5 Money Tips to get Financially Healthy in 2023 with Liz Frazier Peck, CFP®
Episode Description: Sometimes the financially "correct" thing will not create a healthy result. Author and CFP® Liz Frazier Peck explains how to make the right choices that align with both your financial and your life goals.
A little sneak peek into Liz Frazier Peck’s episode!
Highlights:
00:00 - Introduction
03:33 - Powerpoint presentation on broccoli
04:43 - Money tip #1
05:17 - Money tip #2
05:41 - "The rule of thumb is 20%."
06:43 - Money tip #3
08:44 - Money tip #4
10:25 - Money tip #5
12:34 - Money is a tool.
Liz’s Bio:
I am a fee-only financial planner, Forbes contributor and the author of 'Beyond Piggy Banks and Lemonade Stands: How to Teach Young Kids About Finance'. Additionally, I am the Executive Director of Education at Copper Banking. I am a financial literacy advocate, and especially focused on teaching kids the financial foundations at a young age.
Links to resources mentioned in the episode!
Follow Liz!
Instagram - lizfrazierpeck
Twitter -@lfrazierpeck
Website - lizfrazier.com
Follow Bobbi!
Instagram - @bobbirebell1
Twitter- @bobbirebell
LinkedIn- Bobbi Rebell
TikTok - @bobbirebell
Website- http://www.bobbirebell.com
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Full Transcript:
Liz Frazier Peck:
You know what? I'm really bad at maintenance. I am not detail-oriented when it comes to my cars. I want easy. I want to be able to take something in and get it fixed if it's broken. I do not want to have to have that on my plate to worry about. So I lease my cars. It's more expensive, it's not an asset, but it is worth it to me.
Bobbi Rebell:
You're listening to Money Tips for Financial Grownups with me, Certified Financial Planner, Bobbi Rebell, author of Launching Financial Grownups. Because you now what? Grownup life is really hard, but together we got this.
All right, my friends, we are going to be talking a lot about financial wellness this year. I have some big announcements coming in the next few weeks, but in the meantime I want to get the conversation started. One of my favorite quotes from this week's interview with Certified Financial Planner professional Liz Frazier Peck is when she says, "You have to mix what is financially correct and the financially best thing to do with what is best for you." Remember that.
As you heard at the top of the episode, she's talking about her decision to lease a car even though it was ultimately going to cost her more. It comes down to financial wellness and also our overall well-being.
Liz Frazier Peck is not only a Certified Financial Planner professional, she is the author of Beyond Piggy Banks and Lemonade Stands: How to Teach Young Kids About Finance. Liz is also working on a book series for kids that incorporates financial education in the stories. She'll explain more in our interview. Liz also writes a fantastic column for Forbes that we will link to in the show notes, and is the Executive Director of Education at Copper Banking. Here is Liz Frazier Peck.
Liz Frazier Peck, you are a financial grownup. Welcome to the podcast.
Liz Frazier Peck:
Thank you so much for having me. I'm so happy to be here.
Bobbi Rebell:
I hunted you down because I had to have you on this podcast because we share a very common interest, not just in being financial literacy advocates, but also in helping the older generations, not just parents, educate the younger generations, children of all ages. I tend to focus more on the teenage years, but you have a book on the younger years, Beyond Piggy Banks and Lemonade Stands: How to Teach Young Kids About Finance. And by the way, you're also hard at work at a new project. Tell us a little bit about those.
Liz Frazier Peck:
Yeah. These are such passion projects for me. The book that I wrote a couple years ago, Beyond Piggy Banks and Lemonade Stands, this stemmed from, I'm a CFP Financial Planner and I work with these very smart, successful adults and they all kind of say the same thing to me. They're like, "I'm not a money person." Or "I don't understand numbers or finance." And I'm like, "I think that finance is so overcomplicated and it doesn't need to be."
So the more I kind of started digging into that and learning more about that, I just realized that there's good reason why people are intimidated by finance because nobody teaches them. I mean, how would we learn to swim if nobody taught us how to swim? And so the more I started thinking about this, the more I thought, wow, we talk to our kids about everything. We talk to them about nutrition and stranger danger and safety and kindness and how to drive a car. So we teach them about all these important things and we do it in a way where we incorporate it throughout just everyday conversations. We're not doing a PowerPoint presentation on eating broccoli. We're incorporating it into just our daily conversations. And none of us are perfect health and nutrition gurus, but we're still teaching them.
