COVID has shown us how quickly unexpected events can throw our plans off course. Now, more than ever, it’s important to plan ahead–especially when it comes to your finances. Whether you’re bootstrapping your business, setting up your retirement fund, or simply learning the financial basics, it pays to pay yourself forward. Investing in your future will pay back dividends.
To help you master your own financial future, we teamed up with Ally for our recent Money Moves digital summit to host a mentor power-hour with five financial experts to answer your most pressing money questions.
In case you missed it, we’re sharing a few of the Q&As from our Money Moves mentor session. Read on for some sage financial advice from our five mentors who know quite a bit about the importance of investing in yourself, your business, and your financial future.
Q: Investing can be intimidating–what advice do you have for someone who’s new to investing and doesn’t know where to start. How do I overcome the intimidation factor?
JACQUELINE: As a first-generation stock investor, I know what it feels like to be paralyzed with fear because you don’t know what to do first. I am the daughter of a police officer and teacher who had pensions to fund retirement, so the stock market was not a topic of discussion at my dinner table during childhood. After graduating from college, I realized the importance of owning stocks as a piece of my wealth building strategy. I started small and made a $25 contribution to the 401K provided by my employer. As my salary increased, I contributed more, hired a financial advisor, and opened a Roth IRA account. I also worked hard to eliminate credit card and student loan debt. Over time, I became obsessed with understanding money and wealth building. Now, I am constantly listening to audio books and podcasts, watching CNBC or reading the Wall Street Journal and Barron’s. All of those efforts helped me to better understand money and investing. So, my top tips for new investors: start small, automate the process and make a commitment to learning.
Q: If this last year taught us anything, it was the importance of planning for the unexpected. As a small business owner, how can I be better prepared financially for emergencies?
ALLYSON: The last year taught us many lessons and brought significant stress to women business leaders all over the world. We found ourselves questioning how to properly position our services, pivot our product lines and staff our teams amidst a global pandemic and a world-wide racial reckoning. This was not easy, but we survived.
There are (3) things that I shared with our clients averaging $250,000+ annually to keep them on track and committed to success.
Financial stress can cause us to take our mind off our business goals, slide away from leading with discipline and throw us quickly into a state of overwhelm and fear.
Use affirmations like the one below to kick off your breathwork or meditation because if you’re riddled with anxieties and high-stress emotions, your business and your bottom line will soon follow.
REPEAT AFTER ME: I am a vibrational match for financial prosperity because I choose to only allow massive well-being. I stay in the place of already receiving monetary abundance from all sources that are for my highest good and greatest joy.
Stay the course. It’s the ebb and flow of business and keeping your mind centered, your energies focused and your intentions clear will get you through the storm and back into the sunlight of your success.
Q: I am currently working full-time for an employer but I plan to launch my own business soon–where is the most important area for me to focus my financial energy right now in order to take the leap?
BRITNEY: What a great question… and it’s awesome that you’re starting to think of this now. A mistake I often find those starting new businesses make is: investing based on what others are doing, and not based upon their OWN goals/needs.
So here is my advice:
So to answer your initial question… your financial energy will go into “the key people that can help you make [your launch] happen”.
Maybe it’s inventory samples? Maybe it’s a business coach? Perhaps it’s a brand designer or operations strategist… but the question still remains—who are the key people that can help you make the launch of your new business happen? Start there.
Q: I’m reevaluating how I split up my finances in the wake of 2020. How much cash should I keep in my savings and checking account?
ALAINA: Here is how I break down cash in my accounts:
Checking Account: I keep a small cushion in this account (no more than $200 – $500) just to cover any unexpected expenses from my daily spending. I don’t like to keep more than that just in case my debit card is compromised.
Short Term Savings Account: With my short-term savings account, I am keeping money for any repairs or things that don’t happen every month (like birthdays). In this account I keep one month of expenses.
Long Term Savings Account: This is my emergency fund. I would keep 3 – 6 months of expenses in this account in case you may lose your job. If you have a very secure job or you can get a new job very easily, I would keep 3 months, however if you are self-employed or your job is unstable, I would keep 6 months of expenses.
Q: I’m saving up to buy a home, but I’m worried that my credit score is too low. How can I increase my credit score and maintain it?
ASHIRA: The best way to increase and maintain your credit score is to start paying all your bills on time. A late payment can have a substantial effect on your score.
You want to keep your credit card utilization ratio under 30%. Your credit card utilization ratio is calculated by dividing your credit card balance by the total credit card limit. Make sure each individual credit card utilization is under 30%. Credit utilization makes up roughly 30% of your credit score, this makes it one of the most important factors in increasing or maintain your credit score.
You could also dispute negative or inaccurate items reported on your credit report. The best option is to write a letter to the three credit bureaus explaining why the information is inaccurate and provide evidence. Make sure to mail the letter certified mail with return-receipt requested as proof you sent the letter.