finding some way so that you have easy structure without maybe setting up a big spreadsheet if you're not a Excel whiz necessarily. For sure. I also, I am not an Excel whiz, but I still love using spreadsheets. I think that you can use something simple like Google Docs or Google Sheets if you're not, you're kind of intimidated as I am by something like an Excel spreadsheet. But there are ways to customize it and make it a little bit easier depending on your own preferences. Yeah. So I do want to circle back to Alfredo's final question about whether you guys have any advice about how to get rid

of the anxiety and ignorance is bliss type of thinking. This whole idea of not wanting to face the situation because it's so stressful, I think it goes back to what we were talking to at the beginning, which is that you just have to set aside time so you're mentally prepared. I mean, it might not be fun, but if you just put it on your calendar

and you know you're going to tackle these things at a specific time, I think it forces you to do that. And so you stop just putting it off because it's so easy to just keep putting it off and say, you know, you'll, you'll do it tomorrow. Yeah. And that's a good bit of advice. And it's also worth saying that this feeling of anxiety and of wanting to bury your head in the sand, it doesn't go away overnight. It takes a long time actually to work through that. And I even now sometimes feel that,

like I had a bunch of friends visiting around June, friends I hadn't seen in a long time and I was spending more money than I had been since the pandemic started basically. And I was getting that feeling that, oh, I don't really wanna log into my credit card account and see what the balance is because I know it's gonna be high.

And that's always a reminder that I do need to look at it. I do need to focus on what I'm spending money on and maybe not get that second appetizer or that second cocktail when I go out. So that way I can curb what I am spending. It also seems like Alfredo mentioned that basically one source of stress is running out of money and getting to that zero balance. And so I think it might also be worth just putting some time into thinking about how to make sure you are giving yourself more of a cushion so you're not running down to zero or you can, you know, try to avoid that. So sometimes that might mean have a month and just cut out some of your expenses that you can live without. Maybe you're going to be really strict about not going to any restaurants or whatever it is that would help you

make those cuts. Just so you have that cushion, having even $100 in your bank account that you are not going to dip below, I think it might help address some of that anxiety because it seems like for Alfredo, some of it is around just running out of money. Right. And speaking of that tip, which I think is great and my month of just spending a little bit more than I wanted to having all my guests, I have a reminder set up on my phone that just says, don't spend any money with a smiley face emoji. And it pops up on my phone every day at 1030 in the morning, typically around the time where I've done a little bit of work and I might be browsing around eBay or who knows what. And it helps, it helps me think, okay,

yes, let me focus. Let me go back to my goals. Let me not spend this money and keep some for my cushion. Yeah. So much of spending is boredom. Yes. A sense of searching for yourself. And it's so easy, your credit card is saved online with all these retailers. So it's so easy to impulse buy things and then have them shipped to your house. And you don't even remember what it was that you ordered. So if you can find a way to I don't know, just take like different retail apps off of your phone or log out or even remove your credit cards from your accounts. So every time you make a purchase, you have to manually reenter your credit card number. Just give yourself some friction. So you really rethink every purchase. And if you do that for a month or two, you might

find more money in your account at the end of every month, just because the impulse spending has reduced. Right. That's a great point. And, you know, a lot of shopping online and shopping in general is sort of making this idea of your future self. Oh, you'll be this person if you have that sort of car or these clothes or that phone. And if you break that habit of trying to recreate or create your future self and then focus on how much you could actually do with that money that you're not spending, I think it helps to pivot how you're thinking about where your money is going. That's so true. I also think for me, I know it helps just to put a delay on my purchases. So sometimes I'll get really excited about buying something and, you know, two clicks and it's already on the way. But instead, if I say, no, you have to wait 24 hours before buying anything. It just, like Sarah's saying, it gives that extra friction.

And then the next day I might decide, hey, I actually don't really need that. And it helps to cut down on some of those impulse buys. Yeah. If it's something that you need, sometimes putting it in your cart and just leaving it there, the retailer will send you a coupon code. Yep. So if it's something that you were going to buy anyway, why not get 15% off? So that is a way to save money.

It also causes you to rethink your purchase or it gives you more time to shop around and comparison shop too, because maybe you can find the same item for less money somewhere else. All right, well, I think that about answers Alfredo's question. Kim, thank you so much for talking with us. Thank you so much for having me.

And with that, let's get on to our takeaway tips. First up, create structure. Set aside time to work on your personal finances each month. Next, automate where you can. Think about setting up alerts so you know when your balance is getting low. And lastly, get a grip on your budget. Know your income and expenses and leave yourself a cushion to avoid the risk of spending more than you have. And that's 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 730-6373. That's 901-730-NERD. You can also email us at podcast at nerdwallet.com. Also 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.

And here is our brief disclaimer thoughtfully crafted by NerdWallet's legal team. Your questions are answered by knowledgeable and talented finance writers, but we are not And with that said, until next time, turn to the nerds. Thank you.