Ep 53: Bad Money Habits Could Spoil Your Retirement Party

Ep 53: Bad Money Habits Could Spoil Your Retirement Party

Picture this: You're at your retirement party, finally ready to enjoy your golden years, but worries caused by some bad money habits have robbed you of fully enjoying the sweetness of the day. It happens to more people than you think, which is unfortunate because, with just a little bit of modification, you can rid some of the worst money habits from your life and set yourself up for retirement success.


Ready to uncover the money habits that may be sabotaging your financial journey? Join Sherry and me as we promise to equip you with the knowledge that will enable you to navigate your financial path with more confidence and wisdom. We kick-off the discussion by addressing the pitfalls of making financial decisions driven by emotions instead of logic. We throw light on how this can manifest itself, from buying into the latest financial trends to over-investing in a company based on personal feelings. Illustrating with real-life scenarios, we point out the benefits of diversifying your investments and the significant role a third-party can play in strategizing your financial decisions.

Isn’t it curious how emotions often cloud our financial judgment leading to costly mistakes? Sherry and I examine this concept further, highlighting the importance of seeking professional financial advice. We discuss how this can help you avoid these missteps and potentially save you a lot of money in the long run. In an era marked by high-interest rates and surcharges, we also delve into the often overlooked habit of living beyond our means and mismanaging debt. We emphasize the need for self-awareness and careful management of credit card debts. So, if you're ready to break bad money habits and want your money to work for you, not against you, this episode is a must-listen!

Full Transcript

0:00:00 - Speaker 1
Discussions in this show should not be construed as specific recommendations or investment advice. Always consult with your investment professional before making important investment decisions. Securities offered through registered representatives of Cambridge Investment Research Inc. A broker-dealer member, FINRA, SIPC Advisory Services through Cambridge Investment Research Advisors Inc. A registered investment advisor. Cambridge and Greenway Wealth Advisory are not affiliated. It's time to dive into some insider secrets of investing and retirement planning To make your retirement as smart and as elegant as possible. This is Money Chic with Sherry Rash.

0:00:31 - Speaker 2
Time for another edition of the podcast. It's Money Chic, with Sherry Rash and myself here to talk about some bad money habits that could spoil the party. We don't want to spoil the party, so we want to just talk about a few things along the way in life, no matter kind of what stage you're in in life, there's just some bad habits that we all know can affect us in various different ways and various different walks of life, but certainly when it comes to money, it's not good, we want to fix these things, so bad money habits can certainly bite us, so we're going to talk about a few of those this week on the podcast Sherry, what's going on?

How are you?

0:01:03 - Speaker 3
Doing alright, and I would say most people don't even realize that it might be a bad thing.

0:01:07 - Speaker 1
That they have it, that what they're doing.

0:01:09 - Speaker 3
Yeah, they might think there's nothing wrong with it, but we're going to give them something to think about.

0:01:14 - Speaker 2
That's right. Yeah, that's true. I mean, like, a lot of times there's certain bad habits in life I think we all can self-identify, right, and then there's other ones where other people pointed out to us and we're like no, and then eventually you have to do some soul searching or something looking to realize, oh, I do have that bad habit, that's right, you know. Whatever it might be, I'm on my girls.

0:01:33 - Speaker 3
They crack their knuckles all the time and it drives me insane. And then, as I'm waiting for you to we're getting started, I caught myself cracking my knuckles. I'm like, oh, okay. I think I need to look in the mirror a little bit before I start critiquing the knuckle cracking.

0:01:50 - Speaker 2
There you go. Great point, right To illustrate that for sure. Well, let's talk about some non-knuckle cracking. Let's talk about some financial stuff here. Let's start with investing emotionally instead of strategically. Now, obviously, as a financial professional, that's certainly that's going to drive you nuts, but it's also expected because humans are we're emotional creatures. Period Cross the board Doesn't matter, right, and it's easy when there are certain items, like money, that we get very emotional about, and so it's easy for us to do that as the investor. But that's where I think again, using someone like yourself comes into hand, comes in very handy, because you can look at that a bit more strategically when we can't sometimes.

0:02:31 - Speaker 3
Yeah, and I think, at least for me, when you hear investing emotionally, it pops in like person freaking out, pulling their money in or out of the market or investing at a certain time. But that's, I think, the extreme.

0:02:45 - Speaker 2
True, I would agree yeah.

0:02:47 - Speaker 3
Investing emotionally can be something as simple as I know. This is kind of a thing with a lot of millennials is buying into crypto, right? Right, you're hearing about crypto. Your friends may have made some money on it. Well, I want to get in on that, right, let me try it. And you might not be frantic and emotional all about it, but you're just saying, hmm, let me do that too, because you don't want to miss out on it.