And I thought why in the world are we not teaching our kids about money? Because once they hit 18, every step they take through their adulthood and retirement is directly affected by their ability to manage money. So it's student loans. It's getting your first job and negotiating that. It's having rent and traveling and family, everything.
And so now I'm taking that a step further and writing a kid series. It's a fictional kid series following a family of four siblings. But each book is going to just weave in financial education.
Bobbi Rebell:
I'm going to pivot quickly because I want to get to these amazing tips that you brought. You brought five money tips to get financially healthy, which is perfect as we start a new year. The first one sounds simple, but it's really something a lot of us tend to do the eye roll over and we need to stop that. And you have some ways that we can sort of rethink it and change our mindset about it. And it's keeping a budget. I tend to drop the ball on this one. I'm going to be honest with everyone.
Liz Frazier Peck:
Everybody does. My suggestion is go through your past couple months of expenses. Put it in basic buckets. They don't have to be how much I spent at this restaurant every week, but put it in shopping and travel and things like that. Keep it loose, don't put too much pressure on yourself, and just observe yourself. Don't look at it as I can only spend $500 in this category. You can do that at a certain point, but to start, just observe yourself, see where you're spending. And you're naturally going to start tightening up in places if you need to.
Bobbi Rebell:
Which brings us to your second healthy money tip, which has to do with savings, which is also something that can really be a stumbling block for many people. We have the best intentions, but somehow, I don't think anyone's ever said, "Darn, I saved too much this year."
Liz Frazier Peck:
That's funny. Yeah, I was actually just giving a quote for an article and they had asked how much people should be saving out of their paychecks. I said, "The rule of thumb is 20%." And that's what everybody says, which that's great. If you're saving 20%, fantastic. However, what I worry about is people hear the 20% number and they're like, "I can't save 20%." So they don't save anything. Or if they feel like if they can't save 20% and they're saving less, they're not doing a good job of saving, they're not doing it right, and there's less motivation to do it. Just save something.
Really, just save something because not only, and I'm sure a lot of your listeners know compound interest, the more that you can save early on, the more time that money has to earn money. And that's just a huge and very powerful savings tool. But also, you're building a habit of saving. So that's just as important, especially in the teenage and early twenties, thirties, just building that habit of saving something.
Bobbi Rebell:
And also remember that by savings we don't mean it has to sit in a savings account earning .01%. By savings, we mean we can also move it into investing so you do get the maximum return, whatever you define as the right investment for you. And I say that because we're going to our third healthy money tip, which has to do with an emergency fund, which is different from the savings/investing that we've been talking about.
Liz Frazier Peck:
Yeah, that's such a good point. I think that's probably my number one question that I get from my clients is what should I save for first? Or what should I do with my extra money? Should I pay off my mortgage? Should I invest it? Should I do this, should I do that? And I always say the same thing. The first thing that you need to have is an emergency fund.
People say three to six months of expenses is a healthy emergency fund. And that's great. And it's meant to cover expenses. If you lose a job, you want to be able to cover your expenses for three to six months. But that can vary. If you work in communications or sales for companies that are these healthy companies and you're living in a market or you work in kind of a generalized industry, you'll probably be able to get a job a little bit faster. So maybe you only need three months. If you have a very, very specific niche industry or niche position that there's only a couple of and it's going to be a little bit harder to get a new job, you want to have six-plus months of expenses.
But that's the most important thing because people get so stuck and really get into danger when something happens. Something as little as, not little, something like a water heater bursting or a car breaking down and you have to have $1,000 to fix it and you don't and have to go into credit card debt. And that just starts a really bad snowball.
Bobbi Rebell:
Yeah. But it's hard. So it's okay, if you don't have six months, get what you can at the very least, even if it starts with $1,000, a few hundred dollars, whatever it is. Going back to the pattern of savings, get into a habit of building up that emergency fund, and know that it's also okay to use it because I think sometimes people are so afraid to use it that it just sits there and they do do the credit card debt rather than dipping into the emergency fund, which is what it's there for.
All right, our fourth healthy money tip for the new year is perfect for the new year because it has to do with goals.
Liz Frazier Peck:
Yeah. That's the first thing I do with my clients when I meet with them is I say, after I get to know them, "Let's talk about your goals." And they're like, "Well, I want to retire in 20 years," and things like that. And I'm like, "Okay. So one, in retirement, you're not going to just turn 67 and then want to garden for the rest of your life. So let's think about what do you want to do in retirement?"
