Amid calls for social-media hiatuses and digital detoxes, certified financial planner Alexa von Tobel urges modern techies to dive deeper into technology—in ways that work for them. “Money is stressful for everybody,” says von Tobel, founder and managing partner of Inspired Capital and founder and former CEO of LearnVest. “But the math is not that complicated.”
Von Tobel has spent more than a decade schooling the public on how digital platforms can help demystify our financial lives. In her new book, Financially Forward: How to Use Today’s Digital Tools to Earn More, Save Better, and Spend Smarter, she doubles down on that message by reminding people that they are in control, no matter how many new apps, currencies, or industries emerge. “The world is moving so quickly, I want people to feel like they know where the world is going,” she says.
Use automation to play ‘offense’ against extraneous spending
With the tremendous “amount of tech that exists to help you part with your dollars”—like digital ads that seem to predict what we want before we’ve even Googled it—it pays to be wary, said von Tobel.
“It’s really hard in the on-demand economy to budget,” she said. “So you need to play digital offense.” She is a big proponent of automating bill payments and savings (both long-term and for emergencies), which can help prioritize your nonnegotiable expenses and keep you contributing regularly with little effort.
Use tools such as banking apps or third-party budgeting and saving tools and you’ll stand a better chance of resisting an impulse purchase of the boots that follow you from web page to web page.
Break down goals to make savings feel real
“So much about money is habits and delayed gratification: ‘If you don’t get two today, you can get three tomorrow,’” von Tobel said. “That takes drilling into someone’s head.” Cognitive inclinations toward “present bias” (difficulty moving past instant gratification) and “exponential growth bias” (difficulty appreciating the value of compound savings) make saving for the future hard for many of us.
In her household, von Tobel and her husband divvy up savings for their four-year-old daughter into several accounts and then do their best to convey to her the goal for each “bucket.” “I want her to understand the analog of physical money to digital money,” von Tobel said. In this case, the largest bucket is long-term (for college) and the smallest is for shorter-term pleasures (cupcakes).
Creating different accounts makes it easier to see how your money is working for you and how much closer you are to achieving specific goals, and also keeps you grounded in what you are saving for—a difficult task in an age of swiping, tapping, and Venmo-ing “invisible” funds.
Research emerging investments before jumping on the bandwagon
Cryptocurrencies are here to stay, said von Tobel, who projects that blockchain technology will become increasingly woven into our everyday lives over the next 15 years. Nevertheless, when it comes to investing in anything, she said, caution is key.
“Before you invest, make sure you have no credit-card debt, have an emergency-savings fund, and are contributing to your retirement account,” von Tobel advised.
Once you’re ready, be your own best adviser if you decide not to pay for help. In her work at Inspired Capital, she looks for businesses that have a “record of success and a team of committed entrepreneurs.” She suggested that individuals who go at it alone might seek out promising ventures on platforms such as Kickstarter, AngelList, and YCombinator.
But be careful. “At Inspired Capital, we do due diligence and strategize,” she said. Individuals without that kind of team behind them need to be even more vigilant about spending their hard-earned money on volatile currencies and companies, no matter how exciting they seem.
Buy happiness by buying time
The growth of freelancing and rapid expansion of the gig economy mean the phrase “time is money” has “never been truer than in 2019,” von Tobel said.
On one end of the gigging spectrum, individuals are taking on less-structured jobs to supplement their incomes. If you’re at the other end, von Tobel said, you can use the gig economy to give yourself more of that precious resource—time. “How do you buy happiness?” she asks. “Spend money on the things you don’t like to do.”
Calculate the value of your time by determining your per-hour income after taxes, and you’ll have a greater appreciation for how you spend your days based on your compensation. For example, tally the time it takes to grocery shop weekly: checking to see what you’re out of, writing a shopping list, making time to go, then hauling everything back home, unpacking it, and prepping ingredients for meals. If you paid yourself for this task, how much would it cost? Now compare that to the cost of a meal- or grocery-delivery service, and see which is the smarter option for you.
Presented this way, von Tobel said, “letting good money follow bad” becomes less about reckless money spending and more about time wastefulness—and you don’t want to squander either.
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