For many college students, financial planning for the future is the very last item to accomplish on that never ending to-do list we all seem to have here at Holy Cross. Even the mere mention of saving for retirement, paying off debt and loans, and creating a budget seems to incite fear and panic in the souls of college students, myself included. However, as much as we would all love to put off these realities, they are going to affect us/become inescapable at some point. So, in my opinion it’s better to get ahead now and tackle them head on. To do just this I sat down with LearnVest CEO and Founder and bestselling author of Financially Fearless Alexa von Tobel to get her advice on myriad of financial topics.
Q: To start off with, can you please describe/explain what LearnVest is?
A: LearnVest is redefining the American approach to personal finance. We match clients with dedicated financial planners and our powerful planning technology to create simple, affordable financial plans. We truly believe all Americans should feel confident about their money and empowered to make smart, educated decisions.
Q: What were the inspirations and influences behind your decision to start LearnVest?
A: After I graduated from college, I quickly realized how little I knew about personal finance. I had so many questions and realized my friends and family did too. This led me to found LearnVest, a way for people to get simple, straightforward advice.
Q: We often learn financial behaviors from our parents and families. What did you learn from yours’?
A: My mom is my biggest role model. She worked as a nurse practitioner while raising three children and still managed to somehow do it all. From my family, I learned the value of working extremely hard and the importance of knowing as much as possible about my own financial life.
Q: Financial planning for the future can be daunting for most people, particularly for college students who often have significant debt. In addition, we often put off things that are difficult or scary to do. What advice would you have to encourage students to take the first steps and embrace the mindset of planning for the future including while still at school?
A: To start, I would encourage students to sign up for LearnVest; it is free to set up an account, which can help you keep track of what you’re spending and help you create a budget (https://www.learnvest.com). Knowing where your money is going is something that will help you for the rest of your life! I also encourage everyone to take a “Daily Money Minute” and scroll through the LearnVest app to quickly check in on their expenses every single day. If you start to make this a habit, it will become extremely empowering instead of scary to see what’s been going on and to have that knowledge.
Q: Setting a budget is a great way to be financially prudent, but it can prove troublesome to adhere to at times. What tips can you offer for not only setting a budget but also sticking to it?
A: What works really well for a lot of people is the 50/20/30 rule. This is where 50% of your budget goes to essential expenses (housing, transportation, groceries, utilities); 20% go to financial priorities (paying off loans and debt, building savings, retirement); and the final 30% goes to lifestyle choices (this is what you get to live on and enjoy now, however you want). The 50/20/30 rule is an easy way to break things down at a high level.
Q: We all know saving is important, but we often don’t know how much we should be saving or even how to get started. What would you recommend to students or new graduates?
A: Again, the 50/20/30 rule can help here too. 20% is a great goal to start with, though I know that might sound like a lot when you’re just getting started. So, I’d recommend starting by saving any amount that you can, because no amount is too small! Over time, continue to increase that amount (even by a few dollars each month), and you’ll start to build your saving’s muscles.
Q: How should one balance near-term and long-term goals like paying down debt versus saving for retirement?
A: It is important to do both, but one of the first things I would start with is building an emergency savings fund of 3-6 months living expenses. The reason for this is that if something happens (you have car problems or you lose your job), you don’t want to have to use credit cards and rack up more debt. Once you’ve started to make progress here then you can focus on your other goals like paying down debt.
Q: The first years out of college are presumably important ones in terms of developing good financial management habits. What habits would you encourage this year’s seniors to develop as they are starting out in their careers?
A: As I mentioned before, figuring out where your money is going is huge. Start by making “Daily Money Minute” a real habit. I do this first thing every morning, and it’s become second nature. It’s also critical to properly budget and understand what you can afford, especially when it comes to your home. I see so many young people spending far too much on rent and that will completely derail a budget.
Q: You’re in the financial advice business. What’s the best financial advice you ever received, and whom did you receive it from?
A: As I mentioned above, people often overspend on rent. One of the best pieces of advice I every received was to never overspend on your home. It’s often one of the biggest expenses in people’s budgets, and if you get that wrong, it throws everything else off.
Q: As an entrepreneur, what advice can you offer for those of us in college who are also interested in starting our own businesses?
A: One thing I find very helpful is having the right mentors. As I was starting out, if I met someone I clicked with I would ask if I could ask them to coffee. This simple task got my foot in the door, so I could talk about what LearnVest was doing. I have been extremely fortunate to find some amazing mentors along the way.
Q: Finally, I understand you’re a new mom. Congratulations! What tips do you have for managing the competing demands of family and a busy career?
A: Thank you! I love being a Mom. I have always tried to find ways to save time. For example, I routinely eat the same things every day to keep things simple, and I use trackers like Fitbit and Jawbone to ensure I’m getting in steps and sleep. Now that I have a baby, I make sure that I use that saved time to spend it with my family. We have regular family meals, and we make sure to plan time away together by turning business trips and wedding trips into family trips.
LearnVest, Inc. is wholly owned by NM Planning, LLC, a subsidiary of The Northwestern Mutual Life Insurance Company.