In this episode of The Good Cents by Payactiv Podcast, host Eric Rosenberg and guest Jen Smith, budgeting expert and author, share practical strategies for effective year-end financial planning. As the year winds down, it’s the perfect time to reflect on your financial habits and set the stage for a successful new year. Here are the key takeaways:

• Conduct a 90-day transaction inventory to identify patterns and spending triggers.
• Use tools like Google Sheets to categorize expenses by frequency or amount.
• Focus on modifying small habits, like limiting emotional support purchases, to reallocate funds effectively.
• Prioritize high-interest debts and create a manageable repayment plan based on seasonal spending trends.
• Break goals into quarterly milestones to maintain momentum without feeling overwhelmed.
• Review all recurring bills and subscriptions, negotiate better rates, or cancel unnecessary ones.
• Spread these tasks throughout the year for a less daunting process.
• Set inspiring short- and mid-term goals, such as saving for vacations or family milestones.
• Automate retirement savings through employer plans or IRAs, ensuring contributions are actively invested.
• Visualize goals with tools like dream boards to maintain focus on the bigger picture.
• Balance financial discipline with fulfilling immediate aspirations to stay motivated.

Eric Rosenberg:

This is a friendly reminder that today’s episode is intended for education and entertainment purposes only, and should not be considered financial or legal advice.

Hello, my friends. Welcome back to The Good Cents by Payactiv Podcast. As always, I am your host, Eric Rosenberg, and as the year is going to wind down pretty soon, it’s a good time to take stock of what we’ve done this year, and get prepared for the next year. That’s why I am so excited to have today’s guest, Jen Smith. She’s one of the best budgeting podcasters and authors I know. Today, we’re going to dive in with her for some year-end financial planning tips to get ready for your next year financially. Let’s dive in.

All right, everyone, I am here with the woman of the hour. Jen, welcome to the show.

Jen Smith:

So happy to be here. Excited to talk about finances in the end of the year.

Eric Rosenberg:

I know, the year-end is coming up quick. After a few years that seemed like they were really slow, this last year seemed really fast. All of a sudden, I blinked, and we’re getting ready for 2025. It’s almost New Year’s. Unless you’re listening after New Year’s, then it’s almost 2026 or whatever time. I love podcasts. You never know when it is, but if you’re listening live, it’s almost New Year’s, and there are so many things I like to do to get ready for the next year. I’m not a big New Year’s resolutions person. I’m a right-now resolutions person.

If I see a problem with my finances or even my diet or my exercise, I don’t need to wait until January 1st. I can just start right now. But if I want to make those changes and good financial decisions, it’s a good idea to take time to review and make a plan. So, Jen, if you were getting ready for New Year’s with your own finances or talking to your awesome audience, what would you say is the first thing you should do to start preparing for next year?

Jen Smith:

So, this is what I do to prepare because every November, December, it doesn’t matter who you are, how long you’ve been doing this. The chaos and the loveliness of the holidays can really take you for a ride, and a lot of us get our spending out of whack around the holidays. So, the first thing I do in order to be able to plan, I want to look at what’s in the past, because a lot of people will say start with a budget, but that’s just a plan for your future. It doesn’t address what you’ve been doing in the past. So, that’s what we have to look at first.

I say do a 90-day transaction inventory, and yes, it’s a holidays. Your spending is a little different. You still want to do it for the last 90 days, because it is your most recent 90 days. It’s where you are right now. Look at what you’ve been doing for the past 90 days, and you can pull it all from your bank transactions, do a copy paste or do a pencil and paper, whatever feels right to you. I like to pull it all into a Google sheet. Then I can sort it by either date or place, like if I’m going to Starbucks or all the mortgages or something.

What I’m really looking for is what habits have I developed in the past year or in the past quarter? Am I going for takeout at a certain place? Am I stopping for takeout after leaving somewhere like the grocery store? Am I getting a coffee on the way to the family, to the in-laws? I’m looking for patterns at the spending habits I’ve developed, so then I can pinpoint a couple of these spending habits to focus on in the start of the New Year. The new year, new you idea, it’s overdone. It’s not approachable.

You are great already, right? So, we’re just doing New Year already great, better you. The way we do that is we start with our spending habits, and start to make little progresses there. Just different plans on, “Okay, if I find that I am getting emotional support coffee on the way to see a friend or a family member or a colleague every time, how can I still get that emotional support in a way that doesn’t cost me money?” So, we’re just trying to pick a few spending habits to reprogram to start off the new year. That is the first thing I would do.

