The Rachel Cruze Show - 12 Financial Fails Everyone’s Guilty Of

Episode Date: April 29, 2024

💵 Sign up for EveryDollar today. Create a free budget!  From getting sucked in to one too many sales to overspending on our summer wardrobe (hello, trendy new sunglasses), we’ve all made money mistakes at some point. In this week’s episode, I’m sharing twelve common financial fails—so we can be extra careful about avoiding them! In This Episode: ·      5 Sneaky Ways Stores Make You Spend More ·      3 Job-Hopping Errors That Will Impact Your Wallet  ·     4 Financial Mistakes People Are About to Make     Next Steps: ·      🛒 Are you wasting money at your favorite stores? https://www.youtube.com/watch?v=Z1dksNiuToo   ·      📉 Get investing help from a pro: https://www.ramseysolutions.com/retirement/dave-ramsey-smartvestor?campaign_name=SV_PaidSearch&gad_source=1&gclid=CjwKCAjwoPOwBhAeEiwAJuXRh8IOa2FUC2pOZdDm-qKuFyQm0BuAlOFjHD3hyl56H_E1JWeLYpEJMRoCim4QAvD_BwE   ·     🤩 Set financial goals at any income level: https://youtu.be/9q-UTjlP3hI ·      😎 Check out these affordable staycation ideas: https://www.ramseysolutions.com/saving/staycation-ideas ·      📚 Try these tech-free summer activities that your kids will actually like: https://www.youtube.com/watch?v=qYSe-2ZRxzU ·      🐰 Spark family conversations about gratitude with my latest kids book: https://store.ramseysolutions.com/youth/children/im-glad-for-where-i-am-by-rachel-cruze/   Offers From Today's Sponsors 🏥 Learn more about Christian Healthcare Ministries.   Listen to more from Ramsey Network 🎙️ The Ramsey Show   🧠 The Dr. John Delony Show 🍸 Smart Money Happy Hour 💡 The Rachel Cruze Show 💸 The Ramsey Show Highlights 💰 George Kamel 💼 The Ken Coleman Show 📈 EntreLeadership   Ramsey Solutions Privacy Policy Learn more about your ad choices. Visit megaphone.fm/adchoices

Summer is officially upon us. Your budgeting BFF Rachel is over here thinking about all the ways that people are going to overspend. So yeah, financial mistakes that you should be careful to avoid in the coming weeks and months. Hey guys, welcome to this episode of the Rachel Crew Show podcast. I'm so glad that you're here. So in this episode, we'll chat about the biggest mistakes people make when changing jobs. Then I'll talk through four financial mistakes you should avoid making this summer.

But first, let's talk about the sneaky ways stores trick you into spending more money. Take a listen. So there is a lot of division in the world today, but I think one thing we can all agree on is that we tend to overspend at Target. I see the memes all the time of people confessing that the Target checkout line really got them today. And listen, I 100% relate. But Target isn't the only store where people tend to overspend. In fact, there are intentional marketing tactics behind every. every single store. If you've ever stepped foot in one, you are part of it, you guys. You

experience it and may not even realize it. So today I'm sharing five of the most common tricks stores pull in in order to have you spend more money. And number five on the list gets me the most fired up. So make sure to stick around for my hot take. All right, the first strategy that stores use to get customers to spend more money actually feels like they're doing you a favor at first. You think, oh, wow, Nordstrom, you're really rooting for me to give me the best deal. So nice of them. But listen, I hate to break it to you, but the rewards at programs are not doing you the favor you think they are. So whether it's a $20 birthday coupon or get 10% off when you spend more than $150, their goal is to get you to spend more. That is it, okay? That is what they focus on. It is not so you can save more.

it is really, how can we get them to spend more money? And listen, if you get free shipping because you needed that certain amount of clothes, then that's great. Good for you. But for me, buyers remorse really can kick in if I really didn't need something, but I bought it because it seemed like a good deal. So don't fall for it, you guys. All right, the second strategy businesses use to get you to spend more money is about merchandising. So merchandising is just a fancy word for the way stores are set up. And it's from the placement of items on the shelves. to the layout of the actual store. This is one of the most strategic parts

of your shopping experience. So, for example, at the grocery store, they keep their artissory chicken in the back for a reason. They want you to walk through all the other aisles when you're in a pinch for dinner time because you're more likely to add some additional things to your grocery list. Or let's say you're at the snack aisle at Walmart

and you notice a little bit more of an expensive name brand product, like right there eye level, while all the generic brands, you know, are down below or up high. And they're like camouflage, you can't even see them? And did you know that this trick goes all the way back to London in the early 1900s? Department stores that started keeping their perfume and their cosmetics out from behind the counter to lure in the ladies who were walking the streets so that they could sample the products for themselves. So this is a common practice because it is so effective to getting people to buy.

