Episode 43 – Millennials and inflation
Episode transcript:
[music intro]
Jenny
Welcome back to Fund Your Future with DRS. And today we’re continuing our generational conversation about how different generations are saving for retirement. And we’ve got a DRS team member in the studio with us today from the millennial generation: Durin. Welcome.
Durin
Thank you, Jenny. Happy to be here.
Jenny
Great. And Seth and I also both fall into the millennial category. So, we’re all in good company here.
Seth
So Durin, when you think about millennials and finances, what’s the first thing that comes to mind?
Durin
I think for millennial finances the first thing that comes to mind for me is primarily the struggle to get a job that supports the kind of lifestyle you want to live. And so, I think a lot of my peers especially, are on that first step, thinking about how do I afford to do the things I want to do and retirement savings and those kind of things oftentimes fall secondary to that as they’re trying to make up those initial few things, right.
How to pay for their car payments or their rent and things like that. But I think fortunately, you know, there’s been a lot of opportunity to get jobs that that pay for those things. And so, I think more and more, my peers are thinking about, especially as being a part of the younger millennial generation, thinking about things like retirement savings and stuff.
Jenny
That’s a great comment, especially reminds me of some of the other conversations we’ve had with our other Gen Xer folks. Do you feel like there’s a particular point where you kind of had an ‘ah-ha’ moment of, “I need to save for retirement?”
Durin
I mean, I think, getting married was actually a big part of that point for me. I think that sometimes it can be difficult to think about the future or like, plan for yourself. And so and I had a cat for the first time like that was when I was, “oh, I gotta make sure that I, like, have money to feed my cat, you know, I can’t just fail and be me.” And then, as I’ve gained more responsibility and more people depend on me. And there’s more expectation to do that. And I really started to think more and more about those things.
Ironically, when I was 13 and had a babysitting job, I was actually starting my retirement savings at that time with my disposable income because I had no expenses. And then as I got older, you know, my retirement contributions dwindled a little bit.
Seth
It’s a really good point about how our lifestyles change at different points in our lifetime. When you’re 18 and have a job. I remember being in a very similar situation, like I had almost no expenses. I was a high school student that had a job in fast food and was like, I’ve got all this disposable income, I’m going to go buy a snowboard or I’m going to support the lifestyle that I want to live.
And then as your lifestyle changes over time, it really impacts your spending priorities. I really also appreciate the idea of like those major life events, shifting your mindset. I think for people when they get married, that’s a great example. When they have kids, maybe when their parents get sick, there are all these things that like trigger, like reflection about your own life and what are you going to do about that? And then what are you going to do to help other people? Yeah. That’s interesting.
Jenny
Well, and you mentioned getting married. Do you mind sharing if you and your spouse have had conversations about saving for retirement and kind of what that looked like?
Durin
I try to have this conversation all the time. See, I was raised with a lot of financial planning and literacy and financial conversations around the dinner table. So that’s a big part of it for me. I’ll bust out the whiteboard, I’ll do budgeting. You know, we’ll do the whole thing. Right? So, it is absolutely a conversation.
And my wife just got a job at the state. And so, I’m very excited for her because, you know, now we get to have the conversation about what plan selection she gets to go through.
Jenny
…and you’re very knowledgeable about that.
Durin
Yeah, I’m very well versed and, it’s true. I mean, having conversations with members, when I listen to their stories, I think about like, “wow, this is something that I should be thinking about now.” And it’s kind of a privileged position to be thinking about the future at such a young age. You know, I don’t think I would have been doing any of this had I not worked here.
Jenny
Yeah, for sure. I felt the same way. I mean, I also grew up in a household where that conversation of: “Well, you need to save, here’s how you budget with a checkbook.”
Durin
Balance a checkbook.
Jenny
Balance a checkbook. Yes. So, it is helpful to that, but also to your point. So now working at DRS for the last 2 or 3 years, I’ve learned a lot and [I’m] very thankful for having that knowledge of planning now, when I’m in my 30s and 40s.
Durin
I mean, because those plans you make now, they have so much time to change and grow. I mean, you know, I’ve heard the analogy of: “If you want a ship to go a different direction, you just have to turn it one degree ten years ago.” Right? And then it’s going a completely different direction and point. And I think, you know, retirement savings are a very similar way, right?
