Smart Money Podcast — Stop Scrolling, Start Saving: Better Habits and Budgets for 2025
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Welcome to NerdWallet’s Smart Money podcast, where we answer your real-world money questions. In this episode:
Learn how to budget irregular income, set sustainable financial goals, and curb mindless spending for a better 2025.
How do you create a budget when you're paid in large, irregular chunks of income? What are practical ways to curb unnecessary spending and stick to financial goals? Hosts Sean Pyles and Sara Rathner discuss how to break down irregular income into manageable monthly budgets and how to cut out habits that hurt your finances, like mindless phone scrolling. They begin with a discussion of financial New Year’s resolutions, with tips and tricks on identifying habits to stop, making sustainable changes, and focusing on small, actionable goals. Then, personal finance expert Kim Palmer joins Sean and Sara to discuss budgeting with irregular income. They explore strategies for dividing large paychecks into monthly allocations, using tools like high-yield savings accounts, and the importance of tracking expenses.
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Have a money question? Text or call us at 901-730-6373. Or you can email us at [email protected]. To hear previous episodes, go to the podcast homepage.
Episode transcript
This transcript was generated from podcast audio by an AI tool.
Sean Pyles:
Sara, we've talked before about how we're not big on New Year's resolutions.
Sara Rathner:
No, we're not, and I don't think anybody else is either, because I actually recently read the stat that fewer than 10% of resolutions are actually successfully completed. Sorry, guys.
Sean Pyles:
That sounds about right.
Sara Rathner:
My one resolution would be I kind of want to be better about drinking more water this year, which feels like a measurable goal.
Sean Pyles:
Yeah, and also, as far as resolutions go, that one's pretty painless and mostly good for your body. Just don't drink too much.
Sara Rathner:
Exactly.
Sean Pyles:
Also, resolutions don't have to be about taking something on in the new year. It can be just as powerful to stop doing something.
Sara Rathner:
Yeah. I'm a busy person, so I always like the idea of doing fewer things. Welcome to NerdWallet's Smart Money podcast. I'm Sara Rathner.
Sean Pyles:
And I'm Sean Pyles. This episode, I'm joined by personal finance Nerd Kim Palmer to answer a listener's question about how to budget when you earn an irregular income.
Sara Rathner:
But first, Sean and I are going to indulge in a different kind of goal setting: picking one thing to stop doing.
Sean Pyles:
Sara, you presented this idea to me. What made you think of it?
Sara Rathner:
The thing is I can't take credit for it. I'm in a book club, and when we met in December, we went around saying something that we wanted to stop doing. And most answers, honestly, had to do with laundry, because most women in my book club have a lot of kids.
Sean Pyles:
Lots of laundry goes with kids?
Sara Rathner:
Yeah. Nobody's giving up the idea of having clean clothes. It's not like that. But they wanted to stop folding things so perfectly, and one person even mentioned stopping the annoying task of changing over your kid's wardrobe when they outgrow a size or the season changes, and I felt that one in my bones, because I just did that with my kid's clothes, and it's the worst. It's the worst task.
Sean Pyles:
What's the alternative? The kid is wearing small clothes or out-of-season clothes?
Sara Rathner:
I think they just kind of pull everything out of the drawer and just shove a bunch of stuff into the drawer unorganized, unfolded, and it's just like, "Well, this is clean, and it fits, so deal with it."
Sean Pyles:
It's good enough.
Sara Rathner:
Yeah, good enough parenting.
Sean Pyles:
That's fair.
Sara Rathner:
Right there. Anyway, shout out to my book club. I know a few of you listen to this podcast, and I'll see you at the January meeting.
Sean Pyles:
I like the idea of going into the new year by saying what you will do less of. Resolutions or annual goals, whatever you want to call them, are usually additive. If we just start doing something new or different on top of what we're already doing, then our lives will be fixed, and our finances will be suddenly improved. But sometimes simpler is better. Strip back the stuff that you don't need, and focus on what's really important or helpful. Sara, question: What do you want to do less of this year?
Sara Rathner:
I think I want to curb the mindless phone scrolling that I tend to do in the evenings after I put my son to bed. If we're not watching a compelling TV show, then I tend to just zone out on my phone, and that's not really good for anyone.
