When you think of finance, usually the first things that come to mind are the most lucrative jobs that are unrealistically displayed in the movies.
These include traders, investment bankers, or hedge fund managers that are associated with burnout, long grueling hours, no life, and only living a temporary lifestyle they want to abandon once they’ve made enough.
Of course, not all jobs in the business world are like this.
But it’s becoming harder and harder to find someone who truly enjoys their job and has been there for the long haul in business.
Life isn’t linear and as a result, unless you work for yourself, there is no certainty it will last.
As the price of tuition for school skyrockets each year without any incentive for the schools also known as businesses themselves to lower rates, more and more people take out loans to pay for a degree that might not be worthwhile anymore since it puts them into debt and end up in a job market full of volatility and competition.
I’m not promoting entrepreneurship and no degree, but there is no guarantee that any job will last.
So how do you find this balance and if so, a career that can last?
Personal finance is a sector of the business industry that has become more prominent since we have finally come to realize as a country that we truly need to plan for the worst in order to live freely during a recession despite going through one only a decade ago.
As we’ve witnessed this unexpected pandemic, it is astonishing to find out that almost 40% of American adults would not be able to cover a $400 unexpected emergency with cash, savings, or a credit card that they would quickly have to pay off according to the Federal Reserve. With the average savings amount of only $8,863 no wonder, this is true.
So are we a too optimistic society that believes that financial collapses, global warming, and diseases don’t spread or cannot happen anymore?
Seems like it.
Believe it or not, we need to be more pessimistic about the future mixed with cautious realism, everything else, including politics, let’s lighten up the mood.
Since the ROTH IRA was established in 1997 along with the 529C plan to pay for college in 1986, we haven’t come so far to learn to take steps to better our future since then.
Yes, that feels like centuries ago, even a few decades before I was born in the dot com era but unfortunately, until something bad happens like a once in a lifetime pandemic, we start to realize that being comfortable is not the best move to make longterm.
Why is this so?
We enjoy temporary pleasure.
We love eating a pint of ice cream watching Selling Sunset until the next morning, we have a panic attack and major guilt but push it aside when the action needs to be taken.
Yet while the banks are going through this turmoil of supply loans, the personal finance industry is booming becuase as Fidelity states, “a change in plans is always part of the plan!”
The U.S. Bureau of Labor Statistics predicts the personal finance field will grow by 27% through 2022—nearly double the 14 percent growth rate projected for U.S. occupations on average. This translates into more than 60,000 new jobs in addition to the almost 225,000 that existed in 2012.
You’re in luck!
With personal finance, you don’t have to give up being comfortable becuase change is slow.
Some steps that you need to take one step at a time include:
1) Plan for uncertainty
2) Invest and have more cash on hand
3) Set up an emergency fund
4) Time is your best friend
Personal finance is also referred to as financial management.
It is simply how you manage your money, investments, savings in order to live a fruitful life and not on the tip of an icebreaker.
Talking about money is an extremely taboo subject but really should not be.
I suppose this is so because we don’t like to talk about how much we make because then there will be judgments and assumptions which are plausible so that’s why there is Morning Star and Glassdoor.
But seriously, talking about money is necessary to understand what is best to keep your family afloat.
We all make, love, think about it more than we should and it does lay the groundwork for how we live our life.
And behind all of this is how you spend your time.
Time is an asset and the only thing you cannot buy more of.
How you spend it determines your actions, decisions, and how you will live.
Of course, we live in different situations, and each of us was brought up in different circumstances. But we all have advantages that we can utilize.
Think about it.
Becuase you were born in NYC is already an advantage for whatever it may be!
Internships, job opportunities, diversity, etc. as opposed to living in a rural Oklahoma where you aren’t exposed to those positions.
But in Oklahoma, you might have access to more farms and learn about where our food comes from, etc.
Everything is relative.
It is the same way in how you view your finances.
You can say that you didn’t inherit much wealth or be excited to make use of all the opportunities you have in London or another innovative city!
Anyone who makes investing, budgeting, and planning a priority is already ahead.
No need to make big bets on the stock market.
By simply contributing a few dollars a month to a high yield savings account or ROTH IRA to compound your money, will set you on the right path.
