Women's Financial Empowerment

JUNE 2019 | FUTUREOFBUSINESSANDTECH.COM

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WOMEN’S FINANCIAL EMPOWERMENT

Emily Current & Meritt Elliott The best friends, entrepreneurs, and fashion designers discuss their rise to business success

How one mom turned around her finances and is now helping others do the same Why it pays to do your homework when selecting a financial advisor

The “Queen of Frugal” Shares

You Don’t Have to Break a Sweat to Get Financially Fit

Top Tips for Life on a Budget

1

You recently talked about the five numbers required to be financially fit. Can you tell us what these mean?

• 15 percent: Your minimum gross monthly savings.

• Six: The months of fixed expenses saved in an emergency savings account.

• 750: The minimum credit score.

• 35 percent: Ideal debt-to-income ratio.

• Two: The minimum number of investment accounts you should have: one taxable (brokerage), one non-taxable (i.e., IRA, 401k, SEP IRA).

2

What are the different ways women should be investing to become financially fit?

Women need to think about investing their funds beyond just retirement accounts. If your money is sitting in a bank account earning less than 1 percent, you’re literally losing 1-2 percent of the value of your money every year.

3

There was a time when Jordan Page had no savings, $15,000 in credit card debt, and limited income. By cutting back on expenses and searching for deals, she turned things around dramatically and now offers tips on how others can do the same.

Understand how to budget Page, a social media personality and mother of six, says to first determine your actual take-home income, and write down 70 percent of that figure. This is your budget for the mortgage, bills, and other expenses.

Savings should be 20 percent of your monthly income, with the remaining used to invest, tithe, or pay off debt.

What is the best financial advice you ever received? Who gave it to you?

A college professor of mine made me read the book “The Millionaire Next Door” when I was a senior in college.

He said it was the most important book we would read about finances. At the time, I thought it was a cute story about frugal people.

Fast forward 20 years, and I know he’s right. Financial health isn’t about keeping up with the Joneses; it’s about being the millionaire next door.

Keep it simple Don’t focus on having 8-10 or more budgets to manage per week. “Give yourself a set budget amount each week, then spend it how you see fit,” Page says. Some weeks you may need most of your cash for groceries, while other times you might use it for baby shower decorations or taking your kids to the zoo.

To see the full interview, visit us online at FutureofBusinessandTech.com.

Beware of the sneak attacks Page says it’s the $1, $10, and $20 decisions we make

PHOTO: JYLARE SMITH

Once a financial advisor at Merrill Lynch, Shannon McLay decided to dedicate her life to helping people achieve financial wellness by creating The Financial Gym.

daily that ultimately decide our quality of life. Think twice before indulging in pricey cups of coffee, frequent takeout meals, and monthly subscriptions.

Recognize value Cut-rate isn’t always the answer. Sometimes, learning how to save up for, and invest in, a top-quality item is ultimately more frugal than buying the cheapest version of something.

Limit using plastic If you have an outstanding balance on a credit card, literally freeze the card in water and don’t touch it

until the balance is paid off. Once your spending is under control, find a card that gives cash back — not points or flight miles.

Take control Don’t dismiss budgeting as too complicated or a hassle.

“I can either ignore budgeting, resent money, scrape by, and limp along forever, or hit it head-on, make it my own, find how to make it exciting and bearable, and find what works,” Page says.

“I can actually live the life of my dreams without having to win the lottery.” n Cindy Riley

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Developing a plan to achieve financial independence may seem complex, but the search for a financial advisor doesn’t have to be.

Determine how the advisor is compensated There are three basic ways financial advisors are compensated. “Fee-only” advisors are paid solely by their clients and do not receive commissions from the sale of financial products. The fees are typically calculated as a percentage based on assets managed for the client, or as a fixed rate.

Institutions pay “commission-based” advisors based on the sale of financial and insurance products, and as a result of trades placed in client portfolios.

“Fee-based” advisors are like a hybrid of the two structures. They are paid by the client for planning services, as well as by financial institutions in return for selling financial products.