Sean Pyles:
Yeah, Sara, I can completely relate. The bad habit of mindless scrolling before bed has me firmly in its clutches. When I was studying for my CFP exam last year, I actually started using this app called Roots, which can put pretty extreme blocks on your app usage and helps you break your phone addiction, and I found it really, really helpful. But naturally, I deleted that after I passed my exam, and I'm back to gleefully and mindlessly scrolling for hours on end each day, especially before bed. So, maybe I need to re-download that app. Sara, what's driving this goal of leaving behind mindless evening phone scrolling?
Sara Rathner:
I just think it's such an easy pattern to fall into, and honestly, I just want to use my free time for other things. I want to read more books this year. Also, Severance season two is airing on Apple TV soon. If you haven't watched it yet, it is definitely worth skipping the doom scrolling for. It's basically television that feels like doom scrolling all the time. It's great.
Sean Pyles:
I have not watched Severance. I'm still deep in the X-Files, so when I finish that in about two years, maybe I'll start Severance.
Sara Rathner:
It'll take that long to finish the X-Files.
Sean Pyles:
For me, yes.
Sara Rathner:
Definitely worth it. Put it on your list for something next.
Sean Pyles:
Okay, noted. Well, Sara, this is a money podcast. How is giving up the phone time a good financial move?
Sara Rathner:
As we all know, social media is a hot pile of garbage for many reasons. It encourages people to buy things that they don't need. Social media used to be how you found out that your high school bullies are actually living terrible lives now, and then you could feel better about yourself. Now it's all just influencers peddling stuff. Maybe a few of those influencers were your high school bullies, and then you could feel really bad about yourself, but honestly, I think we could all use a break from being sucked into this fake world. It's just manufactured to make you buy things.
Sean Pyles:
That's fair. And it's not just the influencers. I mean, there are ads seemingly every other post, and that can wear on you too over time, especially if you're scrolling when you are tired at the end of the day. I am not immune to clicking on these ads, and every time I do it, I feel a little bit like a rat grabbing for the cheese in a mousetrap, knowing that no good is going to come of this, but dang, that cheese looks so good. It's really hard to resist.
Sara Rathner:
That's true, and I don't want to be a lab rat reaching for the cheese, so we're going to work on this. We're going to try and make this better.
Sean Pyles:
Yes.
Sara Rathner:
I use the royal we. Sean, you don't have to join me in it.
Sean Pyles:
I'm with you in this. We'll do it together.
Sara Rathner:
Sounds good. And Sean, is there anything else that you want to take off of your plate this year?
Sean Pyles:
Yeah. I'm planning on leaving behind extreme financial rules, mostly ones that I imposed on myself, I'll say. Longtime listeners of the podcast may recall that last year I told myself that I wasn't going to buy any new clothes at all for the first half of 2024. I have a weakness for unique vintage pieces and have acquired a number of them over the years, usually from eBay, and my small house and even smaller closet cannot accommodate anything else. I told myself that enough is enough, no more buying, and I did really well for that first half of 2024 of not buying anything. But after June finished, I suddenly felt like I had permission again to buy clothes, and boy, did I buy clothes. I don't really regret the purchases themselves, because they were done fairly thoughtfully and, dare I say, tastefully, but I do think that I bought more than I would have if I hadn't put that overly harsh limit on myself for the first half of the year.
Sara Rathner:
Yeah. Sometimes really strict parameters end up making you go way too far off the deep end once you give yourself a little bit of allowance. It's like when you first go off to college, you can really easily spot the kids with really strict parents, because they're the ones partying the hardest. It's so true.
Sean Pyles:
Yes, absolutely.
Sara Rathner:
As it turns out, a little bit of moderation is a good thing. Instead of cutting yourself off completely from stuff, maybe ease off a little bit.
Sean Pyles:
Yes. The flip side of leaving behind extreme financial rules is focusing on more sustainable spending habits. I know that I'm going to get that itch to browse the vintage section of eBay and look for clothes again, so I'm going to put a limit on myself of just purchasing one item of clothing a month maximum. This way, I have a rule to follow, but it feels pretty reasonable and I shouldn't end up rebelling against myself.
Sara Rathner:
If your closet's overstuffed, kind of like this one-in, one-out philosophy, so every time you introduce something new to your wardrobe, you have to say goodbye to something you don't wear anymore. Donate it. Give it away. Honestly, I need to get better at that, because I still have too many pencil skirts from like, 2011.
Sean Pyles:
Well, Sara, they're about to be back in fashion, given that timeframe.