One of the reasons why personal finance interests me is because it is less, how do I put it, punishment and more goal-oriented, people-focused, and value-driven, something we all should strive for more of in our lives besides sitting in front of the computer waving our electronic hand all day via Zoom.
Because face it.
You could have all the hard skills in the world, from being proficient with VBAs in Excel to knowing how to code with your eyes closed in C++, but that most likely won’t make you as satisfied and let you serve as a person as much as helping someone pay off their crimpling $60k student loans and plan for retirement would.
Finally, finance has turned a corner and now become more personable.
Through advocating for personal finance in school, and we have a long way to go with that and as females not relying on the male of the household to take care of our bills as much anymore in case he is no longer able to, we;ve taken great leaps to finally prove to families that planning is a security blanket and protection for your life to come through empathy, something this industry lacked.
So why does personal finance get a bad wrap?
Well, unfortunately as a society, we are too wrapped up in money-making careers.
How is it possible that we have to know what we want to do before we even look for colleges?
We are swayed by our parent’s success, Fortune 500’s magazine articles about the top earners in the industry, and simply just become jealous through comparing ourselves not understanding that happiness equates to success, not vice versa.
Now I won’t get into that debate today because it is a controversial topic for some reason even though it’s self-explanatory and true, but what’s crucial to remember is that everyone needs personal finance in their life.
We push it behind because it isn’t a conventional academic class.
At least, coding is now taught in school but what about the most important thing that we think, use, love, spend daily?
Freedom
Yes, anyone can become anything but truly anyone with a degree, CFP, CPA certification is eligible to help someone with their finances.
Curating LBO and DCF models are great, but when was the last time you got to interact and help someone face to face?
Servant leadership and a multitude of values come into play as an advisor.
It comes full circle and utilizes those soft skills that are almost as crucial as today
We All Are Them
Not all of us will need to query data in Excel for our job, but regardless of what position you have, knowing how to manage your money will be a requirement.
Some jobs require
The longer you wait, the more disadvantages you put in place for yourself, simply by waiting time.
No matter if you are depressed, in debt with still a 6 figure income, which happens more than you think, or living comfortably and happily-making 90k per year, sticking to a plan and being diligent is most important.
Those are traits that are developed, not learned in textbooks.
No need to get that CPA exam, unless you are advising others.
Just have your plans in place for how you want to live your life.
For yourself, stick to the basics.
So where do I actually start?
First off,
1) Determine Your Goals
Are you saving for a trip, the big expense to have more cash on hand now, or want to invest in the stock market for returns later on?
2) What is Your Risk Tolerance
The younger you are, the more risk you are allowed to take since once again, you have more time.
As you become older, you have to make smaller bets and cannot afford to lose as much money so you are more risk-averse.
Prioritize paying off anything you owe-high interest debt, car, student, or credit card loans first. The government or bank is in control until you pay it off and if you want to do it fast, you have to limit your overall spending per month
3) Expect The Worst
If you do, your life will be happier and easier too.
Sadly, only 69% of Americans are saving less than 10% of their income according to CNBC. As more Millenials live paycheck to paycheck due to rising costs of school, housing, cities, less flexibility in jobs and competition, we seem to not have time to plan for the worst becuase we are already in it and too optimistic.
To dig yourself out of this hole, you need to set up an emergency savings fund, have insurance for all your valuables and assets, 6-8 month leeway fund in case you get furloughed or laid off and that will make you more at ease during a time when everyone is struggling because they made poor decisions.
4) Diversify
Investing in a variety of assets such as stocks, bonds, mutual funds, ETFs to name a few is a great way to generate wealth over time and not be stuck to one thing.
In life, it’s never good to be good at one thing.
Be a generalist, not a close-minded specialist unable to adapt.
With our finances, if you have a have so much cash, that is just lessening in value due to inflation and you aren’t actually growing it.
To let money work for you not against you, earn passive income through investing, taking accountability on your own and research.
Money grows when you are sleeping or playing tennis. The more income sources you have, the more comfort and stability you will have in your life if 1 income vanishes, you are not left on the side of the road.
If you don’t have time for this, then it might be the right time to consult an advisor who will do the heavy lifting for you.
But remember, just becuase they have that certification, doesn’t mean they can predict markets.
They do the same research you do with no priority technology to get insider information.
Everything is available to you so seize it!