Know the advisor’s legal obligation Advisors are held to one of two regulatory standards: suitability or fiduciary.

A fiduciary standard requires advisors to put a client’s needs ahead of their own and recommend the best strategy for the client. A suitability standard requires advisors to make recommendations considered to be “suitable” to the client’s needs, but are not necessarily in their best interest. It is fair, and advisable, to ask the question, “Are you a fiduciary?”

Decide if the advisor’s process aligns with your objectives Some advisors provide comprehensive financial planning, some provide solely investment management, and some provide a mix. Ask the advisor to see examples of a financial plan. Are they experts in areas you need guidance with, like estate and tax planning? Ensure the advisor’s focus aligns with your needs.

Samantha J. Anderson, CFP®, Co-Chair, Women’s Initiative, National Association of Personal Financial Advisors 4 • FUTUREOFBUSINESSANDTECH.COM

How Emily and Meritt Found Success in Friendship and Business

mium denim line Current/ Elliott, and began tapping their resources (graphic designers from internships, bankers they went to school with, and the like) to get advice on building their brand from the ground up.

“A lot of women were really supportive of our idea of going out and doing our own thing,” Current said.

Meritt said their inexperience as designers, along with their low overhead, further compelled them to take the risk. “We felt that if we were going to jump off a cliff, that was the time to do it.”

PHOTO: LUKE FONTANA

What to Consider When Searching for a Financial Advisor

Fashion designers and entrepreneurs Emily Current and Meritt Elliott have always found success by going against the status quo.

Before they were entrepreneurs, Emily Current and Meritt Elliott were just two friends attending the University of California, Los Angeles, with a shared affinity for all things fashion and denim.

Now, the owners of successful lines of accessories, bedding, jeans, knits, and stationery are just trying to enjoy the ride

— and bring other women along as they go.

“I think when we started our first company, we were really new to the business and relied on other people to show us the ropes,” Elliott said, “and when we learned the ropes, we found that we didn’t want to do business that way.”

Jumping off a cliff After Current and Elliott graduated from UCLA, they started their careers as stylists. Soon, they came up with the idea for their first business venture, the pre-

A wonderful shift Today, Current and Elliott continue to push for more support of women through their work with Rebecca Minkoff’s Female Founder Collective, a network that grants companies a seal that indicates to consumers the company is women-led.

“We feel that there’s space for everyone; we really try to lift each other up and help each other,” Elliott said. “It didn’t start like that 15 years ago in this business — and it really feels that way now. It feels like a wonderful shift.”

Marching to the beat of their own drum has always been the secret to Current’s and Elliott’s success, and they encourage aspiring entrepreneurs to resist putting themselves in any one box, too.

“Be prepared that your career and your destiny will take many shapes and have many chapters,” Elliott said. “A big lesson that we learned is that you can reinvent yourself — and there’s a lot of freedom in that.” n Melinda Carter MEDIAPLANET

Investing in Retirement Is the Ultimate Form of Self-Care

Women typically live longer than men, so we are more likely to live alone in retirement and, therefore, need more money for it.

Yet, on average, women earn less than our male counterparts. The good news is that women are increasingly putting themselves in the financial driver’s seat — 95 percent are directly involved in their households’ financial decision-making, but women are still less likely to feel confident that they will reach their most important financial goals.

Planning for retirement is the best form of self-care. These are some things all women can do today: Lean in on money talk Make retirement security a part of the conversation with yourself and your friends. Women are a powerful force in the American economy — let’s lean in and use our collective power to elevate this conversation.

Work with a fınancial planner Preparing for retirement takes more than just contributing to a retirement savings account. Modern retirements can last 20-30 years and we need to make our money last. Taking steps, like owning life insurance, individual longterm care insurance policies, and at least one individual annuity, are critically important components of building a financially secure future.

Teach your daughters (and sons) Talk to your kids about the importance of preparing for a strong financial future. You do not have to earn a high income to be financially secure. In fact, a quarter of the most financially secure households earn $50,000 or less. How did they do it? They had a plan and took steps.

