Ep 97: Protecting Yourself Against the Endless Ways to Spend Money

Have you ever thought about how the various ways to spend money have changed over the decades? 

Did you know that the first credit card was actually used in 1958? Yet the plastic cards that we carry around feel like they might be ancient? 

And did you ever think about going back to the checkbook, and actually being the person that balances the checkbook? 

Some of you might not even know what a checkbook is!

Well, there are so many different ways of how payments that we make in various different capacities have changed over the years. And today, we're going to dive into what's new, why we use it, how we use it, when to use it, and what specific security things might we want to consider before entering into any specific spaces. 

So please, share this episode with a friend, and please give us a rating on your favorite podcast provider! That's what keeps the show growing. Thank you! Now, let's get to work!

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Securities offered through LPL Financial, a member of FINRA/SIPC. Advisory services offered through Advisors' Pride, a SEC registered investment advisor. LPL Financial, Advisors' Pride, Forethought Planning and the guests of Thrive For[e]ward podcast are separate and unaffiliated parties. The views expressed here are those of the participants, and not those of Forethought Planning, Advisor's Pride, or LPL financial. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. LPL Financial and Forethought Planning do not offer legal services.   

Transcript

Well, our friends, welcome to this episode of The Thrive Forward podcast.

Have you ever thought about how money and how we spend it has

changed over the decades? Did you know that the first credit card was actually used in 1958? Yet the plastic cards that we carry around kind of feel like they might be ancient? And did we ever think about going back to the checkbook, and actually being the person that balances the checkbook with your register, and writing a check? Some of you might even go? What is the cheque? Shannon? I don't even have that. Well, there are so many different ways of how payments that we make in various different capacities have changed over the years. And today, we're gonna dive into what's new, why do we use it? How do we use it, and when to use it, and what specific security things might we want to consider before entering into any specific spaces. So if you are curious, tune into today's topic, share it with a friend, share it on social, we would love for you to tag us. And of course, this is our way of being able to get you the education around your wealth in small tidbit, bye.

