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As the founder and managing partner of Inspired Capital, Alexa von Tobel knows personal finance inside and out. In her new book, Financially Forward, she delves into the future of money and how to make the most of it. We sat down with her to hear how the insights she shares in her book can help us in our approaches to both our careers and parenting.

 

In Financially Forward, you address the trends impacting our wallets. How are our financial lives different than those of our parents’ generation?

Alexa: There are a lot of different factors that are shaping the state of Americans’ wallets, which makes our financial lives look very different than it did for our parents.

At its core, we’re living differently. Our family structures are changing—we’re living longer, taking care of both our elder parents and children, we’re marrying later, and the cost of raising children has increased. All of this impacts how we budget and plan for the future. We also view ownership—of a home, car, or anything else—very differently than our parents. The American Dream of the house with the white picket fence has been replaced by the rise of the sharing economy.

There are also a lot of changes in the way we work and spend. Our career paths are more fluid. Our parents didn’t have side hustles or hold multiple jobs the way many of us do today. The amazing upside for us is that our earning potential is flexible (i.e. via the gig economy).

The reality that we’re using way less cash than our parents also shouldn’t be understated. Mobile pay is moving us further away from having to physically part with our money, which has a huge psychological impact on how we think about our wallets.

 

One thing remains true across generations: financial security is an important goal. What is your best advice for establishing a solid foundation?

Alexa: Before you move on to any other financial goal—saving for a house, kids, or a big purchase—it’s important to make sure you’re taking the necessary steps to establishing financial security. There are three critical things to think about here:

  1. You’re on track for retirement. People always ask me about investing and it’s important, but the best, and first place, you should invest is in yourself and your future through your retirement accounts.
  2. You have no credit card debt. Credit card debt can be incredibly daunting, but there are many different ways to hack your debt pay down. I typically recommend for people to rank their cards by interest rate, and start with paying down your highest interest rate card first.
  3. You have an emergency savings, or a “freedom fund,” as I like to call it. This is an amount of money in liquid savings, usually 3-12 months of expenses depending on your personal situation, that can support you in the event of life’s inevitable curveballs like losing a job or confronting a medical emergency.

 

How can automating our personal finances help in establishing financial security?

Alexa: Automating your finances can help you stick to the financial plan you’ve (hopefully!) created for yourself. If your plan sets out to answer the question, “where should my next dollar go?” automation makes sure those dollars go into the buckets you’ve decided on. I recommend automating as much as possible, from retirement and savings contributions, to credit card payments, and household shopping. I also advise people to set auto calendar alerts to check in on their financial plan throughout the year, as well as important moments like prepping for tax season or budgeting for the holidays.

 

Which apps should every mama have on her phone? What are the benefits of using mobile pay?

Alexa: I’m a big proponent of mobile pay and setting up your digital wallet, which is essentially just your phone. There are a few different benefits that I think Apple sums up nicely (as they should!):

  • It’s faster than a credit or debit card, so it saves you time at checkout
  • It’s more secure because your credit card number isn’t given to the merchant
  • It’s more anonymous, because the transaction info that’s tied to you isn’t stored

There are SO many apps to consider—I include an entire glossary in Financially Forward! A few to highlight:

  • Familytime, which allows you to manage parental controls and screen time
  • Jetblack, a new personal shopping service over text message, aka a busy mom’s best friend!
  • UrbanSitter, an app that allows parents to search for, book, pay, review, and recommend babysitters and nannies. Editor’s note: UrbanSitter was founded by HeyMama member Lynn Perkins!
  • A money management or daily spending tracking app like Albert, Empower, Mint, or Wally.

With most of our financial lives existing online, how do we keep our identities and assets secure?

