Podcast 113: Shifting Your Mindset to Build Stronger Financial Habits

Feeling stuck or overwhelmed by your finances? You’re not alone—and you’re not out of options. In this episode of Ask Gregory, Gregory Ricks helps you reconnect with your financial goals by making them personal, achievable, and even enjoyable. From shifting your mindset about emergency funds (hello, “reserve accounts”) to choosing the best debt payoff strategy, Gregory lays out realistic, motivating steps anyone can take and ways to make financial goal setting fun! Whether you’re ready to start saving, stop stressing over credit cards, or just want to feel more in control, this episode gives you the motivation and tools to make it happen.

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Transcript

Gregory Ricks: 0:00

Hey, welcome. I'm your host, Gregory Ricks, a financial advisor here to answer your questions and help you win with your money. So let's, let's talk about heading into 2025. Many people are setting new year's resolutions, making it the perfect time to add a financial goal to your list. But saving money and getting your finances back on track isn't easy. I'm gonna help you with it. So one of the common questions, why is sticking to a financial goal in the new year so difficult for many of us? Well, here's a couple stats for you from

Bankrate: 0:51

27% of adults in the United States have no emergency savings—the highest percentage since 2020. And also, inflation is still impacting Americans' ability to save—63% say it is causing them to save less money than they had hoped. So let's, let's think about that for a moment. Emergency savings is a problem for people, and they're saving less from that. But one thing that's important regarding the saving less—well, let's make sure we keep saving because I'll -- don't get depressed over that. It's more of an ebb and flow. And I'll tell you, over the years, I've had that happen to me over my adult life as well, where some years I saved more, some years I've saved less. There are some years I had to stop saving—it just went the other way for me. Last year was one of my better years for savings, and there's always going to be an ebb and flow on that. So don't let that depress you. Don't let you…uh, get in the way that you give up hope or quit. And that's one reason to keep a handle on that. Another thing regarding emergency accounts I think is important to think about there and where some people struggle conceptually with having an emergency account—and I was spending some thinking time on that one subject this week—and what I came up with is maybe we should change how we look at emergency accounts, because some people think about, "Well, why I can't use that money, I can't touch that money." I think emergency money should have an ebb and flow, meaning you might need it, and it might not be for an emergency, but you might need some of that money, and then you're going to put it back later. I want to change the thinking, and I'm going to change my terminology—and I've even got it in my notes right here—the two words: reserve account. I want you to start thinking about emergency money as a reserve account. And it's not our IRA, it's not our Roth, it's not our investment account. It's a reserve account that may have some ebb and flow to where we need money, but we want to keep building it up. And at some points, a reserve account can get pretty big because I'm thinking of doing something with the money. But it is a part of life, and I don't want you to—and I think this can help people because it's changing the thinking. It doesn't have to be just for emergencies, but it has

to have money. 3: 3:53

55 When you have an emergency, you have some there, but it also might be for a future purchase, and it can be a moving account value that helps you. So start thinking of,"Okay, I need to build me a reserve account so I have money on hand when I need it for various things." And it doesn't

have to be an emergency. 4: 4:12

16 Next question would be: What financial goals should we be aiming for? One of my thoughts on that is—think about what you specifically want to save for. Because one way to simplify it is, what, what are we wanting to save for? Is it for that reserve fund? Is it for retirement? Or could it be for paying down debt? Some of you, it might work for you that you could create separate accounts for those things and handle it that way. Some people are like, "Oh, that's way too much work." If you've got your reserve fund and adequate amount, but then you could shift towards maybe paying down debt or increasing or starting to put money away for retirement. Another thought here is that, "Well Gregory, I don't have either." This is a common question that's brought

up: 5:19

What do I do if I have neither? I think you probably should work on both at the same time. I would start with the reserve fund and set a goal, at least get it to that, then start taking and putting some money towards retirement. Now, with that said, if you're working for an employer and they match you money—oh my gosh—you can't put that off. It's kind of like, okay, you got to do these two things at once. You got to start adding to your reserve fund every month. But you got to take advantage of that company match. If you put in 4% and they match that 100%—that's free money. You're passing that up. You don't get that back. It's like missing out on compounding that has passed—that's behind you. You look back, say, "Oh, look at that compounding back there. Can I go back and get it?" No, you can't. It passed. Like time—that second that just passes—never coming back again. So let's, let's not let that

