Who is your hype man? And where are you finding encouragement on this financial freedom journey?
Earlier this week, I was a guest on a podcast and the hosts asked me how I managed to remain encouraged despite the various experiences that I’ve had throughout my life, including having grown up in a low-income family, having gone from that environment to a school like Harvard–which was a tremendous culture shock–and navigating the world as the only person in my immediate family with college degree seeking the path of financial freedom.
How do you deal with the inevitable moments of self-doubt and where do you find encouragement. Reflecting on their questions this week gave me the opportunity to really sit in a place of gratitude for all of the people and places where I have found encouragement throughout this journey.
Today I want to tell you what I have learned about fear and self-doubt, and some of the tools that have helped me overcome these inevitable feelings and experiences throughout my journey. So here are five things that have helped me overcome fear and self-doubt on the journey to success.
These feelings are completely normal.
I’ve learned to give myself permission to be human and acknowledge the fact that feelings and thoughts of fear and self-doubt are inevitable to come up on any journey where you’re seeking to do things that are different and really challenging yourself to step outside of the norm. So instead of feeling bad, when you get scared, feel scared and do the thing anyway.
When you plant a seed, the first thing to come up is the dirt.
Next is something that I like to remind the women in my coaching program. And that is the first thing that comes up when you plant a seed is the dirt. When you set an ambitious goal for yourself or undertake something new, you can expect the fear and the self-doubt and challenges to arise first. In fact, this is a sign that you’re doing something right because on the other side of fear and self-doubt is growth and success.
Guard your gates.
Next is to fill your space with positivity and encouragement. I grew up in church where we talked about the concept of guarding your gates. These are the ways that messages get into our psyche and our predominant gates are our eyes and our ears. We have to guard the things that we see or read and the things that we listen to with that in mind. What are you watching, reading or listening to on a regular basis?
When setting out on a challenging journey amp up the positivity by following positive Instagram accounts, listening to encouraging podcasts, putting up quotes around you that inspire you, and constantly feeding yourself positive messages. When I was founding my nonprofit, one of the quotes that I kept up in my office was a telegram that Dr. Martin Luther King Jr. had sent to Thurgood Marshall.
In that telegram, I highlighted this sentence that really resonated with me and the sentence read: “You have proved to be a giant of your profession and your career has been one of the significant epochs of our time.” I loved immersing myself in the significance of that statement and imagining that that telegram was written to me.
What quotes do you have up around you to encourage you on your journey and to remind you of how dope you are?
Develop a meditation practice.
The other piece of advice I gave was to consider adding a meditation practice to your toolkit. One of the key features of meditation is the art of noticing our thoughts and allowing them to pass. It’s an important muscle to build when inevitable feelings of fear and self-doubt arise. The truth is that these feelings and thoughts never disappear as you continue to challenge yourself throughout your life. They continue to pop up. It’s inevitable.
Practicing meditation allows us to build the muscle of noticing when those thoughts arise and allowing them to pass. It’s one of the most important practices that I’ve invited into my life and it allows me the space to replace those thoughts with encouragement and reminders of what I can do instead of fear about what I cannot.
Who’s your hype man?
The most important lesson of them all is where we began. Who is your hype man? One of the things that I shared with the podcasters was how important it has been for me to surround myself with positive voices throughout my life. Here’s the truth. None of these things can be done alone. You need positive voices and people in your corner to support you–your own hype men and women to remind you how dope you are and to bolster your self-confidence when you need it.
I have found it incredibly important to surround myself with people who speak life and positivity into me. My mom was definitely one of those people. My sister is probably my biggest cheerleader today. And my close friends–the people I allow to be closest to me–are those who constantly offer me encouragement and support. So my advice to you is to audit the people around you and increase the time and investment in people who encourage you, make you feel good, make you feel strong, make you feel like you can accomplish your goals, and decrease time spent with everyone else.
So those are my five things. One, remember that feelings of fear and self-doubt are normal and give yourself permission to be human. Two, remind yourself that the first thing that comes up when you plant a seed is the dirt. Three, fill your space with positivity and encouragement including the things you watch read and listen. Four, consider adding a meditative practice to your toolkit. And five, surround yourself with people who speak life into you.
I want to conclude with a quote from one of the most encouraging speeches I heard this week and this was Senator Cory Booker speaking life into Judge Ketanji Brown Jackson. As I listened to his words of encouragement to her, I couldn’t help but think that every Black woman, who’s out there working their butts off and killing the game and facing the inevitable pushback that we know comes up–either internally from ourselves or externally from the haters–could benefit from a hype man like Cory.