Eric Rosenberg:

I like the idea of checking out the places you’re going most frequently, because first when you said pull it all into a spreadsheet, my thought was sorted in order by most expensive transactions to least expensive, which I think could also be helpful, give you some insights on where your money is going. But if you sort by the place, or if you’re really fancy with Excel, you could use a pivot table or some fancy if statements, and that will give you the count of how often you go to a certain place. One time I did that with my budget back in the day, and I found I was going to Chipotle way more often than I realized, and those burritos add up. They get to be expensive.

I started bringing my lunch more, things like the coffee shop. Even though the coffee wasn’t as good, I started going over to the coffee pot at work more often, which costs me $0. A lot of people liked to go to the coffee shop across the street partially, because you got to walk across the street, and take a few minute break. So, I’d get my coffee, and I’d go walk in a circle around the building or around the parking lot, and then come back up to work. So, I still got the feeling and experience of getting a coffee, but it saved me 100% every time because it went down to zero.

Jen Smith:

Right. You want to have the same feelings. Our impulse purchases and holiday purchases are serving a purpose. So, the point is to find the habit, find the purpose, and serve the purpose instead of just masking the problem with these habits of spending money.

Eric Rosenberg:

I like calling it an emotional support coffee. I’m going to start doing that. Everything’s emotional support these days. We’ve looked back at our transactions from the last 90 days, which that’s a great tip. What would you do next? How do you get ready for New Year’s financially after you’ve checked out the last 90 days, and identified maybe a few places you want to make some changes?

Jen Smith:

So then we jump into the present. If there is any lingering debt that you’re currently carrying onto, this is a good time to make a plan on how you’re going to tackle it over the next year. It doesn’t have to mean, “I have to pay off all my debt in the next year.” We can look at it maybe quarter by quarter, look at, “Okay, Q1 is usually pretty slow for me. January, February, March, I’m inside, but May, June, July, those are busy months for me. I’m traveling. I’m spending money.” So, we make a plan that we’re paying off more debt in the first quarter of the year, and we take it a little easier in the second quarter.

So, we look at how the year is going, and make a plan starting with our highest interest debt, how we can pay that off first. Maybe you have so much debt. It’s all overwhelming. Maybe we’re just looking at that highest interest credit card or highest interest personal loan, whatever it takes to be manageable. It doesn’t have to be perfect as long as we’re trying to improve our financial status in some way. Then we’re also looking at bills, subscriptions. So, you’re taking in an inventory of all of your bills and subscriptions maybe when the annual renewal date is up, and you’re making that list, and then scheduling times throughout the year to negotiate.

Your phone bill, when that’s getting close, you’re going to schedule maybe a month before to be looking at other promotions, and calling your provider to see, “Do you have a better deal for me, because this company does?” You do the same with your internet and all of your other services. So, if you are scheduling them out throughout the year, it doesn’t feel as overwhelming, like you have to do it all at the same time. If you’ve already got all that under control, then you can also look if you have a 401k at work or an IRA.

Then you can look at those too, and make sure that you’ve got it invested in something, not just sitting in the money cash account. So, that’s a big one with IRAs. Like, we’ll put money in throughout the year, but forget to invest it or not have an automatic investing set up. So, it’s always good to make sure if you have an IRA that the money in there is actually invested in something.

Eric Rosenberg:

Those are really good tips. I like that you said with your debts, it can feel overwhelming. A lot of us have been there. I know there were times that I looked at my student loans and my car loan, and I was like, “Well, this is a lot to pay off,” but you don’t have to feel like it’s perfect. Something I’ve said to friends many times about projects, “Don’t let perfection get in the way of progress.” That is a good time to use it. We’re not all going to be debt-free tomorrow, but if we can chip away at the worst offender, which you said the one with the highest interest rate, and we can start to make progress.

Every little step forward counts, and we should feel good about it. So, if you can put an extra $5 or $10 or $20 into that highest interest debt, imagine how much you’ll save every month once that’s paid off. Then you could use that to pay off the next debt. Eventually, you can see that path to debt freedom, and you get so much more financial wiggle room to add to savings, build a bigger emergency fund, start saving for retirement if you’re not already, and all those good things. You got to start somewhere, and there’s no reason today can’t be day one.

