Because of Covid-19, we are all living in a time uncertainty. If money is a topic that is giving you stress, listen to this episode of Modern Aging. Financial advisor Manisha Thakor talks about how to budget, save and spend your money. Manisha is also the founder of moneyzen.com, a financial education consultancy that helps women create financial wisdom to improve their relationship with money.
Money stress is everywhere. The first message that Manisha wants you to know is that money, “crosses all ages, genders, income, and network levels.” However, understanding money is not as hard as you may think. According to Carl Richard, a personal finance columnist in the New York Times, any financial situation can be explained on a cocktail napkin with a Sharpie. Basically, there is an intersection between what matters and what you can control. This intersection is what you should focus on. So, when it comes to your money, what can you control?
Spending is an important factor that you can control. The first step is to track your cash flow (pre-Covid-19) which you can do easily by pulling up your credit card charges. The second step is to follow a healthy spending guideline. Manisha shares her favorite framework from a book that Elizabeth Warren wrote in 1992. The framework is 50,30,20. Roughly 50 percent of your spendings should be on essential needs. 30 percent of your spendings should be on wants. Lastly, 20 percent of your spendings should be on savings for a near term emergency fund and retirement.
“Using this time to really redefine what 50-30-20 could look like on a sustainable basis going forward when we get out of Covid—that’s another really powerful example of the interaction between what matters and what you can control.” Manisha talks about much more than just healthy spending and budgeting. Take advantage of this episode because there is a lot of valuable information about loans, debt, and financial advice related to uncertainty.
What’s In This Episode
1:03 Introduction to Manisha
1:33 Origin of Moneyzen.com
3:45 Finance related to Covid-19
4:52 Finances that you can control
5:48 Tracking cash flow
9:27 Formula for healthy spending
13:00 Definition for living beyond your means
14:39 Credit card and student loan debt
15:18 Magic number for saving
16:15 Covid and unemployment
17:08 Loans and taking out money
19:12 Rule of thumb for retirement
20:09 The ballpark estimator
22:56 Book Recommendation
24:52 Unnecessary debt versus necessary debt
26:49 Finance and anxiety
28:50 Books to read
32:47 When to seek a financial advisor
34:25 Suitability versus fiduciary
37:01 Most important question to ask a financial advisor
39:20 Where best to invest money in market uncertainty
41:18 Index Funds
41:32 Active investing versus evidence based investing
43:48 Final advice