Sara Rathner:
I kept a pair of boot-cut jeans thinking, "Oh, yeah. One day," and then I actually fit back into them, but they are so low-rise that I literally cannot.
Sean Pyles:
But that's back in fashion, Sara. I think you must. You'll be the cool mom.
Sara Rathner:
All right, Sean. How are you holding yourself accountable?
Sean Pyles:
I'm going to plan on tracking my clothing spending, or I guess not spending, in a running notes document on my phone. This is where I track a lot of my financial habits in kind of a weird way. It's just what works for me. When I find myself scrolling eBay and wanting to buy something but abstaining from buying that thing, I'm going to list the item, its price, along with what I was feeling and thinking as I contemplated that purchase. I think this will help me be a more thoughtful consumer and more thoughtful spender in general, and I'll also just have a nice little spending journal to look back on.
Sara Rathner:
And think about it this way. If you don't buy something, you could imagine that amount of money as money that you've saved because you didn't spend it. Transfer it to a savings or brokerage account maybe?
Sean Pyles:
Very smart suggestion. I may just do that, or if I'm still feeling like indulging in some shopping, maybe after a few months, I'll have some savings to treat myself to something better, maybe a little pricier, that will hopefully last me longer. We'll see. I also have the added bonus of being the host of a financial podcast and saying all of this so that everyone listening will be my accountability partners. In general, I'm planning to try out this approach for the first three months of the year, and then do a sort of high-level check-in with myself about what I like about this and what I might tweak as I work toward continuing to refine sustainable spending habits.
Sara Rathner:
Same, so everybody check back in with us in April. That's when I will lead an in-depth discussion of Severance season two, because I will have paid total attention to every episode, and I will not have looked at my phone while watching at all. Yeah. Also, maybe I'll have a couple of books under my belt, too.
Sean Pyles:
Oh. Well, we can talk about those too. We're about to turn to this week's money question segment, where personal finance Nerd Kim Palmer, and I help a PhD student budget for regular expenses when they have an irregular income. If you are earning a stipend as a grad student, or you freelance, or work seasonal jobs, this one is for you. Before we get to that, a reminder, listener, that we want to hear from you. What are your money goals for the new year, and where are you stuck? We'd like to help you get unstuck, so send your money questions and concerns our way. You can leave a voicemail or text us on the Nerd hotline at (901) 730-6373. That's (901) 730-NERD, or email us at [email protected].
Sara Rathner:
This year we want to add more on-air conversations with listeners just like you. That's right. You, listening right now. So if there's a money situation that you're working through, let us know. Whether you're budgeting for a home renovation or thinking about early retirement, let's talk about it. One more time, leave a voicemail or text us on the Nerd hotline at (901) 730-6373. That's (901) 730-NERD, or email us at [email protected].
Sean Pyles:
This episode's money question is coming up in a moment. Stay with us. We are back and answering your money questions to help you make smarter financial decisions. This episode's question comes from a listener's voicemail. Here it is.
Sam:
Hey. This is Sam. I'm a grad student and a PhD in engineering. My salary is kind of weird. It appears like I'm getting paid by the semester, so a big stipend every four to five months, and I was wondering how you should work out a budget plan with a salary that is given in three chunks throughout the year, how I can make regular investments with that while not depleting my income before the next paycheck comes? Thank you so much. I'd love a call back to talk, and thanks for your time.
Sara Rathner:
To help us answer Sam's question on this episode of the podcast, we are joined by NerdWallet personal finance expert Kim Palmer. Welcome back to the podcast, Kim.
Kim Palmer:
Thank you for having me. I'm glad to be here.
Sean Pyles:
Hey, Kim. So, we know that a lot of people have a hard time budgeting on a regular income, but budgeting when your income is just received in huge chunks that are expected to last for several months seems like it would be much more difficult. And I imagine the first thing that someone should do is simply know exactly what their expenses are. So, Kim, how do you think people can track their expenses, not just on a monthly basis, but in the case of our listener, on a four- to five-month basis?
Kim Palmer:
This is really hard, so I think it does make sense to start with where your money is going, what your expenses are. First of all, you want to see how much you need every month for your essentials, like your housing, your food, your transportation, but then also all of your variable costs, too. So that's things like entertainment, restaurant meals, takeout, any kind of personal costs like that. Then, you don't want to forget to also remember your less frequent costs that fall outside of the month, so that's things like insurance renewals, other kinds of annual subscriptions, and other seasonal expenses.