And speaking of this, that brings me to the third thing that stores do. to make more money. And that's the try before you buy. You know, you think about this for Amazon, for instance, because it seems like a great idea, until you forget that you haven't actually paid for your item once you have it. So basically, if you're shopping for a pair of shoes or a new sweater, and you're not 100% sure if you'll like it on yourself or if it's going to fit right, then you can order it without paying for it. And if you keep it for a certain amount of time after its delivery, then they're going to charge you. So listen, not to be dramatic. But it feels like another form of debt or something. It's like, oh, my gosh, I get something. I don't pay for it in full up front. And then I pay for it later. You know, it's kind of like a car or a couch or tank top from Amazon because you're kind of lying to yourself, like, I have the money for it. And it's in the account. Like, I feel like I do. But do you really is the question. And I don't know about you, but my life, there's so many things going on that I'm like, I can't keep up with purchases that have deadlines to them. That I'm like, oh, I have to do this or return this or this or this. It's just too much. So let's

Listen, just buy the item, track your purchase, and when your money leaves, make sure you track it on your budget, and if you don't like it, then take it back. But always, always remember, if you can't afford to buy the item until after it's delivered, then you can't afford it, period. All right, the fourth thing that stores do to make more money has to do with timing and the frequency of sales. Now, you know, Hobby Lobby, I mean, a great store, but they're a great example of this, because the awesome thing about them is that they always have sales going on. And the tricky thing is

that everything is always on sales. So they're constantly altering week to week, so you kind of have to pay attention to what the current deal is. The Anthropology Sale Room is another great example of this. They almost always have an additional 40% off sale item signs out on the weekend. And if you see something you love and you catch it on a non-sales day, then it might be worth keeping your eye out until it rotates back in on the sale. And if you're willing to do a little extra waiting every now and then, patience really can save you some serious cash. All right, we've made it to number five, which again is the one that I'm like, I hate this one. And the fifth thing companies do to have you spend more money happens mostly online, and it's something that marketers call reducing the friction. So it's kind of

the opposite of number two where they want you to walk all around the store to get your chicken. is kind of like the opposite. It's this idea that like you can get it really quick, regardless if you have the money or not. So think about Klarna or afterpay, like all these companies, they are not doing you a favor. It is a form of debt. And retailers know this, though, because people spend more money on these services. Because again, these services are created because companies realize that people end up clicking out of their online shopping window and they leave things in the cart. I do this. And they're like, no, no, no, no. Maybe it's because they don't have enough money, and they're saying, oh, it's okay.

You just have to do four easy payments. That's all you got to do. Just agree to that, and you're fine. And listen, you know me. The debt thing, it's not my jam. I don't like it. So car payments, student loan payments, even after pay, and those have been normalized in our culture to say, oh, I can afford the payments? But honestly, what people do that women with money, they say, can I actually afford the item? Because the reality is, is that this is stealing hundreds of dollars from people's because for a lot of these companies, if you don't pay on time, there's fees, there's interests, all of it. And if you've ever gotten stuck in that paycheck-to-paycheck cycle, it is so stressful and it is defeating. Okay, so that way of spending with money when it comes

to debt is never going to bring you true financial peace. And you're never going to have the margin you need to build long-term wealth. So if you feel a little stressed out right now, Sorry about that. But, you know, it's kind of good because I want you to spend your hard-earned money the best to your ability. And the best way to make sure that your income is going as far as possible is to track your spending and to be on a budget. And every dollar is one of the best ways to do it.