happen going forward. 6: 6:22

24 Last thought on that question

is: 6:26

Start small. Remember that something is better than nothing. Even if it's 1% or less than that, start doing something towards either your reserve fund, saving for retirement, or paying down debt. And eventually you could get up to a more healthy amount of contributions in the future—is that 10 to 15% when you get a raise, you get a promotion, or get things in line

like rid of debt. 7: 7:01

16 From that standpoint, number two, as far as one of our goals to think about in regard to getting rid

of debt: 7:16

Think of it a little bit differently. Let's not make it like, "Oh my gosh, I don't know if I can pay it all off this year." Whether it's $1,000 or you've got $30,000 in revolving debt, I would prefer you over time to shift to where if you charge something, you pay it off at the end of the month—then charging it—then pay it off next month. Kind of a pay-it-as-you-go system. I think life will be better, but first we've got to get there, and that is just a big ask. So one of the things to start with is to consider making it your goal to avoid adding to your credit card debt in 2025. You know, start with something small and accomplish that, and then you can turn it into something bigger. Credit card debt in the U.S. is $1.14 trillion dollars says the New York Fed. So let's not add to that. Think about that. So if we've got debt and it's one of our goals—whether it's to create a reserve fund, or increase that, pay off debt, or saving for retirement slash investing—if you're planning to attack debt, create a plan of attack for paying off any debt you already have by picking a strategy like the Avalanche Method. That's where you pay off the highest interest rate debt first, then roll that payment into the next highest. Now my favorite—and a method I used years ago to transform this—so I'm speaking from the heart. I did this. I used to carry a lot of revolving debt, lived off of it. Kind of early days of business. I had to carry some debt, but it was one point I said, "I've got to make this go away." So I went about using the Snowball Method, where you tackle your debt from the lowest balance to the highest balance. So you pay off that lowest one, and then you take what you were paying on that and apply it to the next and next. And if you came down to two accounts at the end—and I had this decision at the end—I’ve got two left, and they were pretty much equal. Well, then I went after the higher interest rate on the last two that I had left. And then by paying those off, I evolved to paying as I charge. I do use credit cards. I don't have a problem with it. I don't like debit cards. I believe debit cards expose you to risk, because somebody gets your card or access to—they have access to your account. Where if somebody gets my credit card number and buys something with it—well that's going to be on the bank or the credit card company. And they are looking out for that. I was on a trip—it was inconveniencing me because I had to change out a credit card. Somebody had got my number, attempted to buy something out on the East Coast. And they caught it right away, and they wanted—they had a discussion with the credit card company. I said, "Well, that's kind of inconvenient." They said, "Well, we could do it where you can still use it, but you're not going to be able to do online stuff or anything." So it worked out, got it changed out and moved forward, and it wasn't somebody getting money out of my personal account. So it’s a benefit there to managing it that way. Next thought—and once again, I wanted to make this easy for you so you know—and I’ve got a lot of resources for you to increase financial literacy. But here’s the problem

we all have: 11:38

from an early age, we’re taught it’s taboo to talk about finances, which in part is why nearly 43% of Americans can’t pass a high school level financial literacy test. That’s according to the Financial Educators Council. Growing up, my family didn’t talk about it. People just didn’t talk about money. And in a lot of cases, they still don’t. And I think it’s wrong. Even if you’re struggling—talking about not doing as well—talk about it. And that’s why I think there should be conversations with family members that are moving towards retirement. How’s that working for you? What are your plans for retirement? Or how’s retirement going? Tell me about you turning on Social Security—what did that look like? How’d you make that decision? Have these conversations and learn from it. And you—you need to check in on them and see how they’re doing. If they’re going to run out of money 10 years out or somewhere down the line, when would you like to know? Today would be a good day to have an understanding of that. But a lot of people don’t read and spend time on that. And I go back to like, just get a small bite. How about one—and I even make it simple. I was going to say one article a week—well, read something once a month. Listen to a podcast. And I’m biased towards my content and stuff and radio show, but if you’ve just stumbled across this today, just tune back in from time to time. But go to the website, grab an article, grab a book—there’s a lot. Let’s see, I’m going to hold up here in front of the screen—how about my book? I’ll make this easy for us. Like, you know, I don’t want to spend $20,$30 on a book. I don’t know if I’ll read it or whatever. I tell you what—I’m going to make this