As you read this quote, I want to challenge you to let these words sink in and imagine that he’s speaking directly to you. You are worthy. You can do this. And our world, our community, will be all the better because you were a member of it. Play it back as many times as you need to, then get to work, girl. Stay the course and achieve your dreams. You can do it.
Senator Cory Booker to Judge Ketanji Brown Jackson:
“You have earned this spot. You are worthy. You are a great American. Today, you’re my star. You are my harbinger of hope. This country is getting better and better and better. When that final vote happens and you are sent on to the to the highest court in the land, I’m going to rejoice. And I’m going to tell you right now, the greatest country in the world, the United States of America, will be better because of you.”
It’s March and college acceptances are going to start rolling in!
This is an incredibly exciting time for students and their families across the country and also an important time because you are preparing to make one of the most important financial decisions of your lives.
As a former financial aid officer, and as someone who has worked directly with high school students on the path to college, I want to see you make the smartest possible decisions in the weeks to come.
Tip #1: Know the difference between billed and unbilled expenses.
Nowadays, when you receive your financial aid award you often see a list of all of the expenses related to going to school. These expenses include things like books, food, transportation to and from campus, and other miscellaneous costs.
Many of these costs are estimates. The actual expenses will depend on how much money you choose to spend and how many deals you’re able to find.
For example, the books for your classes are often available at the college bookstore for the highest price, but they may also be available online from retailers like Amazon or half.com.
As you look at the expenses on your financial aid letter, I want you to distinguish between things that the school is actually going to send you a bill for–things like tuition fees and your room and board–versus things that you will shop around for like books and transportation.
Once you know the billed costs you can compare how much money you’re getting in scholarships to see what the gap is going to be.
How much money are you actually going to owe the school after your financial aid has been applied? That is the most important number for you to keep in mind as you compare different offers.
Tip #2: Subtract loans from your financial aid award.
As you may know, I am not a fan of going into debt for school. Scholarships and shopping around are my favorite methods for going to school debt free.
When you get your financial aid award, it will have a number of different types of financial aid listed. Some of the types of financial aid you may see include scholarships, work-study, and loans.
Scholarship money is free money that you do not have to repay. This may also show up in your award letter as a grant. Same thing–money you don’t have to pay back.
Work-study is money that you actually have to work to earn. You’ll get a job and you’ll be paid this money in the form of a paycheck. You do not get this money up front, you work for it. You earn it over time.
And then loans. Loans are the sneaky culprit that often get tucked into financial aid awards to make you think that the total cost of your education is covered.
I have seen many schools fill the entire gap between the cost of attending their school and the actual scholarship money they’ve given you with loans, seemingly adding tens of thousands of dollars or more in your financial aid package.
First of all, you do not have accept these loans. You can say, no, I don’t want the loans. And you should know how much you’re going to have to pay for school without applying those loans to the bill.
Tip #3: Never consider a scholarship offer without seeing the full cost of attendance and your full financial aid award.
Many schools will send an acceptance letter that includes how much money in scholarships you’ve received. It’s really exciting to see that you’ve been awarded a scholarship and you’re so excited to be admitted to the school.
But, if all you did was compare your acceptance letters to each other with the amount of scholarships you’ve won, you could easily fool yourself into choosing a school that offers you a higher scholarship, but where it costs so much more to attend.
That scholarship might be barely a drop in the bucket compared to the cost of attendance.
So don’t fall for the acceptance letter scholarship trick.
You want to look at the full financial aid award. This award will tell you the full cost to attend the school and we’ll tell you everything that’s in your financial aid award including any grants and scholarships, any work-study, and any loans.
Then and only then should you make a decision about which school to attend.
Tip #4: Did you know that financial aid awards are often negotiable?
This is especially true of private schools that are awarding their own financial aid in addition to any grants and scholarships directly from the federal government or the state.
If you find yourself comparing two financial aid offers from schools that are fairly similar and one award is better than the other, feel free to use that letter as a bargaining chip to increase your offer.
Go back to the school that gave you less money and ask them if there is an appeals process. In your appeal, you can include a copy of the other financial aid award and ask the college if they can match or beat It.
Many schools have an appeals process in place specifically for this reason and they may be willing to give you additional scholarship money so that you will choose their school.
Tip #5: Money isn’t everything.
I would advise you to kick the tires of every school that you’re considering attending.
See if they have an opportunity for you to visit the campus. Speak with professors and speak with other students.
They may even have funds to be able to fly you out to visit the campus if you don’t have the money to afford to attend yourself.
This is one of the most important decisions that you get to make. Weigh all of your options carefully, ask for what you want, and what you need.
And in the end, trust your gut.
Good luck and fingers crossed as those acceptances start to roll in!