And so it's really important for any age, whether you're in your teens, twenties or sixties, think about what do you want to do in the next couple years that's going to require money. It might be traveling. It might be getting a new house. It could be anything, big or small. And then think about long-term. Long-term is five-plus years.
And so there's a couple reasons it's important to think about that. One, you can't reach your goals unless you determine what they are. You can't create a plan unless you know what those are. And it helps keep you motivated to see yourself getting closer and closer to your goals. That's one reason why you want to create goals.
But the second one is, going back to investing, when you invest money, you want to make sure that anything that you invest you don't need for the next couple years, because the market cycle's up and down. Typically, it's about a five-year cycle for you to go through the bear and the bull and recessions and expansions. So if you have something that you want to do in a couple years, so you want to buy a house and you have $20,000 for a down payment, you are going to want to keep that in cash. You do not want to invest anything you're going to want to take out for a couple years.
Bobbi Rebell:
On that note, it is important to have the right mindset. And that sort of brings us to the fifth and final of our healthy money tips. Talk to us about the framework that people should use when they think about their life and their money.
Liz Frazier Peck:
Yeah. What I always say, and this was a big part of my book, how to kind of create financially healthy kids, is we hear so much in the media about money. And some people it's everything. Some people it's a source of all evil. And really money is neutral. It's a tool. It's a tool to help you reach your goals.
And so my last piece of advice is when you're planning out your goals and your life, money and what's financially smart and right should definitely play a part of it, but also you want to think about what's important to you and what your values are and what your goals are. So an example I always use with my clients when they're like, "Well, I want to do this, but I just don't think it's the best thing for my money." And I'm like, "Okay, well, let's talk this through."
I have a car that I lease. Financially, that is not the smartest thing to do. Financially, and I was always taught growing up, my mom was a financial planner, never lease, always own. So I thought it was the worst thing you could do with your money. And then as an adult, I realized, you know what? I'm really bad at maintenance. I am not detail-oriented when it comes to my cars. I want easy. I want to be able to take something in and get it fixed if it's broken. I do not want to have to have that on my plate to worry about. So I lease my cars. It's more expensive, it's not an asset, but it is worth it to me.
So that's kind of my last piece of advice is you have to mix what is financially correct and the financially best thing to do with what's best for you.
Bobbi Rebell:
Sometimes it's better to spend money, more money and maybe don't make the best financial decision, but it's like you said, it's what works for you. And that's important. I know people get into these camps of buy versus rent when it comes to housing, and it's like, "But what's right for you?" And maybe you don't know where you want to live and it makes sense to rent temporarily even if it's much more expensive. There's so many different examples of that, even with how you structure your work life. Right?
Liz Frazier Peck:
Exactly. And that kind of goes also to mental and emotional health. Money is, like I said, it's a tool. It's a tool to help you live the life that you want to live. So you have to have very clear ideas of what you need and what you want in that life. So if money can help you do things that keep you emotionally and mentally healthy and secure, then that's a great use of your money.
Bobbi Rebell:
And you write, by the way, you write a fantastic column for Forbes. One of the recent columns was about financial wellness. What's your advice for people who feel financially anxious as we enter 2023?
Liz Frazier Peck:
I think that probably most people fall into that camp, especially right now with inflation and possible recessions and the holidays hangover and everything like that.
I think the best thing you can do for yourself is not avoid it, take a look. And that's why number one is a budget. That's why I always go back to that. Take a look at what you have and just give yourself one day and get organized. And I promise you that you will feel better about your finances. Look at how much you have saved, how much you owe, what you're bringing in, what's your spending, what you need this year, and start a plan. But you are only going to feel more anxious the more you avoid it. And honestly, the more that you avoid it, the worse it's going to get if you've got reason for financial anxiety.
Bobbi Rebell:
And it's hard to get motivated, but if you can do it yourself, do it yourself. If you can get a buddy or someone, another financial stakeholder, someone in your family that loves you to help you do that. And then, also, you know what, we're both certified financial planners, I'm going to throw it out there, get help. Get a professional to help you just do a kind of a self-audit of where you are with your spending, your investing, and your general progress towards the short and long-term goals, because sometimes having an outside perspective and accountability from someone who sees things, sees the numbers frankly, rather than the emotions, can be really helpful in the new year.
And on that note, I want to mention, in addition to being a children's book author and a Forbes columnist, you also have a real job with a very cool app that I think a lot of people will be interested. So tell us about Copper Banking.