So go to every dollar.com today, build your first budget because I'm telling you, it is going to help you when it comes to all this shopping experience. You're going to know the amount of money you have to spend in a category. And regardless of what a store is doing to try to get you to spend more, you will have the power. So whenever a job change comes around, there's almost always a financial shift that happens to. So whether you're getting promoted to a new position or you're moving companies altogether, typically the goal is for your salary to go up. But I have some news for you that even if that is the case, you're still at risk for losing money if you forget a few of these

crucial steps that are commonly overlooked. So today I'm sharing with you the three biggest mistakes people make when it comes to changing jobs. And be sure to stick around for the whole list so that you can avoid these mishaps and continue to build wealth as you grow professionally. So the first job hopping error people make has to do with everyone's favorite thing. Insurance coverage. Uh-huh. Just kidding. I know everybody's like, oh my gosh. Because listen, it's confusing. It's a pain. It can be expensive. But it's even more of a pain and actually can be dangerous if you allow your coverage that you have to have gaps in between jobs. Receiving an insurance plan or benefits through work is something that varies a lot, company by company. And some employers

allow you to be eligible for health insurance coverage immediately after your first day on the job. Others, you have to wait 30 days or 90 days or even a full year. But there are a few things that you can do to make sure that you're handling that shift wisely. So if you are on, the job hunt, I recommend asking these questions during the hiring process because a lot of corporate companies will schedule a specific pay and benefits chat with HR once you start negotiating out the details. But if you're in more of a creative industry or you're interviewing with a small business, be sure to get clarity on your coverage timeline. And if there's going to be a gap between your last job and your new role, short-term health insurance, also call that temporary

or limited term health insurance is designed to cover health emergencies for a short period. And this is usually 30 to 90 days, but it is a solid option if you're in between jobs. Cobra is another option. It's a federal act that allows you to continue insurance coverage for a period of time after voluntary or involuntary job loss. Just make sure to apply within 60 days of your previous coverage ending and adjust your budget accordingly because the costs will go up. The second financial error that people make when it comes to changing jobs is forgetting to transfer

over their retirement investing. Now, just like health insurance benefits, the timeline of your eligibility for retirement benefits and 401K matches can vary depending on your company's policy. But as an example, let's just say you're contributing 15% of your paycheck into retirement and your former company offered a 5% match to your contributions. When you switch the new job, you usually have four options. Number one, cash out your 401K. That's the worst option.

And you'll have to pay so much, you guys, in state and federal income taxes. I mean, there is so much. So if you're under 59.5, just don't do it because there's a withdrawal penalty of 10%. It's just not great. So don't do that option. Number two, do nothing and leave your money in your old 401K. So you could do this if you're really happy with your investments and the fees are low. but that really is never the case. Usually this means you'll have to deal with a higher fees,

and that's going to cut your investment growth down and you're settling for limited investment options from your old plan. The third is to roll that money over to a new employer's plan. So this has some benefits like simplifying your investments by putting them all in one place, but there are a lot of rules and restrictions for rolling money over to a new employer's plan, which brings me to number four. Roll all the funds into, an IRA. And most of the time, this is your best option because it gives you the most control over your investments. Plus, you have thousands of mutual funds to choose from, and you can work with an investment professional who will walk with you through the process as you're rolling that money over.

And I highly recommend connecting with a smart investor pro in your area if you ever need investment help. Check that out. All right. The third job hopping error people make actually has nothing to do their jobs or benefits or investment options. This one's a little bit personal, kind of a gut check, but that is, remember that you go with you. When it comes to your money, your job, your marriage, your relationships, T. Swift and Ken Coleman always say it best. Sometimes you're the problem. Now, I say that with love, but no amount of 401K matching or dental insurance is going to change if you don't check your heart first. If you're constantly chasing after a new job every single year just to think, oh, this thing's going to be satisfied, or if I can just get this paycheck,

or only if my coworkers like me here, you know, or just all of this, you guys, check yourself and know what am I doing? What does this look like? Because I will say, if there is conflict everywhere you go, huh, there might be something going on. I took a call at the Ramsey show, and this guy was like, every boss I have, they threaten to fire me and all this, because my, attitude. I'm like, huh, multiple people have told you that in different companies and different roles. Maybe there's a chance there's something going on in you, right? So again, I'm not saying that you have an attitude problem, but if there are things that are consistently frustrating you at every job you're at or you're looking to fulfill yourself in every job and

it's just not coming, maybe everything is, you know, not working out exactly how you thought because there needs to be some inventory on you, that you go with you. All right, you guys, if you are job hopping, good luck to you. Remember what we talked about in this episode because these things are really, really important to make sure that all these gaps are covered and that you have a great opportunity in the future. Summer is officially upon us. And while most people are focused on the sunshine and the beautiful trees in the time of school, your budgeting BFF Rachel is over here thinking about all the ways that people are going to overspin. So yeah, whether it's a cute decor from the Target dollar section or a new wardrobe.