Where those times you make in your 20s are more valuable than the ones you make in your 30s, and so on. Of course, pension systems are a little different.
Seth
But, in some ways it’s similar. Pensions, you’re adding time on, you’re building service credit. You’re building up this future benefit. So time is still on your side. I think we hear from folks who oftentimes wish they would have started working in public sector five years earlier. Or you know, “How would my life look different if I would have started that career earlier?”
And in some ways, I think what you’re saying also connects back to that, that you can make those positive decisions early on in your life. But there’s also different paths that you can take. And you at some point you have to come to, you know, acceptance about that. You can’t necessarily change what has happened in the past, make the best possible decisions for yourself going forward.
I’m curious, since you mentioned marriage, I don’t think we’ve talked about this with any other guests. What sort of conversations that you have about combining finances or shared checking accounts, or who pays what bill, or how you’ve combined finances, especially if your spouse wasn’t working at one point and now is working? You know what that looks like from a personal finance in a relationship finance situation.
Durin
Yeah, totally. I’m just someone that’s very open with the finances and very much want to do what’s fair and equitable. So very quickly, when she was still my girlfriend, when she moved in with me, I mean, we made a joint account together that wasn’t the sum of all of our money, but we both put in equal amounts of money to it for our combined expenses.
So, we paid our rent out of it, our groceries, anything we did together, we paid out of that. And we just say every month, I’m putting $2,000 in the joint account and we each would do the same amount. And so that was how we worked it earlier. And but now that we’re married and we have just one account, everything’s together in it, you know, a couple different accounts, but everything’s under both of our names.
Yeah. We make those decisions together, mostly at my insistence on having a conversation about making a decision. But, yeah, we’re very much combined on that.
Seth
Yeah, I think that’s interesting. Everybody comes to those sorts of discussions in different ways and kind of with different baggage or different life experience. And oftentimes it can be a point of contention. But trying to have those open conversations and once again, with no judgment and how you come to those conversations can be really helpful.
Jenny
Do you mind sharing sort of methods that you use for budgeting, whether it’s, Excel sheet or, good old-fashioned pencil and paper?
Durin
Yeah. So, I don’t know if all banks let you do this, but my bank, the Employees Credit Union, will, let you, like, print off your transaction history into Excel, and then you can turn that data into some useful graphs using various online applications and the like. But even if you’re just kind of casually looking through it, you can kind of pick a sample month and you can just determine, okay, how much do we spend in this month?
Is this average? Take another month. Use it a reference point. How close are they? How similar are they? And so, I try to think about it in terms of things that we have to spend. We have spent a certain amount on rent. We have a certain amount of money for these things.
And we do like a weekly date. So, I include that as part of the budget. That’s a given. But everything else is flex money. So how much flex money do we have every day to spend? So, I take everything that’s left over and I say, if we don’t save anything, here’s how much we can spend every day. And if you don’t spend it that day, that’s great. It’s my money saved.
And so, we both know what our kind of flex money spend budget for each day is. And that doesn’t count like big purchases. Like if you want to buy something big, that’s kind of its own kind of consideration. But, because we don’t oftentimes think about our rent as being a daily expense, right? Or our phone bill as being a daily expense, but they are daily expenses.
They aren’t just things that happen every month. These are things you’re paying for every day. You just happen to pay it once a month. I think most people my age probably have ten expenses that they actually have, right? They’re pretty consistent, whether that be groceries or electrical bill or rent. And it’s pretty easy to add all those things together and subtract them from your monthly income and say, here’s how much money I have left over.
Yeah. You know, after this. And that’s everything that I have to spend on that I consider left over, which can be quite a lot. So, figuring out how much is the leftover pot can be the trickiest part, I think.
Jenny
Nice I like that term flex money. I like to use the bucket method. So yeah, the first bucket is just general what you need to get by your rent, your utilities. The second bucket is savings, and then the third bucket is just the flex money.
Durin
So yeah I try to put the savings in the first bucket because then I actually do it.
Jenny
Yeah, yeah.
Durin
If it’s mandatory I have to. Right?
Seth
I really also like the idea of thinking about your spending in terms of daily spending or thinking about things in terms of monthly spending or yearly spending, like how much do I spend on donuts every year versus every week or month, because so much of our spending is inconsistent, you know, because it is flexible and it’s something that, you know, some people are really good about going grocery shopping once a week or once a month or every other week.
