NerdWallet's Smart Money Podcast - Your Money in 2023: Use Your Values to Set Your Goals

Episode Date: January 5, 2023

Setting money goals in the new year is a time-honored tradition. But ditching them after a month (or a week) is all too common. This year, use your values to guide your financial ambitions. In this episode, Sean Pyles and Liz Weston discuss how you can set goals you’ll actually keep in 2023 — and what to do if you still need ideas for your money this year.  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 the NerdWallet Smart Money Podcast, where you send us your money questions and we answer them with the help of our genius nerds. I'm Sean Piles. And I'm 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. Follow us wherever you get your podcasts to get new episodes delivered to your feed. And if you like what you hear, please leave us a review and tell your friends. This episode, Liz and I are kicking off a series about how you can make the most of your money in 2023. Over the next four weeks, we will talk about investing in 2023, what homebuyers and sellers

can expect, and managing your finances in uncertain times. And to start this series, Sean and I are going to talk about how to set goals you will actually keep in 2023. This is always the perennial problem where people start out the year with these great ambitions and they have all these things they want to do with their money, but then it's like, okay, how do I actually do this? Or maybe folks don't even know what they want to do with their money but then it's like okay how do i actually do this or maybe folks don't even know what they want to do with their money and we've talked about this many times liz pretty much every year we have some sort of conversation like this

and we're approaching it a little bit differently this year and i think that the key difference this year is that we're going to be focusing on how you can use your values to guide your goals. And by that, I mean, think about what brings you the most joy and meaning in your life, and also focus on areas where you want to make the biggest impact on your life and your relationships and your community. And Sheldon, I know you just had a talk with a financial therapist about exactly this topic and why so many people can't make their goals come true. Yeah, exactly. I was talking with this woman, Sandra Davis, who was one of the founders of the Financial Therapist Association. And we were discussing the concept of money goals. And she mentioned to me that she doesn't

like that concept because goals, having a specific money goal, can feel really separate or maybe disjointed from the rest of the way you live your life and who you are. But instead, if you focus on living your values through your financial ambitions, it can make the exercise of setting goals feel more real and connected to everything else that you have going on in your life. You can't compartmentalize what you do with your money versus how you live your life and structure your relationships and things like that. Okay. I've heard a phrase, knowing your why or your motivation for your goals. And that's basically it. You have to think about what is underpinning why you're doing everything in your life. And really it does come down to your values. I think it might be helpful for us to talk through our values for this year and how they are kind of embodied through our goals. So one that's really important to me is continuing education.

And over the past few years, I've come to terms with the fact that there are certain limits on things that I can teach myself. And this started in part with my interest in watercolor painting. I've been dabbling for a while. And eventually my partner Garrett said, hey, maybe you would benefit from some formalized instruction instead of just trying to wing it by YouTube videos. And I was like, well, that's a great point. So I signed up for a class at the local community college, and I have learned a tremendous amount. And where this extends into my finances, I, despite working at NerdWallet, know there are only so many things that I can do myself.

And that is where having a financial planner comes in handy. Liz, you and I have been talking about this for so long. And you often mention building a team over time to help you manage your finances. And you have a team to do exactly this. So one of the things that I'm doing in 2023 is establishing quarterly meetings with my financial planner, which I think will be life-changing. Yes. Oh, that makes so much of a difference. Just putting those things on the calendar will help you focus and will help you make progress. Those conversations can be so helpful. So yay to you. Thank you. What are the

values are you using to set your goals this year? Another value that I am embodying this year is helping others. And I really like doing small everyday things to help my community. And one example of that is that I've had regular donations to the food bank in the Portland area for quite a while. But now that I am based in Oceanshores, Washington, I really want to connect with organizations in Ocean Shores, which is a super tiny town. So that's going to be things like donating to the food bank there because hunger is such a pervasive issue. And then also volunteering and connecting with people there. Oh, I like that. And then the last value that I have in 2023 that

I'm going to be focusing on is self-reliance in a way. So it's going to be improving my financial and physical and mental resilience. So I'm trying to put myself in the best position to weather whatever comes my way. And I know that it's important to rely on others and I do that plenty, but I figured that I can't be in the best position to help those that I care about most if I'm not as well set up as I can be. Yeah. And resilience is the key word there. You want to be able to absorb whatever things happen to you and keep moving along your financial path and towards your goals. Yeah, because there will always be some new unexpected challenge. I think the last three years have really exemplified that, unfortunately, for better or worse. Yeah. So that's what I'm thinking about this year. Liz, what are you doing to have your values guide your goals? Well, integrity and sustainability to me are two really important values. So I'd like to get my 401k money into a sustainable investment option.

