Goal Today: I hope we can have a candid dialogue about money & personal finance goals 🎯
A few things first:
- You work at an org that cares about understanding how the world works and telling compelling stories → I’d venture to guess for many of you, your primary interest isn’t about making as much money as possible, about consuming as many resources as possible.
- 2. I’d venture to guess you want to have impact and do good. You also may be a realist — navigating a consumer and capitalistic culture — trying your best to build financial independence + be a conscious consumer + civic-participant.
- 3. We all have different experiences and attitudes around money — this is about an honest dialogue, sharing knowledge, not judgment.
What you’ll get out of our hour together 🤓
- Core principles I’ve built financial independence on
- Framework for financial empowerment & goal-setting
- We’ll primarily cover 4 topics — Saving & Emergency Fund, Managing Debt & Loans, Building Credit, Investing
Note: Happy to talk about budgeting ⚖️ in Q&A if there are questions!
Let’s agree on why are we here today? 🤔
Before I share my story — I’d love to hear yours + what personal finance topics you’re most interested in
Why I’m here and what I have to share 🔆
- Graduated in the 2008 Recession
- Often what looks like the most tumultuous times often create the best opportunities for young people — whether it’s in the markets, or in the business or creative space.
2. You don’t need a lot to get started — time and a commitment to a plan.
3. There are no questions that are too basic — we don’t learn this in school
- Studied Finance and got an MBA
- Work experiences: Led Member Services @ nation’s largest student-run credit union, equity research, national policy campaign for U.S. debt reform, world’s largest hedge fund
- Personal finance and in particular, personal investing, still took me years to figure out.
Two tactical items:
- No need to take notes —I’ll share a summary of these ideas afterwards
- DISCLAIMER: INFORMATION CONTAINED HEREIN IS GENERAL IN NATURE AND MEANT TO BE EDUCATIONAL. IT SHOULD NOT BE CONSIDERED FINANCIAL, TAX, OR LEGAL ADVICE. IT MAY NOT BE SUITABLE FOR YOUR SITUATION. YOU SHOULD CONSULT WITH A PROFESSIONAL WHERE APPROPRIATE.
Key principles: the “why” before the “how” 🔍
1. Pay yourself first
- Taxes → you paying the government.
- Expenses & bills → you paying other people for services and goods.
- Saving & investing → you paying yourself first.
- Most people pay everyone else first before they pay themselves. You can be different.
2. When it rains, it pours: Emergency Fund
- Cash reserve to cover short-term expenses.
- Protection against unexpected or adverse events — health issues, family emergency, or job challenges.
- Ability to invest with longer time horizon — taking “long view” generally results in better outcomes.
3. Differentiate between short-term and long-term goals
4. Spend less than you earn
- Live like you were in college for as long as possible (while still enjoying experiences with friends and family).
- Hedonic treadmill (earn more , spend more, repeat)— if you already live a “downsized” life transitions won’t be as abrupt/jarring.
5. Develop a plan + stick with it
- World of instant gratification and shiny objects.
- More important than every to know yourself, be values-driven, understand what risks you’re willing to take.
6. Identify a “Why” that you really connect to
- Not “manifesting” or “visualizing” — simply have a deeply personal reason financial independence or well-being matters to you. [No judgment, just what you value here].
- Ex. personal sabbatical, being able to approach relationships from value-add, not dependency.
- Pay yourself first.
- A cash buffer your comfortable with (a.k.a Emergency Fund).
- Clarify your goals — the short-term vs. long-term.
- Spend less than you earn.
- Develop an investing plan and stick with it.
- Develop a “why” you truly connect with.
4 Foundations for Financial Well-being 💪🏾
- Most financial experts recommend 6–12 month Emergency Fund.
- Start where you can (1 month, 3 months) and build momentum.
- High-yield savings account or FDIC insured account (e.g. Certificate Deposit).
Managing Debt & Loans
- Work down any high-interest debt first — debt laddering.
- Low-interest loan —weigh paying off faster vs. potential returns if you use money elsewhere.
- Think of yourself as your own CFO: trying to get the best and highest use of your dollar.
- Core idea: weighing cost to service debt vs. potential gains of using money elsewhere — compare the two percentages.
- Build it when you don’t need it…
- So when you do need a loan (e.g. mortgage, car, etc.) you get the best interest rates (could save you tens of thousands or more in interest payments).
What goes into a credit score? In order of impact, we’ll use FICO (one of two major scoring companies in U.S.):
- Payment history: 35%
- Credit utilization: 30%
- Length of credit history: 15%
- Mix of credit types: 10%
- Recent applications: 10%
Payment history: Always pay bills on time; in-full (auto-pay is your friend)
- Your credit card utilization (your spending balance / credit limit).
- Example: $2000 avg. monthly balance/$4000 limit = 50% utilization
- Example: $2000 avg. monthly balance/$8000 limit = 25% utilization
- The lower it is, the more it will help your credit score.
- Get your Credit Utilization below 30% to improve FICO score
- If you pay your balance on time and in full, you can ask your credit card company for periodic spending limit increases.
Length of history: Keep old cards with good payment history open for as long as possible
Investing: getting your money to work for you ⛱️
- What answer to you expect when you ask the average person what investing means?
- What it’s not: stock picking, day trading, trolling reddit, etc.
- Our definition: building a portfolio of assets for the long-term to generate returns while managing risk
- Investing can often seem like the topic that most feels like a black box, a world of secret knowledge shared by the the suits in Finance, but it’s not…
- Let’s demystify it…
Why should it matter to you?
- Inflation: goods and services getting more expensive over time
- Over time, purchasing power of each $1 is falling
- To stay ahead we need our money growing faster than prices are rising
Imagine in the 1950s, your grandparents are trying to decide whether to ONLY save or also invest.
What, How, & Where
What: almost limitless types of assets people can invest in — here are the 4 key ones individual investors have access to
- But that doesn’t mean you have to be an expert in stocks or bonds or real estate.
- In fact most individual investors are not successful at picking individual stocks or bonds.
- But that doesn’t mean there isn’t a better way…
- Automate: Target-date fund/Robo
- Financial Advisor
Important to understand:
- Different types of accounts you can use
- What their purpose is
- Rules associated with them
- How you invest and what assets you put into what accounts for tax minimization (retirement accounts)
- Be in it for the “long game”— betting on humanity, innovation, optimism
- Diversified — not betting on specific stocks, ridings the larger upward wave
- Equity orientation when you’re younger
- Low fees — story of 2% fees
Poll: Does anyone want to guess how much more Friend 2 made by paying lower fees?
A few myths you won’t fall for 💡:
Myth 1: You can’t do it if you’re not a finance expert or professional — actually you can do it better if you apply the right mindset.
Poll: What percentage of professional investors outperform the markets over time? 
Myth 2: You have to have a lot of money to make money.
Power of Compounding (your money making more money for you):
- Example 1: Starting at age 25, invest $500/month at 6% annual return
- At age 50: $329,187
- Example 2: Starting at age 25, save $500/month in a high-yield savings account at 0.6% APY
- At age 50: 161,790.69
Resource: Compounding Calculator
Myth 3: This is hard & confusing — I’ll need to pay someone else to do it.
- You can’t be the best manager of your own money; don’t wait for someone else.
- Know your own preferences and risk tolerance in deciding on your strategy and approach, and then stick with it
- JOMO, not FOMO
- The advantages go to those that are better listeners than talkers, that ask the right questions vs. spouting what they know, that understand their “why” and not just the “what” and “how”