And other people like, I don’t know, I go grocery shopping, maybe every three and a half weeks? I don’t know. It’s inconsistent spending. And I think we have a lot of things in our lives that follow kind of a normal monthly cycle, because that’s how a lot of people get paid or they get paid twice a month.
But then there are things like car insurance that you could pay once a month, or you could pay every six months, or you could pay once a year. And trying to think about those expenses in different time terms, length of time to think about how you do like an apples to apples comparison.
Durin
Well, I do that all the time. So, I’ll think about if I’m going to make something part of my daily spending habits because I would say that, like, I’m a pretty consistent spender in terms of my stuff. We buy groceries every week. I buy a cup of coffee every day, and this is my worst – this is my guilty expense.
But I know that it’s what keeps me functioning. So, it’s like it’s worth it in that respect. But I spend $5 every day on a cup of coffee. So, it is almost $2,000 a year, for me to get that cup of coffee every day. And I think about that as like a percentage of my wage, it’s actually pretty high.
It would be a huge savings thing for me to cut that out. But another part of me knows that if I start cutting that out, then there goes a lot of my goodwill in life and work. So, it’s a worthwhile expense. But I definitely think about… like if you translate, for example, our weekly date lunch, I think about that.
How much does that cost us per year to do? And you know, if it costs us, you know, 50 bucks a week, 50 weeks a year, 2500 bucks a year, it’s expensive, but it’s worth it, right? I mean, if in the grand scheme of things — it’s not a ton — but it’s also a lot. I mean, I don’t know, it’s hard to think about numbers…so, I try to think in percentages. And that’s why having the flex money is so useful to me is thinking about what percentage of my income is already spoken for, versus what percentage I actually get to have some discretion.
Seth
I also like, in that way of thinking, you can think about sort of the opportunity costs of what else could I do with that money? Is that weekly lunch worth the same amount of joy or happiness as a one week trip to Hawaii? That might cost about the same amount over the course of the entire year? And you know, that’s something you can think about in your overall budget.
And maybe one year you make one decision. In one year, you make a different decision. You try to figure out where you’re at is in terms of not just the cost of it, but the utility or the happiness or other things that brings you.
Durin
We’re talking about utility. We’re talking about marginal utility. Yeah. No, totally. I mean, it’s hard to quantify those things, but absolutely. It does help putting those kind of, somewhat consistent spending things in perspective of how much they actually cost you over the year. Because like you’re saying that cup of coffee every day, I mean, that could be a small vacation every year.
That’s very real. And that’s like a good way of thinking about how to both save money and how to budget. I think because you start thinking about, well, is that $15 I spend here every week really worth that much to me?
Jenny
And sometimes it is, and sometimes you might make a change. Nice to look at it and go, oh, yep, there it is.
And this kind of is a good transition. But, do you have any tips for budgeting or finances? Maybe especially for folks who are working as state employees, and then also for folks who are maybe working in the private sector?
Durin
Well, I mean, the first piece of budgeting advice that I really liked that I was given; it’s not super useful always, but the best budgeting advice is to make more money. Ultimately, budgeting is a lot easier the more money you have to budget with, and sometimes people will try to budget too small of money. They’re really trying to figure out how to make a small pile of money work, and that can be really difficult.
But as far as strictly budgeting advice, I think, considering what you’re actually utilizing each thing for. So, I think olive oil is a great example for this. Some olive oil is for salads. It’s very expensive. It’s like 40 bucks for a little bottle. It’s delicious, but it’s great. And then there’s olive oil that’s for cooking. And it’s a lot cheaper. And it comes in much bigger bottles.
And so, thinking about, “well, when I’m doing the cooking olive oil, I should really make sure to have some of that on hand. So, I’m not using the fancy olive oil.” And maybe vinegar is another good example of this. I have vinegar for pickling and I have vinegar for cleaning, and one of them is a lot cheaper than the other.
And I love to cook some examples are cooking here, but just understanding I think those things can help a lot. And then also cooking helps with budgeting a lot. I used to eat out a lot and when I started cooking, I started saving a lot more money. I also have a lot more fun eating because I was making all the food I was making.
it just the way I liked it, and I stopped liking eating out as much because I was like, “I’m better than… I’m a better cook than these places..”
