Episode Transcript
[00:00:00] Speaker A: Everything is more expensive these days, it seems like. And that includes back to school supplies. Yes, it is that time of year, you know, whether the kids are just now going back to school or they've been back for a couple of weeks, there are a lot of expenses for parents and grandparents as the students do go back a lot to keep up with here. Joining me now to talk more about that is Laura Monfered, who is consumer credit card executive at bank of America. Laura, thank you so much for being here. Really appreciate your time.
[00:00:30] Speaker B: No, thank you for having me.
[00:00:32] Speaker A: Well, yeah, I mean, you know, we've seen it with everything from gas prices to grocery prices. I guess, you know, it's back to school supplies are not exempt from this inflation. All these cost increases that we've been seeing for a while now.
What are some ways that people are sort of feeling that pain and what are some good, good strategies to navigate through it as the kids do go back to class?
[00:00:56] Speaker B: Yeah, there's a few things I would say. I'd say start by auditing your inventory you have at home. You probably have a lot of leftover notebooks, pens and pencils from the previous school year that you don't even remember you have. And then from there, create a list of necessities. That way you're not tempted to make a lot of impulse purchases when you get to the store. And then when you're at the store, be aware of the credit card that you're using. Make sure you're using one that aligns to how you're spending. So as an example, the bank of America customized cash rewards card gives cardholders 3% cash back in a category of their choice, and that includes online shopping. So that's a great back to school tool to earn more. And right now, new cardholders can earn a 6% cashback bonus in the category of their choice for the first year. So think about whether you want to earn cash back or points. All of that can be used to help offset costs throughout the school year. And then lastly, I'd say layer your discounts. Use digital coupons. Pair that with store offerings. Ask about student discounts. They're on tech apparel. You can also sign up for verification sites like Unidays or Student Beans and unlock even more savings. And I'd also say look at whether you want to go to secondhand or refurbished options. Not every item has to be brand new to get great quality. And there are a lot of verified refurbishment programs that offer course materials, technology, apparel, all at a fraction of retail prices. So be aware of how you're making those purchases so you can make smart decisions.
[00:02:15] Speaker A: Yeah, absolutely. I'm all about refurbishment, especially technology. I feel like there's a lot of just, just maybe not the most recent generation technology, but maybe one generation prior. That's still great that, you know, that might be refurbished out there. Just make sure it's a, it's quality work that's been done, of course, and, and kind of, you know, cross your T's and dot your I's there.
And that's especially important. You know, I feel like for teens and young adults, maybe as they're going to high school or even to college now, how are, you know, there are some ways I'm sure to learn there's a lot of, I guess, social interaction, for lack of a better term on my part that goes on where they want to be accepted in their social circles and all of those things. But how can parents and maybe grandparents, other guardians out there, sort of set limits and educate as that process takes place?
[00:03:11] Speaker B: Yeah, I think as teens start earning their own income, whether it's from a part time job or even their allowance, what you can do is teach them to divide it into three buckets. 50% for their needs, 30% for their wants and 20% for savings. And now that 30% for their wants can be their official fund budget and how they can think about how they want to spend that. And so it's a great way for them to start budgeting and thinking about the activities they want to do, how much is it going to cost and start setting spending limits for themselves so they can start to think about keeping their finances in check without sacrificing their social life. And what they can do is think about what are those trade offs? Do I want to go to the friend's birthday party or do I want to go to the concert and start to prioritize those decisions. The last thing I'd say is talk openly about what we're going to call loud budgeting. And that's encouraging teens to just be upfront with their friends about what they can and can't afford rather than trying to overspend to just keep up with everybody. Maybe suggest a cheaper hangout spot. Be honest about, I can't go to this outing because I don't have the money right now. They're going to get more understanding from their friends than they expect. And many of their friends might be feeling the same way. So just feeling comfortable about openly talking about these things becomes important.
[00:04:19] Speaker A: Yeah, it does not grow on trees. As the old saying goes and making sure that the kids understand that, I think is great. And you know, looking back on I think my own sort of financial journey, especially as a teen, when I got my first credit card, I just sort of signed up because I got an offer, I believe in the mail, and I was like, oh great, I'm going on vacation and I'm just going to spend this money like it's nothing.
But there are ways obviously to do it better than I did it as a teen.
And how do you do that as a parent to sort of teach kids to start that product like building credit responsibly. You talked about the budgeting piece and obviously, you know, building credit is part of that, but it's also part of their financial health for the future.
[00:05:07] Speaker B: Yeah, it is. And I think teaching what we're going to call the golden rules of credit at an early point in their life is important. So make sure your teen understands the fundamentals of credit, which are pay the bill in full and on time every month, keep your balance well below the credit limit, and you got to treat that credit card just like a debit card. You only spend what you have in the bank. You know, nowadays with credit debit, online purchases, making sure they understand that all of those different forms are all tied to real hard earned money and thinking about that becomes important.
The other thing you can do is start early by having them build their credit, but under your supervision.
So what you could do is you can add your teen to your existing credit card account as an authorized user. And so what that does is it's a nice safe way to help them start to build their credit score, they're going to start to establish a credit history before they even apply for their own credit card. And now when it comes time for them to apply for their first credit card, being there to help them figure out what's the right card that matches how they're spending, then don't just get one that has a lot of attractive perks that you're not going to even use. It might just be a no fee card that offers rewards on everyday expenses like gas, dining, groceries. And that might be a better fit for a teen or young adult than a premium travel card at a high annual fee. So having these conversations early and helping them understand how credit works is a critical first step.
[00:06:27] Speaker A: Yeah, and I think too that, you know, understanding that the credit card is not an emergency fund is an important thing as well. How do people, just as this last question as we wrap up here, how do folks start building that emergency fund or some sort of financial safety net for those unemployment, unexpected things that inevitably will happen.
[00:06:48] Speaker B: Yeah, I mean, it's always good to just set goals for yourself, make them small, make them achievable so that you're not deterred by it. We prepare for bad weather. We got to prepare for financial surprises that could be, you know, house repair, car repair, medical bill, and even for kids, teaching them how to think about that you need to sometimes replace that lost toy. You got to start savings. And a great way, a nice rule of thumb to do that is work towards a cushion of three to six months worth of living expenses.
And some ways to do that. And even for kids, as they grow into teens or young adults, getting them in the habit of just automatic saving tools. Things like set up automatic transfers from your checking account directly into a savings or what we're going to call your dedicated emergency fund. It can be $5, it can be $10. It feels small, but it adds up over time. And it's more about getting into the habit of building those savings. At bank of America, we have the Keep the Change program, which as an example, it automatically rounds up your debit card purchases to the nearest dollar and it transfers that change from your checking, your savings. So it's just about getting in the habit of just savings and making it automatic.
The last thing I'd say is find the hidden money.
Take a look at where you're spending. A lot of it is on monthly subscriptions or memberships that you're not even using. Look at the streaming platforms, gym fees, cancel the ones you're not using. You've just now found free cash. You haven't sacrificed anything in your lifestyle because you weren't using it anyway. And now those funds can go into an emergency fund. So it's all about starting small, setting those targets for yourself and slowly building that up.
[00:08:18] Speaker A: That's great. And one last thing here, Laura, anywhere that our listeners and viewers can go for more information.
[00:08:24] Speaker B: Yes, they can. Visit bettermoneyhabits.com for more savings advice.
[00:08:30] Speaker A: Perfection. Bettermoneyhabits.com will send folks in that direction. Laura Monfred is a consumer credit card executive at bank of America. Laura, thank you so much. Really appreciate the tips and appreciate your time very much.
[00:08:41] Speaker B: Thank you for having me.