Alexa: You’ve probably heard a lot about how important it is to have secure passwords, but I can’t stress the significance of this enough. Mix up the passwords you use, and use a password manager to make it easier to remember all of them. I’d also recommend setting up multi-factor authentication wherever possible, especially for your email, bank accounts, and social media accounts. There are extra precautions you can take like securing your Wi-Fi network, setting up fraud alerts, or downloading ad blocker apps on your mobile device. I’d also recommend getting in the habit of monitoring your accounts on a regular basis, so that you can act swiftly if there is a problem.

 

As a leader in FinTech, we’re eager to hear your take on cryptocurrency. How will it change our relationship with money?

Alexa: I’m incredibly excited about the potential of cryptocurrency, and blockchain, the technology underpinning it, but it’s still deeply mystifying for most consumers—and even those in finance like myself. While I’d encourage everyone to better understand crypto and blockchain, I wouldn’t recommend running out to buy bitcoin as your first or even second financial priority. Crypto is still very volatile and there’s a lot of hype. In short, it’s not something to bank on if you’re still trying to get a solid financial plan in order.

That said, there are very real technological advancements happening with blockchain that could radically change how we as individual consumers transact and interact with our money. It could mean less middle men, smarter contracts and more security, among other things.

 

How does preparing for our financial futures help us live better lives?

Alexa: Put simply, preparing for your financial future gives you freedom. It gives you the freedom to dream, hope, plan and provide without fear. It allows you to take your dream job even if it means taking a pay cut or to sleep better at night knowing that your wallet can weather whatever storm is ahead.

 

We’re eager to hear your own story. How did you become financially savvy?

Alexa: I credit my parents for instilling entrepreneurship and smart spending in me from a young age. They were always very intentional about spending, and encouraged me to work and to save my own money. I got my first job when I was ten working at my father’s pediatric office, and a few years in, my parents started my first Roth IRA on my behalf. It wasn’t until college that I realized how profoundly confusing money was for people. Even my incredibly smart classmates were pretty clueless when it came to budgeting and saving, and I realized there was a massive need for more education around this topic. A few years later, when I was in business school and had a few years of work experience under my belt, I realized there was actually an idea there—LearnVest, a startup grounded in making financial planning accessible and affordable for everyone. The rest was history, and I’ve become a full on geek when it comes to the topic of personal finance!

 

Your own kids are young. Do you talk with them about financial planning?

Alexa: Absolutely. My oldest daughter Toby is four, and my husband and I have been trying to teach her about the value of saving. Delayed gratification is one of the most important tools in your financial planning toolkit, and something kids can fundamentally understand. Toby has five different piggy banks in her bedroom and they’re different sizes based on the size of the goal or toy she is saving for. For example, the biggest one is for college savings (I’m sure she doesn’t fully grasp what this is yet), and then she has banks for things like a bike or treats. Multiple piggy banks influences kids to be more thoughtful and intentional about saving, which is good preparation for real life when we are frequently forced to make choices and trade-offs about what to save for.

 

What is your best advice for raising financially literate kids?

Alexa: Start early! A 2018 study from the University of Michigan found that children have formed spending behaviors when they’re as young as five, so it’s important to talk to your children about money early on. While money will likely look and feel very different when our kids are older, instilling strong values and habits at a young age is important.

My other piece of advice would be to make money an active part of the conversation (in an age-appropriate way of course) whether times are good or bad. We all want to shield our kids from struggle, but they’ll pick up on the tension anyway. It’s better to be open than to have them be scared and confused.

3 pearls of wisdom

1.

Model good money habits and make sure, like with anything else, you’re leading by example.

2.

Establish an allowance system and ways to learn about saving - I personally love the piggy banks of various sizes and shapes!

3.

Show them the importance of hard work. No mama wants to be away from her children, but it’s important that the language you’re using about your job is not creating a preconceived notion that work is “bad.” When I’m going off to work and saying goodbye to my kids, I use phrases such as “mom is going to work at her job that she loves and when I come home, I’ll tell you all about it!”

xx Alexa von Tobel

 

Alexa delves more deeply into the topics covered above in Financially Forward. Pick up a copy of your own here

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