I also like how you talked about subscriptions and small bills. That’s something I do myself. Actually, just this morning, I got an email from a big newspaper that I subscribe to, so I can read their stuff in the app and online. I realized, “This is probably not worth $120 a year to me or $10 a month.” So, I went on to cancel it, and actually said just when I clicked that, which I would’ve been okay to cancel it honestly, but they said, “We’ll let you stay another year for half the rate, just $5 a month.” For $5 a month, like a dollar a week, I was like, “Oh, I’ll keep it. $2 a week was too much.”

So, chipping away $5 a month might not sound like a lot, but when you’re trying to come up with that $5 to pay off a debt, there you go. There’s your start. There’s $5 a month that I just came up with. It all adds up really fast, surprisingly fast.

Jen Smith:

Yeah. I think so often, we have this all-or-nothing mentality like, “I want to be able to do it all, and go all in with everything all at once.” That’s just not possible, and it makes us just give up. You can have that mindset of progress. Every little bit counts. Then you’ve already overcome this huge barrier that so many other people are blocked by.

Eric Rosenberg:

Yeah, it’s not all or nothing for sure. So, what are we going to do next? Step one, we looked at the last 90 days. We found those little purchases, and replaced them with lower cost or no cost habits that give us the same feelings. We’ve started getting a plan together to pay off some of those debts. We’ve chipped away at our list of subscriptions. Maybe you don’t even need one of those subscriptions at all. Maybe you cancel something. Maybe you have cable TV at home, and you realize, “Oh, I could use one of those free services,” and just pay for internet. There’s things you might be able to cut completely. What’s next? What do we do next to get ready for our next financial year?

Jen Smith:

So, then we get to have fun and dream. Once we’ve set a plan and looked into the past and our present immediate future year, then we get to dream. This is what serves as the inspiration. This is that deeper yes that is going to help us stick with these plans and these changes that we’re putting in motion. I love to do that by either saving or just dream boarding if you’re visual. Maybe you have a vacation that you want to save for, or you want to save to get your kids a dog next Christmas, or anything that you’re thinking about at least six months away.

That’s where we start putting in these plans that we’re like, “This is going to, in a small way, motivate me to do good things now so that I can get to those bigger things later.” You start putting in little places to save here and there, and then also saving for retirement. I think we often forget about that middle part, the saving for the fun stuff, the vacations, the pets, all those things. Sometimes we think it’s just all about saving for retirement, but saving for retirement is not a good motivator to not spend money. It’s just not.

Eric Rosenberg:

It seems so far away.

Jen Smith:

It does. It’s too far away. Our immediate gratification minds cannot and do not want to comprehend it, but it is one of those things that you have to start putting on autopilot now. So, if your job offers a 401k or comparable employer plan, take advantage of that, but a lot of them do not. So, what you can do is open up an IRA, and usually, if you’re a lower income, a Roth IRA is a great start, but you’ll have to do the research and decide what makes sense for you, Roth or a traditional IRA. It just means that that’s your retirement account that you open yourself, and you’re in charge of where it’s at and what goes in it.

Again, you want to make sure, like we said in the present checkup, that once you put money in it, it goes into investments. But every month trying to put something in there on autopilot, every few months seeing if you can up it, the more you get in control of your spending, and the more stress that’s alleviated from your finances, then the more energy you can put towards earning more. You’re going to find more and more margin to stock away just on autopilot for investing. Make it a goal to try and put a little bit more. You can start with $10 just getting that compound interest rolling. Your future self will thank you.

Eric Rosenberg:

Totally. I think it’s really important to focus on both short-term goals and long-term goals like you were saying. I remember way back in the day, I started putting money away for retirement. I think I started with $25 a month. We can’t all start with these giant, giant aspirations. It’s good to start somewhere, even if it’s just $5 a month. At the same time, I started putting $25 a month away. I’d really honestly wanted a DJ mixer. That was something that I’d wanted since I was in high school, and I never had one. I thought, “Gosh, this would be so cool.” So, I started saving up for a DJ mixer, and I had a goal set in my favorite budgeting app at the time.