easy for you. Email us: 13:51

info@gregoryricks.com, or call

the office: 13:56

504-832-9200, we’ll send you the book, “Retirement

Deserves a Helpful Hand: 14:01

A Guide to the Destination You Deserve.” Ask if you’d like a signed one by me—put that in the ask as well to make sure that happens for you. But my team knows I’m doing this today—they will get you the book out there. So just get some thinking time, a little bit of reading time—not a big ask—but just kind of say, you know, 15 minutes or 10 minutes a week from that. But when it comes to building your financial literacy, start somewhere. Even if it’s a small investment of time—whether it’s through a book, listening to a podcast. What else? Here’s another question I’m being asked: What else can we do to ensure we stick to our financial resolutions? And this is kind of to keep it going. And what we as humans need—we need some motivation. And we need it to be fun. We don’t need it to be stressful, or feel like we’re being punished, or like, “Oh my God, I just don’t want to”—like doing a budget—“I can’t do that every month.” Here’s what I

like: 15:16

you can jot down some notes that you can see. Hang it on a mirror or something—like some goals. Don’t make it too complicated or long. Make it simple. Something that’s easy to start with. But also do this to make it fun—if you reach these goals, what are you going to do to reward yourself? A trip, or a happier life, less stress—create a poster board with some of these goals written in along with some pictures that make that fun for you, if that helps you reach your goal there. Because what we want to do is make it fun. Another thing you can do is choose an accountability partner. You might have a friend, family member, spouse—y’all work together and help each other on this. I’m biased—I think you should have a relationship with a financial advisor or financial professional that has your best interests in mind. But with that said, you need to work with somebody—have conversations with somebody—that understands this, that’s very versed in accomplishing financial goals and helping you on that path. Thanks so much for listening to Ask Gregory, where we answer your financial questions. You can find us anywhere a podcast can be found—and on YouTube and Facebook Live every Saturday from 10 to 1. Subscribe, leave a review, and tune in next time!

Disclosure: 16:55

Investment advisory products and services are made available through AE Wealth Management, LLC, a registered investment advisor. Insurance products are offered through the insurance business Gregory Ricks& Associates, Inc. AE Wealth Management does not offer insurance products. The insurance products offered by Gregory Ricks & Associates, Inc. are not subject to investment advisor requirements. Investing involves risk, including the potential loss of principal. Any references to protection, safety, or lifetime income generally refer to fixed insurance products, never securities or investments. Insurance guarantees are backed by the financial strength and claims of paying ability of the issuing carrier. This podcast is intended for informational purposes only. It is not intended to be used as a sole basis for financial decisions, nor should it be construed as advice designed to meet the particular needs of an individual situation. Gregory Ricks & Associates is not permitted to offer, and no statement made during the show shall constitute, tax or legal advice. Our firm is not affiliated with, nor endorsed by, the U.S. government or any other governmental agency. The information and opinions contained herein, provided by third parties, have been obtained by sources believed to be reliable, but their accuracy and completeness cannot be guaranteed by Gregory Ricks & Associates. Please remember that converting an employer plan account to a Roth IRA is a taxable event. An increase in taxable income from the Roth IRA conversion may have several consequences, including, but not limited to: a need for additional tax withholdings or estimated tax payments, the loss of certain tax deductions and credits, higher taxes on Social Security benefits, and higher Medicare premiums. Be sure to consult with a qualified tax advisor before making any decisions with your IRA. Neither AE Wealth Management or advisors providing investment advisory services through AE Wealth Management recommend or facilitate the buying or selling of cryptocurrencies. Third parties and guests of the show are not affiliated with, nor do their opinions reflect those of, Gregory Ricks & Associates or AE Wealth Management. AE Wealth Management provides services without regard to political affiliation, and the views of individual advisors do not necessarily reflect the views of AE Wealth Management. We are Ask Gregory.