Once you have all of that in front of you, it makes it easier to create a budget for yourself based on all of that spending. And because the income is coming in a big chunk every four to five months, you have to basically divide it up yourself over those months. It is more work for you. Just to make the math easy, let's say you have $10,000 of take-home pay, and you need to spread that over five months, then you'll have $2,000 a month to allocate to those expenses that you just listed out. I think breaking it down like that just makes it a little bit more manageable so you know how much you have for this month and how much you have to save for the future.
Sara Rathner:
Yeah. I did something like this not too long ago. When I was on maternity leave, what I wasn't expecting was short-term disability, which is the first six to eight weeks of your leave, if you're eligible for it. For me, it was paid in one lump sum, so out of the blue, I just got two months of my salary in my checking account, which was cool, but also a little confusing, because how do you manage that much money at once? I wasn't expecting to be paid that much, so one thing I did was I transferred that amount of money to my high-yield savings account, and then I set up automatic transfers every two weeks. I divided the money up by the number of transfers, and I basically paid myself a paycheck out of my own savings account. And that way it was done for me the way that my paycheck normally is, just automatically landing in my checking account. I wasn't tempted to spend all the money at once or overwhelmed by it, especially at a time when I was totally sleep-deprived. That was a way that I basically faked a paycheck.
Sean Pyles:
That's a really smart approach, because you are essentially creating a more regular schedule for payment, instead of having this huge chunk of money that you're hoping will last you. Once you know your expenses, you can have a certain amount that you will then get into your checking account based on those expenses, and you know that you'll have enough each pay period that you allocate for yourself.
Sara Rathner:
And whatever is sitting and waiting in your high-yield savings account is earning more interest, so that's making your money work a little bit harder for you while it waits to be transferred into your checking account.
Sean Pyles:
Brilliant.
Sara Rathner:
All right, Kim. I can see how it would be really hard to track how much money you have left when you are maybe two months into your pay period and you have two or three months left to go until you're paid again. I mean, some people budget on a weekly basis or a monthly basis, but budgeting for five months, it just feels overwhelming. So, what strategies do you recommend so people can better manage their budgets over a longer period of time?
Kim Palmer:
Well, it is so hard, and I think that your example is really perfect in this situation. So, I'm going to describe a similar version of what you did that I think could apply here. So basically, even though you are getting the money in one big chunk, you have to do the work yourself of breaking it up over the period of time that you need it, so you're doling it out yourself. It can be overwhelming to get it all at once, and so that's why we have to do this extra work, which you did on maternity leave. Basically, what can work really well is, similar to your approach, you want to keep the chunk of money in a high-yield savings account over those months, and that way it's earning interest, which is great, so it can be growing, and then you can draw out the allotted income at the start of each month. So put that into your checking account, and then you know exactly how much you have to spend for that month.
I think it's also worth considering or remembering expenses that are going to fall out of that month, so we talked about this a little bit before, when just collecting your expenses. So, think back to what comes up only once a year or maybe twice a year. Maybe it's the holiday spending costs, or you always need money for travel in the summertime, so you also want to set money aside for those as well. Then, another big thing to consider here is taxes, so if taxes aren't being automatically withheld from this stipend, then you'll definitely want to set some money aside so you can pay your taxes when they come due.
Sean Pyles:
That's a really good point around taxes. Depending on our listener's situation, they may have to make quarterly estimated tax payments, and if you don't do that, you could be hit with a penalty, so just be careful, set aside money for the taxes, and avoid any nasty surprises later on. One thing I'm still thinking about is that even if you set up some system where you're getting paid monthly or bi-monthly through direct deposits from a high-yield savings account into your checking account, and you're trying to make it like you're getting paid on a regular basis, the mental load of managing your finances this way still seems pretty stressful. And I'm thinking this might be where a budgeting app could come in handy. Kim, can you think of any that might be particularly well situated to help our listener manage this very odd, unique situation?
Kim Palmer:
I can, and I think you're right. It makes sense to let a budgeting app do some of this hard work for you. So, there are a few different approaches to budgeting, and you can find an app based on what you like best. I think in this situation, what could work really well is what's called a zero-based budgeting system, because basically it means that you are accounting for every single dollar, and you're setting it toward a specific expense. There are a handful of apps that use a zero-based budgeting system, like YNAB, which stands for You Need A Budget, and the EveryDollar app. Those are some tools that could help you.