Most of our other investments are currently in socially responsible and sustainable funds. And I was hoping for an easy option for a 401k. I've kind of been pushing for that. We don't have that yet, but we do have a brokerage window, which allows you to choose essentially from whatever stocks, bonds, mutual funds, ETFs are out there. So I can create my own sustainable investing plan through our 401k using that brokerage window. And as you mentioned, helping others is important. I want to connect with my family more and with our community. So looking for ways to give back and connect through the air is important. And then the final really important value for me is personal growth. And we've got a lot of travel planned for this year, including an extended stay in Paris. So I am finally going to restart French lessons. Oh, wonderful.

Yeah. So me talk pretty someday, as David Cedars would say. I think that's such an important thing to focus on. And it relates back to me continuing my education, the idea of personal growth being something that never stops. There's always more to do, whether it's learning a language or getting help from someone who can teach you things that you may not be able to teach yourself. I find that to be something that I am always trying to bring into my life. I like that. Yeah. And as you said, YouTube videos, they can only go so far. Well, listeners, I would implore you to go through the same exercise, maybe have a conversation with someone that you love and trust and talk about your values and how you can have those be manifested through financial goals or just other types of goals like travel or learning

a new language. And then once you know what you want to do, I think it's important to have a framework to help you meet your goals. And at the Smart Money Podcast, we are big fans of the SMART goal framework, although I have my own twist on it. I call them SMARTER goals. So SMARTER is an acronym which stands for Specific, Measurable, Attainable, Relevant, Time-bound, and the R that I add at the end is Rewarded. Treat yourself as you are making progress, and you are much more likely to follow through on your goals over the course of an entire year. Yes.

Treats are good. Yes. And while you're setting up this framework, try to think about how you can break really big goals, like if you want to max out your 401k this year, into smaller goals that can make them much more achievable. Another thing to think about is say you want to move to a new city by the middle of the year. So in January, think about looking at new apartments, which is also just a fun excuse to browse Zillow, to get an idea of how much rent could cost in that city and how much you might have to save up for a potential security deposit. And then next month, set your plan for saving up to have the money you need to move into an apartment and have a security deposit set.

That's just one example. Or you might have a goal like paying off your credit card debt, which, by the way, is an excellent goal to have in any year, but especially now. We've had a lot of interest rate increases. Credit card debt is always expensive. It's just gotten more so. So now is a really excellent time to pay it off. Yeah. And paying off credit card debt can be intimidating and scary. A lot of people I know that have grappled with credit card debt have felt pretty isolated and like they're the only ones who have it. And the truth is that they are not. Lots and lots of people have credit card debt. So if you do have it, please don't feel ashamed. But also I'd implore you to take some steps to resolve it because it is so horribly expensive. One of the first steps

that can help you is simply knowing how much you have. And it can be really anxiety inducing to start, but you got to dig it all up. I would say physically write down your balances and current interest rates and monthly payments. And then look into using a calculator like the one we have at NerdWallet to see when you could be debt free and how much money you'll pay in interest with your current credit card payments. That can be a very eye-opening experience. Yes. And you can look for ways to pay your debt off faster and cheaper. There are a lot of options. If you've got a family member that you can ask for help, that's one way. If you have good credit, a balanced transfer card can help you get your interest rates down. If you're really struggling,

there are debt management plans at legitimate credit counseling agencies that can help you. Personal loans are another way to fix the interest rate, fix the payment, and get that debt paid off over time. And just to tie this back to a value, for me, I value my friends not paying too much in interest. And if you're listening to this podcast, I'm going to consider you a friend. So do what you can to not pay a ton in interest to a credit card company because that's money I would rather see you spend on other things in your life like vacations or saving for retirement. And on your end, I'm going to bet that once you have a plan to pay off your debt or you completely resolve it, you will sleep better at night and have more financial freedom.

Amen to that. All right. Another thing that I think folks should focus on in 2023, if they are not sure where they should set their goals, is simply saving. Because like we talked about a little bit earlier, there's always going to be some new surprise just waiting to upend your finances. And saving as much as you can can help you mitigate the financial sting of whatever ends up happening. Yes. And in addition, make sure that you are funding your fun. And that means setting aside money for the fun things.

For us, it's travel, making sure that you have those rewards scheduled in over the course of the year and to save up for them so you're not going further into debt can be really important. Yeah, there can be a tendency sometimes in the personal finance space to focus on all of the arduous, boring, paperwork-y things that you can do with your money. But money is just a tool to let you live the life that you want. And fun is a very important part of life. So figure out how your money is going to enable you to have more fun with your friends. I've kind of fallen into this habit with my college pals where we meet up a few times a year at some destination we've never been to. And we are due to plan another such vacation. So that is how I'm going to be funding my fund this year. I like that. We should probably talk about how to follow through on all these goals and plans to make sure we actually do them. Yeah. In addition to using the smarter framework to set your goals, I think folks should focus on the habits that will get them to achieve their goals. One thing that can be really great when it comes to saving is setting up automated deposits into a high yield savings account. Liz and I are really big fans of what

we call savings buckets. And that's basically a different savings account for each financial goal. I have one that is simply called fence fund for the fence I will one day maybe build on my house. It's been taking so long to build money for that because fences are quite expensive. But then I have my fun money too. And I have my life happens money and my emergency money too. So that can be a great way to have that habit built in and not even have to think about it. Yes. And one of the habits that I'm going to create is to regularly look over our transactions. We had a lot of credit card compromises this year, and sometimes these fraudulent charges kind of went right through without paying attention to them.