Susan K. Neely, President and CEO, American Council of Life Insurers 6 • FUTUREOFBUSINESSANDTECH.COM

Financial Guru Farnoosh Torabi Offers Advice for Gaining Financial Independence Closing the pay gap is not a simple exercise, however, women are hungry to gain fınancial independence and there are steps they can take to do just that.

espite comprising about half of the U.S. wo rk fo rc e and earning more bachelor’s degrees than men, women continue to make 80.5 cents for every dollar men make, on average, according to the Institute for Women’s Policy Research. Black and Hispanic women earn even less.

Financial wellness guru Farnoosh Torabi wants women to know they can help narrow that gap by advocating for themselves in the workplace. As host of the popular finance podcast “So Money,” Torabi helps arm women with the skills and confidence to do just that.

“I think women are increasingly putting up a good fight, which is exciting to see,” said Torabi, who is also a co-founder of Stacks House, a pop-up designed to inspire women to achieve financial independence.

Although Torabi sees progress, research suggests women may face backlash or even jeopardize their professional success if they use the same script men do when negotiating for a raise.

“We are aware of these risks and it’s sometimes what prevents us from speaking up,” Torabi said.

A smart first step toward getting more money is figuring out if you’re being underpaid. While websites like payscale.com and comparably.com can tell you how your pay compares to the average salary in your industry, Torabi recommends another, perhaps unexpected, strategy.

“Confide in male role models and colleagues, and ask them for feedback,” she said. “It’s not always easy or simple, but if there is a male colleague that you trust and you want to really gauge your pay

equity, have an off-therecord conversation with him about what he makes or whether he thinks what you make is on par with your industry’s average.”

Taking charge Ultimately, you’re responsible for your financial wellness, said Torabi, explaining that’s what her mom taught her — and that philosophy is the best money advice she ever received.

“My mom once told me, when I was in college, that the only person who would ever bail me out of a financial mess would be me,” she said.

“It wasn’t advice so much as a forewarning, and I’m not sure if she suspected I’d racked up a few thousand dollars in credit card debt at that point, but it was exactly the tough love parenting advice I needed to hear at that time in my life.” ■ Melinda Carter

PHOTO: CHRIS ECKERT PHOTOGRAPHY

Women are now the breadwinners in 40 percent of households, but are we doing enough to prepare for retirement?

What Women Need to Know When Planning for Retirement SPONSORED

Saving for retirement is a challenge for many U.S. workers. But according to new data from Alight Solutions, a leader in technologyenabled health, wealth, HR, and financial management solutions, women face a number of obstacles that impact their ability to save.

“Saving adequately for retirement is not as simple as putting a little more money away with each paycheck,” says Alison Borland, Alight Solution’s executive vice president of wealth solutions and strategy. Prioritizing student loan payments, paying for a child’s

education, or managing day-to-day budgeting can all get in the way of saving.

On top of these financial realities, women also can face significant headwinds that impact saving, including lower pay, interrupted careers, and longer lifespans.

According to Alight’s annual Universe Benchmarks report, women save at a lower rate than their male colleagues — 7.6 percent of pay on average compared to 8.3 percent. A separate report from Alight found that 63 percent of women say they feel intimidated by financial matters, compared to 46 percent of men.

Start small and start as early as possible, advises Virginia Maguire, Alight’s vice president of wealth product strategy.

“Start with a budget to help better manage day-to-day finances,” she says, “and then create a strategy to meet both your short- and long-term savings goals.”

Ask for help Professional investment help can really make a difference with growing a retirement account. Unfortunately, Alight also found that 48 percent of women, compared to 54 percent of men, are not comfortable approaching financial advisors or help.

“Don’t be afraid to ask for help,” says Borland, noting employers today offer a wealth of tools and resources to help workers navigate their full financial picture. Borland also urges women and all employees to make sure the professional investment advice they receive is unbiased.

“Investors should understand how their advisor is compensated to ensure the advice they’re receiving is in their best interest,” she says.

Kristen Castillo

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