Yeah, so you're kind of thinking more with emotion than necessarily logic, because you're not looking at, well, did they buy into it years and years ago when it was a lot lower in price and all of that stuff? That's true, that stuff. So it can be just as simple as that. It could be brand loyalty as well, right yeah?

0:03:26 - Speaker 2
Something that's brand loyalty. My friend of mine is a hardcore Disney addict and again, this is we're not offering any kind of financial advice, we're just having a conversation. But you know, and it's like so he winds up no matter what they do. That's something he likes to invest in. Right, and maybe you work there too. It could be that standpoint. Maybe you work at a company that you just love them and they treat you great and you love the job and you kind of you know you're buying stock options and maybe you're just a little over-weighted because you're emotional about it versus being strategical. I mean you could go all the way back to, like the Enron story of, you know, 30 years ago, sherry, right, I mean everybody had too much tied up in their, you know their paychecks are coming from there, their stocks, they, you know stock options, they're investing in the company, they're pumping all this stuff back into it and then the whole thing collapses and you're really out, right. So again, just, it's easy to do, so it's nice to have that third-party objector, I think.

0:04:18 - Speaker 3
Yeah, removing any emotion to it and just looking at the straight logic when you're making decisions.

0:04:24 - Speaker 2
And we can do that all the time, and we can do that all the time With anything with your money. Yeah, I don't think that most people can do that because, again, it's our money, right? So having that, you know, to say I can 100% remove my emotions from my decision making is almost impossible, so I use someone else to help me with that Exactly. So that I can kind of be my sounding board, sherry, right to keep me from jumping off the edge, so to speak.

0:04:48 - Speaker 3
Exactly. Hold that mirror up and maybe make you question well, am I doing this because of my emotions or what are my emotions towards it? Because, you're right, we all have emotions when it comes to our money, we don't even realize that we do sometimes, but money doesn't have emotions, which is the drum I beat all the time, but money doesn't have emotions. So we have to try to remove ourselves from that or, like you said, have a work with someone that can remove the emotions.

0:05:13 - Speaker 2
Look at the mirror. Find out why you're cracking your knuckles. Right, that's right.

0:05:17 - Speaker 3
I was about to do it too. I just called myself.

0:05:19 - Speaker 2
All right. Next one Living beyond your means and possibly mismanaging your debt. Right now, it's a great time to have that conversation because the interest rates are higher. Right, I mean credit card debts. Right now, credit card was a 29.9. A lot of times you'll see these kind of things on credit cards. You know, if you have no other choice. I guess that's one thing. But are you truly living beyond? Is it no choice because you're living beyond your means, or do you just actually need to do that to get by? Right? So be careful there, because it's easy to do credit cards or they can be a great tool if you can handle yourself. I think again, it's knowing, almost like the prior one with emotions. Here it's knowing yourself. Some people love to put a bunch of stuff on their credit card and then pay it all off because they're getting miles or whatever. That is right.

0:06:03 - Speaker 3
Yeah, where I live now, we're getting this credit card surcharge passed on to us as the end user.

0:06:11 - Speaker 2
So the miles if you go to the store, kind of thing.

0:06:14 - Speaker 3
Yeah, if you go to the restaurant, it's you know here's the price. If it's, you're paying cash and you know 2% added, or what have?

0:06:23 - Speaker 2
you for credit card? Yep, they're doing that here too.

0:06:25 - Speaker 3
Yeah. So those points or those miles you're getting, they're not free anymore. You know like we're paying for those. So then is it worth it to use a credit card for the miles or the points if you're just paying an extra surcharge on top of it and then potentially having debt not paying it off every month? And then paying interest on top of it, so it's like a double whammy.

0:06:47 - Speaker 2

0:06:47 - Speaker 3
But when I'm working with my clients during my financial foundations, we're looking at that what is going out versus coming in and is more going out than coming in and many people aren't aware of that.

Or what's the monthly outlay of your family? And when I ask that, everyone just goes to what they know the mortgage insurance, electric, all the basics but we don't account for very well, all of those one-off expenses or stuff that we do. That just makes life better and that could be what you know tips, the tips you to living beyond your means and having more money go out than come in. So definitely having an understanding of where your money is going. And then another question I get all the time is well, I have a credit card, I have a student loan. What do I pay off first? Or I have to save for my kids' college, but I have a student loan, where do I direct my money to? So having strategies to paying down debt in a way that makes sense and making sure more money is not going out than coming in is really, really important.