Bye. All right, friends. So on today's episode, like I mentioned, we are going to break down payments, why is this even something we should be considering when it comes to our financial lives? Well, so much of our behaviors lie when we reach the checkout, when we go to our carts on our computers, when we place some type of order. So much of our financial success actually relies on some of the things that we tend to want to do when we're checking out or when we're buying something. And so why not think about the ways in which we buy them, because sometimes, our buying behaviors are made easier by the accessibility of auto payments on our phone, autofills on our computer, and going to an ATM now and just being able to scan a QR code that's on your phone versus having to use your actual debit card. And so much of that of that has changed over the decades. In fact, in the 19, in 1958 is when the first credit card was established our modern day idea of a credit card. And then just 20 years later, 1978 There was the debit card. And granted, we live in a society, maybe those weren't adapted right away. And some of the payment ways that we are making payments right now aren't widely accepted in the current space. But fast forward 1015 years, we don't know, maybe these will be the ways that we make payments. That being said, so much of them are wrapped around technology. So what are the things that we should be considering? Before we actually fill in our credit card? So as we expand, and especially thinking about this, even as business owners, for those of you out there that own your own business? How do you accept payment, thinking about some of these topics as well. So when we swipe, it's a really easy behavior to just go to the checkout line and swipe. In fact, if we started to talk about how that plays into behavioral finance, it might be a little too easy for us to make those purchases, right. And when we think about credit cards, those elements allow for us to have a level of financial responsibility or sometimes in excess responsibility that we've given that maybe we don't necessarily know how to handle. What does that mean? Well, having a healthy behavior with the credit that you've been given means paying it back in a timely fashion, not just leaving it out there until you get that statement where you have to pay it or holding off until the credit card companies start to call. We want to make sure that we're having a healthy relationship with what we're doing. Now having healthy conversations with the people that we manage our money with, whether that be your partner in your household, your financial planner, your children, even being able to set healthy boundaries. Now, that being said, that credit card transition from moving us from writing a check and having that old school quote unquote, way of managing our money where some people would sit down every week and balance your checkbook and you wanted to get it to that actual cent so that you knew that you are on par with where you're supposed to be in your checking account. The reality is, I don't know too many people that still do that. And having worked in a bank, I do remember people coming in and saying Shannon, I'm off 10 cents, how do I get that 10 cents? Where did it go? And now, we use some applications like mint or QuickBooks or Quicken or YNAB or all of these different resources to quote unquote manage our finances or categorize, but in the reality Are we? are we managing them? Or are we allowing for things to just be easy for us so easy that we just think it's going to be there, the element is, so many things are becoming a click away for us. Rather than having to pull that debit card or credit card out of our pocket, we now can simply just use our phones for payment. And when we look at where the money is coming from, we can get even more complex before, of course, when we were in the old school ages of being able to just write a cheque? Well, it came from money that we already have, right? It came from our checking account, it was money that was sitting there. And then as we evolved to use credit cards, which our society has become very dependent on credit, not that credit is bad, I'm not here to tell you that it is here to tell you to have a healthy relationship with it. That was extra money that we of course, had to pay back. But it was an advance of sorts, right? In advance for us to be able to have the things that we wanted and pay it back in a timely fashion. And now we even have the ability to use some of our investment accounts, maybe even digital currency, a what we call, have you ever seen those little square boxes they've become even more popular with, with COVID. When it comes to menus, but they're called QR codes, you simply open the camera on your phone, and you take a picture. Now people are accepting payments through that, oh, and have you ever been out with your friends, and all of a sudden, they're like, hey, I'll pick up the tab. You guys can just Venmo or cash app, or Zell all of these different ways for us to be able to send electronic money as somebody who has been in the banking industry for the majority of my career, and then transitioning into wealth management. And consequently, financial planning and forethought. For a client to be able to transfer money to another client without having to go through hoops has been something that has just blown my absolute brains out. And it's honestly really great. But we have to make sure that we're practicing some levels of safety and security when we're transitioning into these other ways of alternate payments. And although we want to anticipate that everyone has our best interest out there, it isn't necessarily the case. So what am I saying, as we see a progression towards digital, in fact, so many elements of digital processing, when you go to the checkout now and they accept Apple Pay, and you can just scan your phone. I mean, I've been out with girlfriends before I still use a card, I swiped my card, but I have girlfriends who you know, their phone, everything's in there. What happens to your phone, if you lose your phone? And so there's an element of safety and security, we want to make sure that we have precautions around if something like that happens. Do you remember what you have loaded into your phone? Do you have a way of canceling it and notifying right away? How are we protecting ourselves against fraud? Fraud isn't just that element of? Oh, I hope it doesn't happen to me we live in a element today where it will. And it's just a matter of when and how can you protect yourself? We are just in this day and age where information is so easily accessible? How are we taking ownership of that protection of things? And so if you are using a cardless aspect to access your ATM, are you making sure that nobody else has the codes available to you? Are you making sure that nobody can see anything when you're out? And about being able to process those financial transactions when you're transferring money to a friend for happy hour to their Venmo account? Are you making sure that you're sending it to the right person, then, you know, as we also consider the sources of where money are coming from how responsible are we going to be to be able to pay that back. So credit is very easily accessible now, but now we're also starting to see virtual currencies or digital currencies also accessible for us to be using for purchasing. And many companies are coming out with the ability to accept some of those as well. So we want to establish what is that secure mechanism? There aren't a lot of securities with with things that come new. And so how do you make sure that you protect yourself by testing what blockchains might be safe enough for you to pursue? What elements of security when it comes to digital organization and security are accessible to you so that you don't lose any data or any funds that you weren't necessarily planning on doing? All right friends, we are pausing in our car versation around payments and payment methods and healthy relationships with cash flow to bring to you, our June nonprofit. So every month at forethought planning, we take a nonprofit and we want to be able to tell you their story to help drive whether or not you find it important to get involved with their mission by volunteering by donating by getting involved by sharing their message whatever pulls at your heartstrings. In the month of June, we are shining light on our local organization, girls take action. Girls take action has a mission. And that is to motivate, empower, and educate girls about the importance of understanding their personal power, achieving academically actualizing their personal leadership, creating positive change in their local communities, and developing a career plan that includes post secondary education. Now, as of today, girl's take action has impacted over 3000 middle school and high school girls throughout the state of Minnesota, Michigan and Georgia, as well as gone internationally to Guatemala, Kenya, and Liberia. Girls in their program are are twice as likely to attend post secondary education, with 95% graduating from high school on time, and 75% of them attending college. If you would like to find out more about girls take action, we will be leaving a link in the show notes as well as on our blog on our website. And you can visit them at GTA action.org. All right, now back to our episode. Another popular way of spending right now is that element of being able to pay part of it now and break it up into equal payments across the bases. Maybe you're waiting for a payday and you really want this thing and so you're going to separate those payments out in order to score that deal.

