Why It's a Terrible Time to Spend Money
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What is the main topic discussed in this episode?
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Here's your Money Briefing for Friday, November 17th. I'm Arianna Espuru for The Wall Street Journal. This time next week, shoppers will flood online sites and shopping malls as holiday sales for Black Friday and Cyber Monday kick off. With prices and interest rates high, this season of giving is coming at a bad time to spend money.
With the resumption of student loan payments, people are really starting to feel stretched thin. Simultaneously, you can get as high as 5% yields on high-yield savings accounts, certificates of deposits, and bonds. So it's even more lucrative to save right now than spend. We'll hear from WSJ reporter Oyin Adedoyin after the break.
This episode is brought to you by Charles Schwab. Decisions made in Washington can affect your portfolio every day. Washington Wise from Charles Schwab is an original podcast that unpacks the stories making news in Washington.
Why is now a particularly bad time to spend money?
Listen at schwab.com slash Washington Wise.
We're about a week away from Black Friday and the start of holiday season.
How are high interest rates and student loan resumption affecting consumer budgets?
But as people gear up for shopping, it might not be the best time financially to splurge. WSJ personal finance reporter Oyin Adedoyin joins me. So, Oyin, a rule of thumb for people looking to save some money is, you know, don't spend it. But run me through why now specifically is a bad time to spend money.
The Federal Reserve has raised interest rates to a two-decade high. This means that everything from holding credit card debt, getting an auto loan, and buying a house is even more expensive than usual. Not to mention, with the resumption of student loan payments, people are really starting to feel stretched thin. Simultaneously, you can get as high as 5% yields on high-yield savings accounts, certificates of deposits, and bonds. So it's even more lucrative to save right now than spend. For that reason, any dollar spent today is a lost opportunity to earn as much as 5% on those savings accounts.
It seems like a lot's going on, and the timing of this is a little rough, given that the holidays are rapidly approaching. How much money are people expected to spend this season?
Holiday spending is really expected to ramp up this season again to grow to about $966.6 billion this year. That's upwards of 3% more spending than last year.
How much are shoppers expected to spend this holiday season?
And that brings us back to what we were seeing around pre-pandemic levels during the holidays.
You spoke to financial advisors and behavioral economists about what people can do to curb the spending. What are some ways that people can prepare for it, even before Black Friday?
The biggest thing I heard is don't wait until New Year's. A University of Penn professor studies the idea of fresh starts, and she told me that starting something at the beginning of anything can help people maintain goals. So think about the first of the month or a birthday or a new season. Another thing to consider is before you even start your Christmas shopping, give yourself an audit. That means taking into account maybe the past few years of holiday spending, not just including gifts, but also travel, any dinners that you went out to during the holidays, any plans with friends, really adding all of that stuff up to get a better idea of how much you usually spend during the holidays and where you can cut.
Matt Bazell, who owns a financial advising firm in Wisconsin, said, despite the access to technology that we have today, he prefers actually getting out a pen and paper and writing out each of those expenses by hand. There's something about that connection that makes it stick better in your brain. And it doesn't have to be painful. You can look at your finances and see that you spent maybe $2,000 to go on a vacation, and it was actually a really great experience. That way you can figure out, how can I make this experience happen again without breaking the bank?
And another big thing with the holidays is buying presents. So once people have their gifting lists and they check it twice, what should people know as they go shopping?
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Chapters
5 chapters
1
What is the main topic discussed in this episode?
0:01–1:36
2
Why is now a particularly bad time to spend money?
1:36–1:52
3
How are high interest rates and student loan resumption affecting consumer budgets?
1:52–3:11
4
How much are shoppers expected to spend this holiday season?
3:11–5:33
5
What practical steps can you take before Black Friday to curb holiday overspending?
5:33–7:38
Speakers
3 identifiedMore from WSJ Your Money Briefing
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