0:07:54 - Speaker 2
Yeah, definitely, and I get living beyond our means, right. It's just something that that's like, if we're talking about bad money habits, the sooner we can fix that one you know, maybe in our 20s or whatever the better off you're going to be through the rest of your life, right? Because?

that's just one that can just get out of control easy and we can all be. We've all probably been guilty of it at a time or two. Hopefully you recognize that and you pulled the reins back in. But just be careful there, right, sometimes you know if you're getting into your first house and then you want to go out and get all new furniture. You know it's just easy to do at different stages when certain things come up. So just be careful with that one. That's certainly a bad money habit that can bite you along the way.

0:08:30 - Speaker 3
And I would say one of the best ways to make sure you're not is having as little debt as possible, right? If you don't have as many as much debt to pay off each month, there's many bills coming in. You actually then actually need less money to live off of. So it's so by having reduced debt, less bills, less really necessary money.

0:08:50 - Speaker 2
So yeah, all right, there you go, let's do another one. How about robbing your emergency fund? We talk about emergency funds fairly often on here because they're important. Robbing your emergency fund for non-emergencies.

0:09:02 - Speaker 3
This is a big one for me. I so, again, when I work with my clients, with our financial foundations, we determine how much do we do you need to have in your emergency fund, and you can Google it. I mean, it's very easy. Three to six months of expenses is a good amount to have in an emergency fund. And I say emergency fund so once you have that amount fulfilled and they'll say, you know, three months if both partners work, if you have a two income household, you can get away with having three months in the emergency fund because the likelihood of both of you potentially losing your job at the same time is not likely, right?

0:09:41 - Speaker 2
So that's one emergency situation. Diving into it to go to Aruba is not an emergency.

0:09:46 - Speaker 3
That's not an emergency. So once it's fully funded, it's essentially you put it away with lock and key Like it does not exist anymore. My one client said to me and I love this he said break glass in case of emergency. It's behind that glass with the little hammer and it is there and you are not touching it.

0:10:04 - Speaker 2
You know what, sherry, I was talking with somebody the day. They had an interesting take on that. So they said they put their emergency fund in a bank, in a different bank in town than their normal. The normal one they use because it's in an area part of town that they just never go to so therefore they don't even think about it. I was like, well, okay, that's maybe a little extreme, but if it works for you, it works for you.

0:10:25 - Speaker 3
Or using, like the more technologically savvy way, use one of those online savings accounts. There you go. The non brick and mortar banks give really good rates because they don't have brick and mortar and rent to pay for, so they can give really nice rates, maybe better than the bank in town.

0:10:44 - Speaker 2
And you just said to emergency fund there, right, just don't touch it.

0:10:47 - Speaker 3
Yeah, have it somewhere else. You have access to it, right? You can send it to your checking account. It may take a day, but you have access to it. But then have a savings account that's attached to your checking account that you can move money back and forth when you need it. But at least you know your emergency fund is there and it's behind the glass and you're not touching it there you go.

0:11:09 - Speaker 2
I like that too. Pretty cool. All right, let's do a final one here, sherry. And then we're just talking about some bad money habits. So let's just talk about avoiding professional advice because you think it's going to quote unquote save you money. Now apply this to any other walk of life and I guarantee you everybody listening right now or just come across the podcast at some point has gone with the cheapest option home repair, car repair, something, and you went with the cheapest option. And what almost always happens when we go with the cheapest option, it costs us more money, right.

Because it does, it fails or it doesn't get done right the first time, and then you got to pay someone else to do it and fix it, or whatever the case is. And so I kind of feel like this falls in line with what you do, sherry, because a lot of times, especially over the last number of years, when the market had been so good for what? 12 years straight right.

0:11:59 - Speaker 3

0:11:59 - Speaker 2
DIY thing is very, very easy If you're throwing a dart at the dart board and you're picking index and it's doing pretty good.

it just hey, I got this, I can do this right, but eventually I think there's so many studies out there, so many things that show that using professional advice actually will help you save more money in the long run. Over things, whether it be taxation or whatever the case is, there's just it's just a silly to me, it's just a silly kind of no brainer excuse to go well, I'm just going to save myself money by not using a pro. It doesn't make any sense.

0:12:29 - Speaker 3
It's funny, you know people will use a professional and pay their service fee and enter their program for many different things. Sure, hiring a decorator, for example, like you could Google and like figure out how to decorate your room right.

Absolutely you could find stuff, but a lot of people will bring in a decorator for the pink colors. Well, because I just don't know what the right thing is Right, and think of anything. I once had a friend that paid a hairstylist to teach her how to braid and it's like whoa, that just blew my mind Watch some YouTube videos.

That's right, there's YouTube, but we'll pay for advice and some it's funny with our finances. We're not as quick to pay for advice when it comes to our finances and I don't know if it's because it's not tangible. We can't feel it and touch it and see it like we can with the pink color or the hair braid right, or we just think we've always had money, so we just deal with it, but we've never had training. You've never had training on it. So how can you handle it?