I'm sure many of you are thinking to yourself, yep, Shannon, I've done that. In fact, I sat with a client once and she was like by the fact that you don't know what this is, is meaning that you don't have the same spending behavior as me might be true. That being said, Friends, we want to be able to have a healthy relationship with whatever spending we are doing. So whether it be a digital wallet, a QR code, a credit card, or good old fashioned check, how are we making sure that we're doing it in a manner that makes the most amount of sense for short term and long term financial lives. So when you're trying to purchase something that you feel like you might need right away? And you only way for you to do that is to split it into multiple payments? Is that what you really need? Is it something that you really need right now? Is it a matter of life and death? Is it a actual need in your life? Or is it something that could wait for you and allow you to save up so that you aren't spreading that out and creating, even if it's interest free creating a behavior of I have to have in order to have I have to do this, instead of maybe setting that boundary for yourself and saying you know what, I have the ability to wait for something. We live in a culture that we haven't had the elements of things that we want raise in price very much in the last 10 to 12, maybe even 15 years, I'm gonna pick on my generation for a little bit, my dear friend, friends in the millennial generation, we haven't had to have the prices of goods that we want go up that drastically in our adult life hood. That being said, many on the early end of the Gen X aspect of things haven't either. And so it's not just a millennial thing. It's probably a 30s to like 4550 year olds, but haven't necessarily experienced in your adulthood, the rise in inflation or the rising cost of goods we've had, we've also been geared to think that we need to have everything immediately, that in order to make sure that the outside package looks as though we can do whatever it is that we need to do. Well, we buy the thing that we need to look like on the outside, whether it be the house, the car, the clothes, the face, the body, whatever it might be, we want to perceive to the outside world that we can do that. And sometimes we do that at all costs of our financial life. And although payment structures may change and how those payments are made, the reality is the things But don't change our behaviors, if we don't deal with them from a healthy space and understanding what we need in what is going to serve us. So it doesn't necessarily matter where you're swiping. But what matters is the reason and the feeling and the belief behind the thing that you are purchasing. Is it something that is going to expand your life in a space that is going to be healthy for your financial relationship now and in the future? Do you need that thing? So many times we have left lived in this life of immediate gratification? What if we just sat back and waited for a little while before we got that thing? Or did that thing or had that experience,

but that experience still be there for us? Now, look, I realized that many of us are also in a status of loss or grief or living in the moment and wanting. That's why I truly believe emotions, and behaviors touch every aspect of our lives. So while at the beginning of this podcast, we said, we've talked about how payments are made. Yes, of course, there's strategic ways to think about some of those things. But at the end of the day, if we don't change some of our behaviors, it doesn't matter if we write a check, or we swipe a credit card, or we're purchasing with digital currency or a QR code, or eventually, the reality is the behaviors that stand behind us. And so my friends, I'd ask you to think about what healthy relationships are you playing with yourself? are you exposing yourself to too many areas, with doing too many things, having too many cards, not paying them off, not having a good relationship with them. Now, there are proper great ways of having awesome relationships with credit. For instance, you can swipe it, pay it off every week as if you would the have the cash in your account, like a debit card, and then you have the ability to hopefully participate in the cashback program, or points program to be able to go on said trip that you want to be able to do so maximizing our availability, and making sure we have the things that we want in the future, but maybe pausing before we get to that want or need fulfillment, and deciding how is it best for me now in the present? And how will it affect me in the future? So as you go forward, starting to think about the evolving aspects of how you spend money and how maybe that's changed over your lifespan. Think about a couple of different things. So as we leave this conversation today, I want you to think about this, how do I make purchases right now? And in those purchases, how am I having a healthy relationship with my money? And as you have a healthy relationship with your money, I want you to think if you're being the most strategic and what does that mean? Being the most strategic means am I maximizing rewards that I could be receiving? Am I Am I getting cashback that I am able to get? am I allowing myself a safety net and not making sure that I'm spending more than what is coming in? So ask you those three questions. As I encourage always sit down, write a journal out, have a conversation if you have a partner, have that partner do the same thing. The more you communicate about your behaviors, the more you will build a solid foundation when it comes to your wealth. And as I always say My dear friends, you are worthy of wealth. The views expressed here are those of the participants and not those aforethought planning advisors, guide or LPL. Financial all investing involves risk including loss of principal no strategy assures success or protects against loss securities are offered through LPL Financial and member of FINRA and SIPC advisory services offered through advisors pride and SEC registered investment advisor LPL Financial Advisors pride forethought planning and the guests of the Thrive Forward podcast are separate and unaffiliated parties