Today I’m answering one of the most common questions that I get asked about being the author of The Black Girl’s Guide to Financial Freedom. And that question is, “what inspired you to write the book?”
I want to talk about one of the inciting events that caused me to begin writing the book and that was the creation of a vision for my life.
It All Started With A Vision
Around this time, last year. I was participating in a syndicate program–a collection of Black professional educators who were pooling money to contribute to philanthropic endeavors. We were education leaders-turned-philanthropists participating in a program to help us identify and clarify our personal investment philosophy.
One of the activities that we had to complete as a part of this program, was the creation of a 20-year vision.
Now, personally, I am a dreamer. I love to create visions for myself and it has helped me figure out my very next steps in life. Growing up I used to create very long-term visions. I think I had sort of imagined being a psychologist when I grew up. I had identified that as one of my strengths and was very interested in helping people.
So I planned out this whole vision of going to college and graduate school and becoming a psychologist. But, all of that went by the wayside when I got to college and actually started taking psychology classes and it was not what I expected. At that moment, as an eighteen-year-old sort of deer in the headlights, I wondered what to do now because my well-laid plan had not come to fruition.
I sort of made the decision that it didn’t make sense to make these long-term visions anymore. I had to pick up a new toolkit, so for me that tool became let’s figure out our very next steps.
So if that sounds like you and you’re like how in the world would I know what I want to do years and years down the line, it actually is quite helpful to think in bite-sized pieces and say, okay I may not know what I want to do 20 years from now, but I can at least think about what I want to do next. Believe that after I take that next step, I’ll be able to take another and another, and I will continue to get clarity of vision on my very next steps as we go.
So in general, that is how I approach planning and life. But I had joined this program and they asked us to do something different from what I had grown accustomed to, which is to think in the long term and name a 20 year vision. The first block that came up was memories of having set that very early vision and then having to abandon it earlier on in life.
The other thing that came to mind, you know I’m 37 today, and so 20 years from now would put me beyond the age when both of my parents had passed away. Both of my parents lived until their early 50s and 20 years from now put me into my late 50s.
I had just a mental block around creating a vision for life that extended beyond the years of both of my parents. So it actually took me a quite a while to complete that assignment.
I put it on the back burner and said I’ll do it when I’m ready. I’m not going to force myself to do something they may feel uncomfortable. So I waited until I really had a light bulb moment of some things that felt clear enough for me to commit to paper to actually write down and say this is part of my life vision.
One of the things that stood out to me was this interest in financial Independence and financial freedom that I had been talking about for years. The leader of the Angel Syndicate knew this about me and would often refer folks to me.
If you want to learn more about FIRE, you should talk to Paris.
And so I had sort of acknowledged that this was important to me, important to my identity and to my future. If I had a 20-year Vision, obviously FIRE would be a part of that.
But beyond the impact on my own life, I knew that I wanted to have an impact on the broader community. So that became a cornerstone of my 20-year vision.
What I named was not only had we created a movement to allow a generation of young people to both gain knowledge about financial Independence, but also receive support in achieving it, but also that I was able to lean on my strengths.
I love being a facilitator. I sort of envision being a board member and supporting and bolstering this movement. There were other things in the vision as well, but that was an important part of it.
This is something I think we should all do whenever we set a particularly long-term vision for ourselves. We’ve got the long-term vision in mind. The next question we have to ask is what about that vision should be true today.
Starting Immediately
How can I pull some pieces of that vision from the future back into the present? What action steps can I take immediately to start walking down the path toward making that future vision a reality?
One of the things that I named in my vision was that I had written a book about FIRE that had had a tremendous impact on the people in my community.
So the writing of the book became my immediate first action.
Seeing that vision come to fruition is a really important process and it’s what I want you to take away from this story.
Now, it’s your turn.
So here is the challenge that I have for you. First, I want you to create a vision for yourself. If 20 years into the future feels way too far away, I understand. Start with something smaller like a 10-year or 5-year vision.
What inspires you? What excites you? What makes you feel really motivated to walk toward that future for yourself?
Think about that. Commit it to paper. Write it down.
The next step that I want you to take is to look at your vision and think what action steps do you need to take immediately to put yourself on the path to achieving that future vision.
Start taking action today. It could be the tiniest step–doing research, adding something to your calendar–but I want you to choose that immediate action today.
I cannot wait to see what comes out of this process for you.
For me, a best-selling book came out of it, and I’m so inspired and motivated and excited and humbled by the response I’ve gotten to this book. Who would have known?!
I just wanted to write a book that was reflective and authentic of my experience and the vision for myself and for my community.
So let me know what you decide and I cannot wait to hear what comes into your life as a result.