0:13:28 - Speaker 2
Well, think about money in general. So it's like all right, think about things on sale. How many of us love a good sale, right, oh, it's on, they're having a sale. But what's the one thing that we never want to buy on sale? When it's the stock market, right, when the stock market is going, which means it's going down, when the stock market is down technically, you can be buying stocks on sale. But we don't do that. It's like with money, we there's a I don't know, it just scares us, I guess, and we just, a lot of times, do the opposite. Very strange.

0:13:56 - Speaker 3
It's that emotional, you know investing emotionally Back to number one.

Yeah, back to number one. But yeah, I've had, I've had clients that are working with me now that I spoke with a few years ago and it was kind of well why I can do this myself, why, why do I need to pay for advice when I can do this myself? And they come back to me a couple years later and they realize we couldn't do it ourselves or we're not in. We're not in any better of a position. So let's seek out the professional advice now. And it's true and I laugh with the your your buying cheap versus expensive. I had that epiphany a few, quite a few years ago and it was over lunchboxes.

0:14:39 - Speaker 2
Of all things.

0:14:39 - Speaker 3
Yes, so my two older girls are in. I was about to say college, oh my word, not even close, getting ahead of yourself there, my two older girls middle school and elementary school. So I've bought a lot of lunchboxes through my my, my years, right, right, and I'd go to the store and I just buy an inexpensive lunchbox because it's just a lunchbox and what would happen is it would get funky throughout the year and I'd have to throw it away and buy another one.

And I realized one year I just said I'm buying the pottery barn lunchbox, which it's like 30 some dollars which sounds kind of ridiculous, right, but I still have lunchboxes those lunchboxes that I purchased seven years ago, right when the cheap ones that might have cost me $8.99 are in the landfill somewhere.

0:15:29 - Speaker 2

0:15:30 - Speaker 3
So paying that little more ended up saving me more money in the long run. And, just you know, sucking it up and paying it now, yeah, and it's and it's funny how the walks of life, you know.

0:15:40 - Speaker 2
So that's a great way for you to to frame that Cause. That's something that you know, brought up a memory for you. You know, like my wife, like I'm fairly handy in my, but there's certain things my wife will. Just she's like no. So if we have a plumbing issue, which we're having, an issue with the dishwasher, I'm like, well, I'll take a look at it. She's like no, absolutely not, because you're going to make it worse and then it's going to cost us more money. And I'm like, yeah, but I'm handy. She's like not with plumbing, you know.

0:16:02 - Speaker 1
So she's like stick with the stuff, Stay in your lane, stay in your lane Right.

0:16:06 - Speaker 2
Exactly so. And and if we do that, sometimes we think, well, I'm going to save myself some money, I'll buy the cheaper lunchbox or I'll buy the cheaper backpack, right? If you think about when you go back to school God, we used to do that all the time with Ally you know it's like, oh, let's just get this. Especially when we were things were tighter, we were like, well, let's just get the you know the cheap one, and eventually you realize, you know what, just spend the extra money the one time for the better one, and it'll last her for a couple of school years, right?

0:16:30 - Speaker 3
Right yeah, exactly.

0:16:32 - Speaker 2
Easy to do. So those are some bad money habits that well you know. They're just bad habits. So if we can try to avoid these, we'll certainly help ourselves along the way. And so when it comes to that last one avoiding professional advice just because you think it's going to save you money in the long run, it usually doesn't.

So if you need some help, reach out to Sherry. She is a financial advisor and money coach at Greenway Wealth Advisorycom. That's Greenway Wealth advisorycom. You can find all the tools and tips and resources there at the website. You can reach out to or schedule some time. Check out the podcast, subscribe to the podcast, find everything you need right there at a website greenwaywealthadvisorycom. Of course, you can also just type in money chic into the search box of whatever podcasting app you are using with us Apple or Google or Spotify and find us that way as well. So don't forget to hit the little heart button or follow button and subscribe. That way you can catch future episodes as well as check out past episodes. Sherry, thanks for hanging out. I appreciate it. This is our end of June episode, so I'll talk to you after the fourth of July. So hope you have a great fourth of July.

0:17:31 - Speaker 3
Thanks you too. Happy birthday America, that's. Right.

0:17:34 - Speaker 2
Enjoy some hamburgers and hot dogs and fireworks, and don't let flash get too scared. I know that's what's going to be the case of my dogs. Yeah, absolutely, they can't stand it, but we'll be back with more here on the podcast. Don't forget to subscribe. We'll see you next time on Money Chic with Sherry Rash.

Shari helped my husband and I consolidate our finances and create a system that works for us. She is a great listener and very authentic - we are thrilled to have this trusted advisor on our team.

Jessica, Charleston
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