Seth
I hear you on that.
Jenny
And it can be a lot healthier too, especially if you’re not using as many prepared foods.
Durin
I mean, probably. It depends on how much butter you use. I mean, you get that flexibility then right?
Seth
I’m concerned that I’m using the wrong vinegar for cleaning… I mean, that I’m using the same vinegar for cleaning and pickling. And so now …
Jenny
That’s true. That’s okay, I do the same.
Durin
What vinegar do you use?
Seth
I just use white distilled vinegar.
Durin
I mean, that’s great.
Seth
Okay.
Durin
Yeah I mean if you want to use a little rice wine vinegar, you don’t have to add as much sugar because it already has some of that sweetness in there. There are oftentimes like seasoned vinegars which are very nice if you’re going to pickle stuff because then you get a little extra flavor in there. I mean, you can use whatever. Pickles are inherently a stored food. So, yeah.
Seth
Man, I did not expect to talk about pickles today.
Durin
Well, I’m going at bringing things off topic.
Jenny
I think it’s okay. We’re a well-rounded podcast.
Seth
I guess one of the topics that’s come up on a lot of these conversations that we’ve had with people of all generations is kind of how you’re dealing or thinking about inflation. And I think I’ve said this in multiple times, like for a long time, people have never really thought about inflation or younger folks especially. Like it wasn’t something that was top of mind.
You know, I talk to my parents and they talk about waiting in line for gasoline because oil embargoes and the real hyperinflation that was scary. And I think for the first time since the late 70s, a lot of us are thinking about what inflation means and how it impacts our lives. So, I’m curious what your experiences have been and what kind of… if there are tips or tricks or thoughts that you’ve had, cooking might be one of them.
Durin
Yeah. I mean, I’ve always considered inflation because from an early age I was very involved in investment and that kind of conversation around it. So, understanding the kind of inherent loss that exists on money as it sits, has always been part of how I consider money. So as a young person, I was never buying bonds. Because I was always trying to beat inflation by a significant margin, not try to keep pace with it.
And so, I think it’s always been something I’ve been thinking about in that respect. But as inflation has gotten higher, I just haven’t really found a ton of ways around this. It really seems like a lot of the rising costs for me are in things I can’t not do, like eat. And so, in that respect, to me, it seems like it’s more of a lifestyle shift that comes with managing inflation than any real like hunting for bargains tip that I can find… flour went up.
It wasn’t just, you know, one brand of flour, flour went up. That being said, it’s still a lot cheaper to bake your own bread. You know, I can get a thing of flour for like six bucks. I probably get like five loaves out of it, you know, like, and it’s just water that I’m adding. So, like that’s pretty cheap. But at the end of the day it used to be three. So, I do feel that.
Have potlucks, do group cooking with your friends. That’s a great way to save money. If you’re cooking, oftentimes it’s easy to make a meal for six people as opposed to two. And if you have friends, you can split that deal off with. You know, I cook a home cooked meal on Tuesday, you cook one on Wednesday, you cook one on Thursday, and we all share the little bits. That’s a great way to reduce those. But I think honestly, we kind of have to eat inflation a little bit.
Seth
The example you also touched on there, I feel like is something that we’ve come back to you in a couple of other episodes as well. It’s not just about, money, but it’s also about community. Like what other benefit are you getting from the dollars you’re spending? I think it’s one of the reasons a lot of people will go out to eat, because they want that social interaction. But are there ways to create that or recreate that in a different environment at a lower cost and a potluck or, you know, a social gathering once a week might help save money, but it also builds your sense of community or belonging within your friend group. I think that’s a really good example.
Yeah, yeah. Inflation is something that we all have to figure out how to deal with. And maybe it means in some cases we eat less eggs because those are the things that have been most impacted at one time or whatever. Being flexible allows you to think about maybe different ways to have that be less of an impact or to, as you said, kind of absorb that impact.
Durin
Yeah, I like that idea of community spread. And to avoid having this be like a Carl Weathers talk on, how to get the most out of your per diem, you know, from Arrested Development? He’s getting the soup bones…[laughs]
You know, I think that doing a cookout… there’s lots of public parks that have built in cookout stations. Go have a barbecue with your friends. I mean, a lot of the packaging size that we’re sold food in, is meant for a family of 4 to 6, not a group of 1 or 2. And so a lot of times, the expensive part of cooking is actually the waste that comes from not using all your food. And if you’re doing stuff with friends, a lot of that waste goes away and you can have a good time because you get to hang with your friends. So, there’s lots of great parks around Washington state that would appreciate the visitors.