If you use sites where you can charge a lot of different things, let's say Amazon or Apple or something like that, sometimes it's hard to see the real charges versus the ones that are bogus. But in general, just getting in the habit of looking over those transactions to make sure that you're not letting your spending get away from you or oversubscribing to things, you know the drill. But we're going to have regular reviews of all

the transactions just to make sure that we're catching either fraud or excessive spending and doing it early. Yeah. And with my strategy of paying off my credit card balance, maybe not every day, but about every other day or at least weekly, I go through and I review the charges that are on my credit card. And that's a regular way to have the habit of reviewing what's been charged and ensuring that it's totally correct and there isn't an instance of fraud. Yeah, that's great. And we've talked about accountability partners as well, having somebody in this fight with you or in this goal setting and goal achieving race with you. So how would you suggest people go about that? Start the conversation with someone that you love and trust and maybe pester them by talking about this until they are invested in this narrative and can help

you follow through on it. I am currently training for a 10 mile race and I've become one of those people who won't shut up about running. And it's the point where my partner, Garrett kind of rolls his eyes and he's like, okay, okay, like go enjoy your five mile run, whatever. And I know he is cheering for me, but also mentally it helps me stay accountable. I feel like I owe it almost to him as much as I owe it to myself. And it helps you follow through in some ways. Okay. Another good way to stay motivated is a little bit more introverted than the extroverted of telling everyone it's journaling. It's a great way to get your thoughts out of your brain and onto something physical so you can really evaluate how things are going. This is a kind of mental offloading that really is effective. If you

haven't tried it or haven't tried it recently, I'd highly suggest it because it can really help you get these things down in a way that you can look at it and be a little bit more objective. So if you're having problems reaching a goal or you're not quite sure what you want your goals to be or how you want to meet them, journaling can be a great way to do that. I'm a huge fan of journaling, and that's something that I started actually in the beginning of 2022. And I found myself by the end of last year having this habit of when I start the month, laying out what I want to do different things like, okay, I want to practice painting a little bit more. Maybe I want to eat out less this month, I want to make sure I talk with these friends. And then at the end of the month, I go back and I see how I did on those various goals. And so it's a way where I'm

almost my own accountability partner. But through the practice of writing, you're able to really think through what's driving you to do this, what challenges you're facing, and then work through them on your own. Excellent. I like that idea. Another thing I want to talk about, which is something I will admit I've never done, but people love to do, is vision boarding.

And it's a wonderful way to, if you are a very visually minded person, have the image of what you want to accomplish, like going back to paying off debt. Say you map out how much you have. A thermometer is a classic image here. And you can fill in the thermometer as you're paying off your debt. And then you are seeing how much closer you're getting every time you make a payment on what you owe. Yeah. And obviously you can do that for savings as well. You can set your goal at the top of the thermometer and, you know, color in the sections as you save the money. Okay. Well, we've talked about our goals and a little bit about how we plan to implement them.

And we would love to hear from you. What are your goals for this new year? And how do you think you're going to achieve them? So let us be your accountability partner. Yeah, you can leave us a voicemail on the nerd hotline at 901-730-6373. You can also text us there or just shoot us an email at podcast at nerdball.com. And we'd love to hear from you. So please let us know. All right. Well, with that, let's get on to our takeaway tips. And Liz, will you please start us off? Yes, indeed. First, lean on your values. Connect your money goals to what you care about most. Next up, give your goals structure. Once you know what you want to do in the new year, use a goal setting framework to help you follow through.

Finally, don't go it alone. Share your goals with your friends and family and smart money to find support in difficult times and keep you accountable. And that is all we have for this episode. To send the nerds your money questions, call or text us on the nerd hotline at 901-730-6373. That's 901-730-NERD. You can also email us at podcast at nerdwallet.com. Visit nerdwallet.com slash podcast for more info on this episode. And remember to follow, rate, and review us wherever you're getting this podcast. And 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. This episode was produced by Sean Piles and myself. Kaylee Monaghan edited our audio. Jay Bratton wrote our show notes. And a big thank you to the folks on the NerdWallet copy desk for all they do. And with that said, until next time, turn to the nerds.