Episode Transcript
[00:00:00] Speaker A: Well, the cost of living these days is high, as you probably know, just about every time you step into the aisle of the grocery store or pull up to a gas pump these days.
But it's right now in the middle of America Saves week. And so what we're going to talk about today is how in the world you can actually prioritize saving when things are so expensive out there. And joining me now to talk more about that is Shikha Narula, who is the head of Consumer Deposit Products Transformation and Rewards at bank of America. Shikha, thanks so much. Nice to talk to you again.
[00:00:33] Speaker B: Nice to talk to you again, Matt.
[00:00:35] Speaker A: It really is kind of a tough thing for a lot of folks, I think, to sort of wrap their head around these days is like, well, you know, everything is so expensive. I feel like as soon as the money comes in, it's got to go right back out the door.
I know you all do, you know, surveys and ask folks kind of how they're feeling, get the, get the temperature of, of things as far as saving and spending go on a pretty regular basis here. What are the latest numbers show, first of all about are feeling right now and kind of what they're prioritizing in their financial lives.
[00:01:09] Speaker B: Yeah. So according to our bank of America data, 52% of people are listing savings as their top priority, yet 72% expect inflation or the high cost of living will impact their financing. So as consumers struggle with that, what I would say is automating your savings can help. There are tools that do the work for you, whether it's bank of America's Keep the Change program that automatically rounds your recent debit purchases up to the nearest dollar and transfers the change from your checking to savings. I think that's a great way to automate your savings. I think the other thing you can do is set up recurring automatic transfers from your checking to your savings account so the money moves before you have a chance to spend it. So, you know, there are ways consumers can help themselves by paying themselves first automatically.
[00:02:01] Speaker A: Yeah, I love that, you know, automating things is so helpful. I know in my everyday life as well. Just if I don't, if I don't see it happen, I don't have to think about it happening. It just kind of happens in the background. It's so, so helpful. And you know, I mean, even if, you know, people are, are struggling today to, you know, just with high cost of living and inflation and, and all of that, they may think that, well, if I, if I prioritize saving, if I cut back on my spending. If I do all of these things, it means that I can't have any fun in life, I can't treat myself every once in a while. How can people sort of strike that balance?
[00:02:41] Speaker B: Yeah, I think it's about cutting back, not completely cutting out. So nearly half of Americans say they tend to prioritize spending on day to day treats and experiences over saving for the future, according to our bank of America data. So the desire for those small joys isn't going away and that's okay. So instead of cutting them entirely, scale them back intentionally.
Maybe opt for a lower cost version of something that you love. Or maybe it's a latte out on Fridays instead of daily.
The other thing I would say is define what brings you joy. So start by reviewing your past spending to identify your joy spending categories. It could be maybe a specific hobby. It could be dinner with loved ones.
And then use the 50, 30, 20 budgeting framework. So 50% of your after tax income to cover your needs like rent. Put away 30% towards things that you want, including those joy spending categories. The dinner out with loved ones maybe.
And then 20% needs to be directed towards spending. So as you're consciously directing that 30% towards things that bring you happiness, I think that will help balance things out with long term savings goals.
[00:03:57] Speaker A: Yeah, prioritizing there. And you know, I mean, when people are thinking about saving, you know, maybe they're thinking about saving for, you know, a big purchase or a big event or something like that, or maybe they're thinking about just building up an emergency fund over a period of time. But if they're saving for something big like that, maybe, you know, emergency fund, which I know that a lot of folks say about six months of expenses is what should go into an emergency fund. So that's, that's a big goal to have, but also something like maybe buying a home or saving up for a wedding or whatever. How can they break those things down into maybe smaller, more achievable steps so it doesn't seem so daunting?
[00:04:38] Speaker B: Yeah, I think savings for those bigger moments or those bigger goals, it can feel a lot more manageable if you break it into smaller steps. So maybe split it, maybe it's that down payment towards your home or that emergency fund, maybe split it out in five or six chunks and then set milestones for each of those chunks. And as you hit those milestones, make it a point to celebrate. So that's one way you can try and stay on track.
Give yourself a deadline, set clear deadlines for both those milestones as well as the overall goals. And maybe try and link each of these goals to a dedicated savings account. So that way you're keeping money separate from your checking and that removes this temptation of spending it. And hopefully then you start to see that progress that you're making towards each one of those smaller chunks and then make small adjustments which can add up along the way. So free update extra cash for your goals by taking a look at some of the smaller, easier to overlook expenses. Like maybe you have subscriptions that you don't use anymore or maybe you're using rideshare for short distances. Maybe if you were to scale back on some of that, it can help you redirect maybe even a small, modest amount each month towards those larger goals and see yourself make progress.
[00:05:58] Speaker A: Yeah, those little things definitely do add up over time, that is for sure. Well, just about time to wrap things up here, Shikha, but anything else you wanted to add? Maybe where folks can learn more or get more information about America Saves Week or some some tips there where, you know, they can just learn more about what we've been talking about.
[00:06:17] Speaker B: Absolutely. I think there's a number of digital tools that are out there. Bank of America customers can access Life Plan, which is a great way for them to, you know, look at the personalized financial goals and track progress as part of America Saves Week. There's a lot of information that's out there. Consumers can go to americasavesweek.org and learn more about America Saves Week. Listeners can also visit bettermoneyhabits.com to get more financial guidance and savings advice that we discussed today.
So those are some of the resources that I would point listeners to.
[00:06:53] Speaker A: Very good. Shikha Narula is the head of Consumer deposit Products Transformation and Rewards at bank of America. Shikha, thanks once again. Really do appreciate your time.
[00:07:03] Speaker B: Absolutely. Thank you for having me.