Seth
I love it. I also was not expecting an Arrested Development reference during the podcast. That’s going to hit another a whole nother audience that I’m excited about.
Durin
It is kind of fun to watch…there’s some historical cooking channels on YouTube that I love, and one of them is like pasta grannies, and they talk about pasta and grandmothers in Italy making pasta. But there’s another one that’s a little bit a little sadder. But it’s depression era cooking. It’s specifically meals that people ate during the depression era.
And it was so funny to see so many of my college meals on there, and I was like, “wow, I was doing this” like I was — I mean, unintentionally — going back in history and finding the same solutions they were.
Jenny
What’s an example you can think of?
Durin
So, it’s one of the weirder examples. It’s a variant of Eastern European goulash. So, it uses ground beef instead of whole beef. And it uses canned tomatoes instead of a tomato puree and paprika. And it’s basically just, a stew cooked out of those and then served over noodles. And it’s pretty decent. Maybe akin to Sloppy Joes or like Hamburger Helper. It’s very similar. And this was apparently what’s called Hoover stew.
Seth
Yeah, I think oftentimes when you look for those sort of historically, foods that fed a lot of people. I always go back to dal and naan. So like, Indian food, that’s very inexpensive to make. I’m using lentils and flour and water to make bread but it’s sometimes some of the best things you can eat and comforting and nourishing.
But yeah, trying to figure out what those foods are from different regions and how you can make them relatively inexpensive. I’m going to go Google “depression cooking” now and see what comes up.
Durin
Well, I mean we’re talking about cooking now, so we’re fully in it. But one of my favorite just quick home meals is just heating up rice. And then, have you ever heard of Furikake? It’s rice seasoning. You can buy it from stores. And there’s like a million different kinds of this.
You can get your sesame or your toasted fish, your kimchi or whatever, sprinkle it over and then poach an egg. And that’s just a great food to eat. You might eat a couple bowls of it because it’s, you know, it’s a little light, but it’s delicious. And it’s like $0.30 to make. Like genuinely super, super cheap.
Jenny
Nice. I’m going to have to remember that because my husband is gluten intolerant. So, we don’t do a lot of gluten. So, we do a lot of chicken and rice. So, I’m going to have to try that to mix up the rice dishes.
Durin
Yeah. And even you can double up your ingredients. If you have Hon Dashi for soup stock you can just sprinkle that right on the rice. It’s weird to put soup stock directly on, but it’s like it’s just breaking up a bouillon cube and putting on something. It’s delicious.
Seth
I feel like this is the first episode we’ve ever talked this much about food, but when you talk about like major impacts to budget; it’s transportation, housing and food. Those are the things that have really big impacts. And if you can make headway in one of those areas, you can free up a lot of money in your budget, or you can create a lot of space for other savings, or savings for retirement.
And also, you know, spending for fun. I appreciate that you went down that rabbit hole with us, because I think it was exactly what we needed to talk about. Maybe some people needed to hear.
Durin
Well, it’s the most flexible of the three you mentioned. Oftentimes moving is a factor of can you find somewhere else that’s available to you in your if you have a car payment, you have a car payment. You have an insurance payment, you have gas. But you can’t really change that that much. You can walk to work, you can bus, but there is only so much you can do. Whereas food, you feel like you’ve a lot of flexibility there. How much you actually have can depend a lot on what your actual dietary needs are. But you know, there is some room to be had.
Jenny
Yeah. Well, I think we’ve really covered a lot here. Durin, do you have any other thoughts about millennials and, this particular moment in time?
Durin
Yeah. I mean, I think, you know, as a millennial, I think I was fed a lot of doom conversation as I was younger. And, while I still resonate with those feelings, I think it’s important sometimes to not let go of the idea that things can be better. And that, it may not always be bad or hard, because if we accept that as a given, then we stop doing the struggle for things that are better.
And so even if, you know, inflation is really hard right now, try as best you can because it very well could be better in the future.
Seth
I love that that’s a perfect way to end. So, thanks for coming on.
Durin
Yeah of course. Thanks for having me.
[music outro]
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