INBOUND19 spotlight speaker alumni, Sallie Krawcheck, Co-Founder of Ellevest, joined INBOUND Studio's Laura Moran to discuss investing in yourself during a time of high stress, on INBOUND LIVE. Ellevest is focused on helping women prioritize their financial futures. Their platform is unique as it was built by women, for women.
“Don't let a good quarantine go to waste. ”
Below you will find some key insights from Sallie on how to manage your money in the todays climate.
Insight #1: Preparing for an Unknown Future
Maintaining finances can be intimidating when your future seems like it's in a state of flux. It's important to remember that the financial decisions that have worked in the past, may not work with the present climate.
“In times like this, I think it's back to first principles. The very first thing is the money that you got, is it working for you the way that it should? Take up one of those couple of hours at home. Do you have credit card debt outstanding? If you can afford to pay that back, do that because that is wealth sucking. Are there expenses that just don't make sense anymore for you? There's obviously a natural pullback on expenses. We're not going out to dinner. We're not going on vacation. Take that money, pay off the credit card debt or get your emergency fund bill.”
Insight #2: We are all in this together
EVERYONE is being affected by COVID-19 in different ways. Don't be be fearful of seeking support in the places that you need it most. There's no shame in that game. If you're having trouble balancing your expenses, “start smiling and dialing,” to companies like the electric company, cell phone company, your landlord and your student loan provider. You have nothing to lose and might surprise yourself with their flexibility.
“I think maybe it's a product of the fact that everyone literally is being affected by this in some way. It does seem that there's a decent amount of goodwill out there and people are trying to help people where they can. You know, credit card companies and services included. And no, it's not the most interesting way to spend an afternoon. But, you know, it's gonna be a probably profitable way to spend the afternoon.”
Insight #3: Do what you have to do
Typically you wouldn't want to touch your retirement fund because it's tax deferred and meant for future YOU to kick back and relax. With that being said, nothing about what we're experience is TYPICAL. The good news is, some penalties have been waived for taking money from the 401K so try not to but, “if you’ve got it, you got to live on.”
“When you see it, when you need to use the emergency fund, you will know it because you know your imbalance. This is my salary. You know, if you're fortunate to have maybe investment earnings or something, which most folks don't. But, you know, this is how much money I've got coming in. This is how much money I've got going out when the thing goes out of balance. I lost my job or my pay was cut or I've been furloughed. That's where the emergency fund comes in. You don't want to do that in a vacuum. You want to cut the expenses at the same time. But this is why you put it aside...You know, for this it's unfortunately, I lost my job. You know, take that emergency fund where you have to.”
Insight #4: Don't let this quarantine go to waste
The unemployment rate has skyrocketed, and if you've been affected, looking is for a new job should be a priority. Be flexible with your expectations. Simultaneously, network like crazy, “you want to be reaching out to the boss three bosses ago.” Take the opportunity to strengthen skills that you’ve been missing, there are a plethora of online certification options, such as HubSpot Academy, so one recommendation is to continue to push yourself forward professionally. Finally, find a place of calm, this could be a time when you realize it's time for a career pivot. What do you really want to do for a living?
“And so my biggest career leap forwards were after I took career breaks when I had my son and took some time off. And it was only in that period of time when I was able to sort of go deep and say, you know, I didn't like investment banking. In fact, I hated it. Like, really hated it. What did I hate about it? Answer obviously everything. What did I do? What really made me hate everything about it? And what were the parts I liked and that I would want to do more of? And it took me about six months before I realized that investment banking wasn't for me but to sell side equity research.”
Insight #5: Opportunity doesn't wait for anything or anyone
Opportunities are available, sometimes you just have to dig deeper to discover them.
“There are going to be any number of multi-billion dollar valued businesses that are started in the next several months. There just are and we will be reading about them 10 and 20 years from now about how someone was in their bedroom or were on a zoom, and then all of a sudden there will be funding for some number of good ideas. Are you going to be one of the people who's going to come out like that? Which is always the risk you take. So why not? Why not take it now? Times look even in good times, right. You know, the greatest career risk you ever take is not taking career risks because the economy, capitalism moves and if you don't stay up with it, you're done.”
Insight #6: A penny can go a long way
With Ellevest you can open account with a penny.
"The amount that most should invest or putting towards future you, is the rule of thumb of 20 percent of your take-home pay, 50 percent typically goes to needs, 30 percent to fund...and then 20 percent to grandma you. And that is that credit card debt getting paid down. That is the 401K investment. That is the brokerage investment. You think about it. Put that aside for grandma you. And then finally, what's more, even more important than the amount is when we start to invest. A dollar invested in your 20s is worth so much more than your 40s or 60s. And so just if you follow the percent of your take home pay, then that tells you how much it should be...Sort of by definition, if you're living within the means you did before, the way the market has performed historically, you should have enough for retirement to get you through.”
Insight #7: Invest in yourself
Know your worth. We all know that women don't invest as much as men. By not investing, some women have lost a million plus over the course of their lifetimes due to the lack of financial education and fear of risk.
"It's important to keep in mind the sort of scary statistic. No chance that even if we are in loving relationships, 80 percent of us die single. And that's because we live so long. And if we're in a relationship with a man, we live six to eight years longer than he does now. If we outsource the management of our money to him when that money comes back to us, which it does, seventy four percent of us have a negative supply's, not half. Not like, oh, it's half the guys sort of down, you know, 74 percent. And so this is a moment in which we should say when it comes to money. Am I living my values? Are the things I'm spending my money on important to me? Are they part of who I am? And taking back control of our money and understanding that we need to take this moment. This pause to get ourselves set. Are we investing in the 41K? Are we investing? Do we have emergency funding so that Grandma you looks back at this time and says, thank you? Younger, you are making sure I was okay.”
Be Good to Yourself
“Look, the truth is we've all been sent to our rooms. Humanity has been sent too and when you're sent to your room, think about what you think about, what you can think about, what we did.
And we as women have not been taking good care of ourselves. We were so busy taking care of everybody else. The in this moment we have to think about ourselves and get ourselves straight on our money. So when we get out of here, we're true to our values and we're set up for the next handful of decades...”
- Sallie Krawcheck