Liz Frazier Peck:
Copper Banking is just such exciting work that I'm doing. So I am on the board of Copper Banking as the Director of Financial Education. And Copper Banking is a banking app meant for teens. It's a platform that provides education and tools and helps them save and they get a debit card. But just last week, they launched Copper Investing. And this is so exciting for me and so huge for I think financial literacy in general for the next generation because it allows them to in a safe and kind of structured way invest their money as teenagers.
And you and I know, and I think, again, most listeners know if you could start investing as a teenager, by the time you're 50, I mean the amount of time that you can grow your money. One, you're actually have the ability to build some serious wealth.
But two, the fact that teenagers, I mean it's just such a different world than when we grew up. I mean, the fact that teenagers can learn about investing firsthand in a safe and secure environment on Copper, they're going to be so much more comfortable with money and investing when they get older. And once they get real money, when they're earning real money through a real job as an adult, they're going to have this level of experience and comfort and have built this habit of investing. And that is, I mean, there's nobody who's over the age of 40, I'm aging myself, but there's nobody over the age of 40 who says, "I'm so glad I didn't start investing when I was a teenager." "I'm so glad I didn't buy Microsoft when I was 20."
Bobbi Rebell:
Yeah. And to your point about being a safe environment, I mean the default is they're going to be on Discord or Reddit and they're going to hear about some apps like Robinhood that, and I'm not saying Robinhood is all bad, but I am saying that there have been some problems there with the way that it's structured. You want to make sure that their investing experience is something that is safe and pointed towards teens, I guess. I'm kind of being careful with my words because it's not just about one app. But it is important that they be in a secure environment initially when they don't necessarily have the tools to understand when something feels like a game that they are playing with real money.
Liz Frazier Peck:
Yeah. And I'll tell you what drew me to Copper is that they are so focused on education. They're not just opening up an app for teens to start investing on because that's sexy and fun and exciting. They want teens to do it the right way. So every step of the way it's like, have you learned this? Have you learned this? You need to know diversification. You need to keep your money in for a long time. It's not just open to the world of investing. At some point it will be, but to start, teens are put in portfolios based on their risk. So they're doing it in the right way for teens, which is just really amazing.
Bobbi Rebell:
And very important. And it also can serve as a conversation starter for parents. All right, Liz, where can people be in touch with you and learn more about all the things that you do?
Liz Frazier Peck:
Well, they can visit my website lizfrazier.com, pretty easy. They also can find me on Forbes Media under Liz Frazier Peck. I write on there regularly. And on the Copper Banking app, I'm also frequently on there giving advice and tools and videos to help teens save and invest.
Bobbi Rebell:
Perfect. Thank you so much.
Liz Frazier Peck:
Thank you so much for having me. This was really fun.
Bobbi Rebell:
So my friends, what are you doing this year to improve your financial wellness? DM me on Instagram @bobbirebell1, that's bobbirebell1. Be on the look out, by the way, I need your help. There are a lot of imposter accounts out there. So if you see one that is not that, please report it to Instagram. Regardless, let me know on that correct Instagram account your tips for a financially healthy 2023.
I also want to thank so many of you who have picked up a copy of my book, Launching Financial Grownups. It means the world to me, and especially some of you said that you have given it as a gift to someone that you care about. Bonus points if you have written a review on Amazon. Many of you know that Amazon does have an algorithm. They're going to prioritize books with more reviews or even activity on the reviews, like when you say click the like that this review was helpful to you, that helps too. Any activity, it really helps me to spread the message of helping the next generation be financial grownups. So please write those reviews and thank you if you did.
I have some big announcements coming in the next few weeks, so if you are not already on my free newsletter, please jump on that link in the show notes, where you can find links, by the way, to everything relevant in this episode. You can see the show notes right on your podcast player usually. If not, go to my website, just by name, bobbirebell.com and click on the podcast tab. Also, I have a free full transcript of every episode there for you. Big thanks to author and CFP Liz Frazier Peck for helping us all be financial grownups.
Money Tips for Financial Grownups is a production of BRK Media, LLC. Editing and production by Steve Stewart. Guest coordination, content creation, social media support, and show notes by Ashley Wall. You can find the podcast show notes, which include links to resources mentioned in the show as well as show transcripts, by going to my website, bobbirebell.com. You can also find an incredible library of hundreds of previous episodes to help you on your journey as a financial grownup.
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