I knew that some of the cash I was putting away was for that. When I got to the point I hit my target, I could go buy it guilt free because I’d planned for it, and I knew that I was already covering all of my other budget categories like debt payoff and paying my rent and my utilities, and I was putting away money for retirement too. So, I was doing all the right things first, and then I was able to put a fun goal on top. If you’re saving for a vacation, if you’re saving for a cool new purse or sunglasses or whatever your thing is, don’t let anyone else dictate your thing. You should use your money for what you value and what you want in life.

Just because your neighbor wants some rockin Air Force 1 shoes doesn’t mean you have to get rockin Air Force 1 shoes. Maybe you want to get super cheap shoes, and you want to get a rockin electronic thing or something. Who knows? It’s your money. It’s up to you. Don’t let other people influence what you want. That’s also really important to think about around New Year’s or any other time. It’s your money. We call it personal finance for reason. It’s personal. It’s your thing. No one else has exactly the same money as you. No one else has the exact same goals as you.

 Even the person who works right next to you all day, they might make the exact same as you, but their finances, I could almost guarantee, look totally different than yours. It’s hard to make a guarantee, but that one, I could almost guarantee everyone’s money looks very different. So, we’re getting to that time to wrap on up. Do you have any final tips to help someone get in the right mindset or any other last-minute moves someone should make before New Year’s?

Jen Smith:

Yeah. So, a mindset shift that we talk about in our book, Buy What You Love Without Going Broke, is switching your mind from how much to what. What that means is budgeting can really focus on how much can I spend? That feels like a challenge to either get as close to the max without going over, or there’s a lot of guilt and shame that you don’t want to spend anything because you don’t know if you’ll need that money or that budget later. So, that creates a lot of guilt and shame and overspending eventually.

When you’re thinking about what, “What can I get with my money instead of how much I can spend?” Knowing what you value, and seeing what you can get that aligns with that, and we’re looking at, “How can I get the most of my values for free first, and then how can I get creative and get it more low cost?” Once we fill up our cup enough with what we value most, you find that there’s not as much spending going on, even on these impulse stress spends and all these peripheral things.

So, you just find when you’re focusing on the right things instead of tangible things or just even intangible things that costs money, when your focus is in the right direction, you just naturally spend less, because you’re more fulfilled in what you’re spending your time on.

Eric Rosenberg:

That’s great. That’s an awesome way to wrap up. Fill your cup. I know, Jen, you guys made these cups that say Frugal AF. I really want one of those. I got to be honest.

Jen Smith:

Dang it. I should have given you one.

Eric Rosenberg:

I should have asked. We were just together recently at a conference. I’ll see you soon.

Jen Smith:

Okay.

Eric Rosenberg:

I’m sure. But yeah, when you said fill up your cup, I thought about that cup. You can still be frugal and have a full cup. That’s totally possible.

Jen Smith:

That’s the goal, always to fill your cup up as much as possible, and not focus on the money of it all. But then when you do spend money on it, then you don’t have to feel guilty about it, because you know the money’s well spent.

Eric Rosenberg:

That’s great. Thank you again so much. If anyone wants to check out your podcast or learn more about you, where should they go?

Jen Smith:

See, you can listen to Frugal Friends wherever you’re listening to this. We release every Tuesday and Friday. Then we also have a book, Buy What You Love Without Going Broke. It’s out January 7th, and you can get it wherever books are sold. We love bookshop.org, because it supports local bookstores, but it’s also available Amazon, Target, Barnes and Noble, all those.

Eric Rosenberg:

Awesome. I’ll be sure every time I walk through the book section, and I see a book by someone I know, I get so excited. I’m excited to see your name on the shelf soon. Thank you so much for joining us today, Jen.

Jen Smith:

Thanks, Eric.

Eric Rosenberg:

Wow, as always, that one was so much fun. Thank you so much for sticking with us till the end. Jen was a wealth of knowledge. Be sure to check out her podcast. Remember, as a Payactiv member, if you have the Payactiv app1 on your phone, whether that’s an Android or an iPhone, you have access to tons of free financial wellness tools, including ones to help you manage your budget and know if you are safe to spend more. We never want to see you pay any overdraft fees, and we’d love to see you get out of credit card debt, and avoid payday loans to minimize what you’re spending on interest.

So, if you’re not already, head to Payactiv, and install those apps, and get started today. If you are listening to this right before New Year’s, happy New Year. If you’re listening to it any other time, there’s never a bad time to get started improving your budget and financial habits. Now until next time, keep living the life you’ve earned.

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