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Financial Wisdom from Saturday Night Live
Today we are going to start in a more lighthearted way. I used to love Saturday Night Live growing up. Especially the cast of the 90’s. I want to share a quick sketch from when Steve Martin hosted the show that I think gets across an important point. The sketch focuses on a couple worrying about their credit card debt when an author comes up to them with advice. You hear the audience roaring with laughter when the author of the book states something so obvious it seems revolutionary. Don’t buy stuff you cannot afford. This is actually a timeless truth, and abiding by it will save you money and stress. Steve Martin asks the question in the sketch “…and where would I get this saved money” as though someone were looking for a unicorn. I’m going to give you some tips today on how to increase savings and how to avoid buying things you can’t afford inspired by Saturday Night Live:
Set up an auto draft to your savings account monthly. This is the single most powerful way to increase your savings. If you wait until the end of the month to save what is leftover, there is often very little there. But if you treat your savings like a payment yourself, you’ll find a way to make it work with what is leftover. You may reply, “but I don’t have any room on a monthly basis to do this, I need every penny.” If that is truly the case, as soon as you get one of your loans paid off, convert that payment to an auto draft to your savings account to allow you to borrow less the next time you need something, or maybe even allow you to pay cash. Paying yourself is better than paying the bank.
Differentiate between wants and needs. Many times we think we simply must have something, when it’s really just a want. Just because people around us have certain things, that does not mean it is something we must have. Make sure you have money for needs – food, shelter, transportation and medical care. Even in the first three of these need categories we often spend way more than is necessary. When it comes to food, we may eat out too often when we could spend a third of the cost by planning ahead and cooking at home. When it comes to shelter, we often buy a house far bigger than our needs. And when it comes to transportation, the trucks just seem to get bigger and fancier don’t they? There is nothing wrong with having a big fancy truck – as long as you can afford it. My first house payment was $506.33 when I was 23 years old. There are lots of people with car and truck payments that cost more than that. You might reply, “Chad, you don’t know how much vehicles cost these days.” While it is true that the cost of vehicles has gone up, you can still find reliable vehicles at reasonable prices. Just today, a client was in the bank getting a cashier’s check to go and purchase a really solid family vehicle for $13,000. For this client, not having a payment was a priority, and he prepared in advance by saving money to make it happen. We really don’t have to have the latest and greatest.
Get rid of your credit cards. I know the first thing you may reply is, “but I love getting airline points or cash back on my credit cards.” Okay, if you have paid off your credit card every month without fail, I might be able to concede it is okay for you to have a credit card. But the majority of listeners will have carried some kind of credit card balance at some point in their financial lives. Credit cards allow you to cheat. Because you don’t have to have the money in the bank before purchasing something, it’s easy to spend more than you have with a credit card. Remember in the sketch that Steve Martin asks the question, “…so do I buy first and then figure out how to pay for it?” No. Once you have a credit card balance, it’s hard to dig back out because other than the minimum payment, there is no amortization schedule. It’s simply too easy to only make that minimum payment. So, if you are carrying a balance on your credit card, pay it off. If you can’t pay it off, that is a confirmation that you are spending more than you are making, and that something has to change. Credit cards themselves are not evil, but there are very few people who can consistently show the discipline of using them well. Consider switching to a debit card so you can see the money leave as you spend it.
So these are three tips that if you do them, I’m certain you’ll have more peace of mind and keep more money in your pocket. If you don’t you are simply never going to be able to accomplish all that is possible for you financially.
You know, rewards accounts for debit card usage do exist. At MBC/Foundation Bank, we actually have one of these that rewards you for using your debit card a certain number of times each month with a 5.12% Annual Percentage Yield on the first $15,000 in the account. It also has a host of benefits attached like cell phone protection, roadside assistance, discounts at local merchants, and credit monitoring. Terms and Conditions apply, so find out more about this account by visiting foundationbank.org/accounts or by talking to your local branch. If you’ve found this podcast helpful, we hope you’ll subscribe to it in your favorite podcast app and share it on social media. Until our next episode, God bless you.
-President Chad P. Wilson, CFP
Today’s episode of “Money Matters” was written and recorded by President Chad P. Wilson of McKenzie Banking Company / Foundation Bank on October 10, 2023. This episode does not constitute financial advice. Please consult a financial professional to discuss your specific needs. Any rates mentioned are subject to change and are accurate as of the recording date. MBC/Foundation Bank is an Equal Housing Lender, Member FDIC.