for the warmer weather, you know, we just all know that our budgets change month to month, and these days for a lot of people, their budgets need to be a little bit tighter. So today, I'm going to share with you four financial mistakes that you should be careful to avoid in the coming weeks and months. And the last item on this list really flips the script. All right, the first financial mistake is overpaying for vacations and trips. I say this all the time, but we just need to be reminded that social media should not dictate to, your financial choices. Okay? Instagram is not reality. It may look like everyone you know is going to a boogie beach resort or maybe off to Europe or whatever it is. But you have no idea their financial

situation, okay? Maybe their in-laws generously paid for them to have a ticket in first class, and that's what they're showing you on Instagram. Or maybe they went into debt for the trip. Or maybe they have saved and are spending their harder money. You just don't know. Because the point is, is that you don't have to spend thousands of dollars, though, on a trip every single year to make amazing, memorable summer memories. All right, the second mistake that people make when summer rolls around is buying expensive new items instead of thrifting them or shopping sales. So, hear me out.

If you need new socks, like, go get you just some new socks. Okay, I get it. But if you're suddenly spiraling because every kid has outgrown their rain jacket and their bike helmet and all this stuff at the same time. Just calm down, prioritize purchases, and maybe even look to say, hey, what is on sale right now? Or go to the thrift store? Because maybe you're desperate to host a great get-together with friends, but you don't have to break the bank, you guys, okay? So looking out for sales is so, so key. And again, you don't have to resort to overspending on swimsuits the week before all the kids go to summer camp, just grab a cheap option at Target and call it a day.

or shop at a local consignment sale for those cute family beach photo outfits, like whatever it is, get creative, but be wise. Which brings me to the third financial mistake that people are about to make, and that it's dropping a lot of cash on experiences for the kids. So we millennials usually are all about doing different things than our parents did growing up, right? And one thing that they may have done right is letting kids figure out for themselves what to do when they're bored. And it seems like now we're packing every little day with every little thing and activity and all this stuff. But seriously, one of the best things that you can do is have your kids just be independent for a little bit, right? So whether it's your church, your kids swim team, a summer

sports league, the more involved you are in your community, the more challenging it can be to say no to some of these things. But as a parent, it's your job to set limits and to be responsible. and this goes to your financial commitments as well. And so every day does not have to be a fancy at Pinterest Craft Day, all right? Let them go out in the backyard, get creative, and that's okay. So take that pressure off. The fourth financial mistake people are about to make is not making their older kids get a job. Okay, listen, I have not raised teenagers, but can I just tell you, the summer job, it's kind of as like part of childhood. So teaching, responsibility, and work ethic. All of this, it serves your kids so, so well. It is a great way for them to earn their own money,

to meet people outside their social circles. Whether it's babysitting or doing chick filet, they hire at 15 years old. I have friends that worked at Sonic, you know, whatever the thing is, let them have a little bit of that experience when it comes to having a job outside the house. And summer is usually a great way to do that. So maybe it's just for a month or two. But again, This idea of teaching your kids about money, I think is huge. When they're little, the chores and the commissions, it's a great way for you to do that. But if you have older kids, you know, it's just one of those things to think about. Now again, I don't have teenagers. I have little kids, like I said, and that was one reason why I wrote my new kids book. I'm glad for where I am. And it's all about gratitude. It's a really great book when it comes to gratitude and teaching our kids. Oh, summer. God, I love it. Just make sure you guys that you're being wise with your money when it comes to these summer months. All right. So thanks so much for listening to this episode of the podcast. Make sure to leave a review. Your feedback, it helps us out so much.

And subscribe to the podcast, share it with your friends, with your family. Because, man, spreading the word about this stuff is so important because we want everybody to be wise with money. All right, you guys, happy summer. And remember to take control of your money and create a life you love.