Another approach that is appealing to a lot of people is known as the envelope system. It's also sometimes called the cash-stuffing system. Basically, you are putting money into envelopes, and those envelopes are labeled for specific expenses. One might say rent, another could say utilities, and of course, they don't have to be actual envelopes. It can also be a digital system. The Goodbudget app is one that takes this envelope system approach. It's really all about finding the one that you like, whatever system or app works best for you, so you actually think it's fun to log in and check out where your money's going. And NerdWallet actually has an article on the best budget apps of 2024, so you can find that in today's show notes, or you can also just search for NerdWallet best budget apps.
Sean Pyles:
I would love to find a budgeting app that makes budgeting fun. I'll be honest, I've yet to find that for myself.
Kim Palmer:
It's so fun, Sean. Always. I don't know what you mean.
Sean Pyles:
I mean, I like to feel responsible and on top of my finances, and that's why I use a budgeting app, but I've yet to feel joy while using one, so kudos to you, Kim.
Sara Rathner:
Maybe if there's an app out there that gives you 20 bucks every month you stick to your budget...
Sean Pyles:
I would love that.
Sara Rathner:
...I'd be down with that carrot. Even if our listener is super diligent about tracking their income and their expenses, I bet that there are times where money is going to feel tight toward the end of their pay period. So, are there any ideas that you have for ways to maybe stretch their budget a little further so they don't run out of cash before the next paycheck hits?
Kim Palmer:
I think this situation is where it can make a lot of sense to leverage multiple bank accounts. You did this yourself, as you explained in your example. I think it could really apply well here. So you want to put that chunk of money when you get it, tuck it away almost immediately into a high-yield savings account, so it doesn't feel so accessible and easy to spend. Then, you want to take each month's expenses into a checking account, so you have access to that. I think using a tool like that can just help you leverage these different accounts to make sure you are not overspending for that month, to keep you on track. I think that could really help a lot. Then, just taking a step back and looking at your expenses that you tracked when we started all of this, and just see, are there any expenses, especially the variable ones, that would be possible to trim? The ones that can be easiest to trim are things like when you are ordering takeout, subscriptions, other food eaten outside the home, and entertainment costs. So, those can all be ways of looking for savings.
Sean Pyles:
Another thing I want to emphasize is how important saving is, especially if your income might be intermittent or even unreliable. It is really crucial that people have some cushion to get them through times when money might be tight. Kim, do you have any suggestions for how our listener or maybe anyone in a similar situation might be able to maximize saving when they're kind of unsure if they'll have enough money to last them until their next pay period?
Kim Palmer:
I'm so glad you brought this up, because I think you're right. Having extra savings when you don't have a steady paycheck and it comes in a more fluctuating way is so important, because that way you can turn to it when suddenly you find yourself in a leaner month. The right size of an emergency savings account varies so much based on your expenses and your income. At NerdWallet, we have a really helpful calculator, so you can enter your own numbers and information and find the right amount for you. In general, it can be great to start with a goal of having $500 set aside, and then you can work on growing it from there. But starting wherever you can, even if it's a small amount, and then just making small steps each month toward growing it, that can be a really good place to start.
Sean Pyles:
And this could be a place where our listener might be able to have a separate sub-account, where perhaps $50 or $75 each month goes from their big chunk that they got paid into this emergency savings account, so they're automating the savings. They know they have something built up, just in case they find themselves stretched a little thin and they have to rely on that cash at some point.
Kim Palmer:
That's a great idea. I think having separate accounts that you are managing in this way, and in some cases, you might be taking advantage of automatic payments between the accounts. You have them labeled so you know what the accounts are for. That can all be really helpful, just so you can stay organized.
Sean Pyles:
Well, Kim, thank you so much for coming on and sharing your insights.
Kim Palmer:
Of course. Thanks for having me.
Sean Pyles:
And that is all we have for this episode. Remember, listener, that we are here to answer your money questions, so turn to the Nerds and call or text us at (901) 730-6373. That's (901) 730-NERD. You can also email us at [email protected].
Sara Rathner:
Also, visit nerdwallet.com/podcast for more info on this episode, and remember, you can follow the show on your favorite podcast app, including Spotify, Apple Podcasts, and iHeart Radio to automatically download new episodes.
Sean Pyles:
And here is our brief disclaimer. We are not financial or investment advisors. This nerdy info is provided for general educational and entertainment purposes and may not apply to your specific circumstances.
Sara Rathner:
And with that said, until next time. Turn to the Nerds.
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