Today, we are talking about one of the most important financial concepts to know: the 4% Rule.
Years ago, when I was going through my debt free journey, I found myself googling resources figuring out how to save as much money as possible. I wanted to ace the debt freedom journey and get rid of my debt as soon as I could.
During the course of my research, I came across a blogger named Mr. Money Mustache. Pete Adeny, the blogger who runs the Mr. Money Mustache website, is someone who retired at age 30. And he’s nearing 50 now. So he’s been retired for a couple of decades.
At the time that I was reading his blog, I was really interested in some of his savings tips. Now if I were to describe Pete as a saver, I would call him a super extreme saver. He and his wife and their child were living on a household budget of $25,000 a year.
Meanwhile, they were earning an excess of six figures total. So they were saving over 70% of their income!
I found myself wondering why anyone would be crazy enough to do that. It definitely seemed like a big sacrifice.I was happy to take some of their savings tips and apply them to my own life, but it made me wonder…why would you make so much money and spend so little of it?
The FIRE Movement
What I learned was that he and his wife were following the FIRE movement. “FIRE” stands for “financial independence, retire early,” and there are thousands of people all around the world– probably millions–following this plan so that they have the option to retire at any age.
And there are many people who follow Pete’s path and retired at the tender age of 30 or earlier.
The question is, aside from extreme saving, how were they able to retire without being worried that they were going to run out of money?
What I came across was a very simple calculation that people in the FIRE movement use to calculate their assets. This calculation is called the 4% Rule. Now before we get into how it works, I want to tell you where it came from.
The Trinity Study
Once upon a time, there was a group of economists who got together to study the market and understand different retirement account scenarios. They looked at different types of holdings, different allocations, and 30 year periods in the market, to understand how much money one would have to have invested for their money to last.
This study has come to be known as the Trinity study. (You can google it and read all of the juicy details even today.)
They weren’t interested in early retirement when they conducted the study. They were simply running financial models of the market. Here are some things we know about the market that factored into their scenarios. If you look at any 30-year period in the history of the stock market–including the Great Depression, including the recession of 2008, looking at the history of the market including all of the dramatic ups and downs–you will find that in any 30-year period, the stock market has generally returned around 7%.
So if you had your money in the market at any point in its history, over a period of 30 years, you would make 7% on that money.
That’s a really interesting number to know because it helps us understand that if we invest in the stock market today, over a long time period horizon, we might expect to make at least 7% on our money. I say at least 7% because over the past 100 years that average has been inching up to around 10%.
(And of course, over the past few years that number has been exponentially higher, but we don’t need to worry about that because we’re thinking about long-term horizons.)
The 4% Rule Emerges
So let’s use 7% because it’s the safest conservative number for us to use. Now, people who follow FIRE looked at this study and extrapolated the answer to their question, which is how much money would I need to invest to be able to retire and live off of my retirement funds forever. Not just for the next 30 years, but indefinitely, and be able to pass that money along to my heirs in the form of generational wealth.
This is where the concept of the 4% Rule emerges. The 4% Rule is essentially this: if you have your money invested in a portfolio that mirrors the total stock market, then you can safely withdraw 4% of your money each year and the remaining amount will continue to grow at the rate of inflation (that means that even if you withdraw 4% of your money every year, the amount in your account will never decrease and you’ll be able to continue to withdraw 4% every single year for ever). Definitely pretty cool, right?
If you’re wanting a simple way to understand how that calculation works, here’s how I like to think about it. Remember that 7% number that we talked about–that the market generally returns a rate of 7% over any lengthy period?
Well, imagine that your portfolio has grown by 7%. And let’s take inflation into account. What is inflation? It’s when the cost of goods goes up and how much you can buy with the same amount of money goes down. Inflation is a really important concept to know because if you don’t invest your money over time, your money is actually losing value.
So that money that you’ve got stashed under the mattress or sitting in a savings account is actually becoming worth less and less year after year due to inflation. This is really important to keep in mind.
The inflation rate in the US over time has averaged around 3%. Sometimes it’s higher, sometimes it’s lower, but 3% is a good average to keep in mind.
Calculating Your Retirement Number
So let’s put those numbers together. If you have a portfolio that has grown by 7% and you subtract the 3% inflation rate, 4% is what you have left over. Four percent is the amount of those earnings you could take out while the remaining amount in your account continues to grow at the rate of inflation, which means it doesn’t lose its value. As the cost of goods goes up, the amount of money in your account goes up to match.
If you are super mathy and you care a lot about the numbers, you’ll note that on an annual basis these numbers fluctuate quite a bit. It may be helpful for you to go back and read the Trinity Study to understand all of the scenarios more closely.
If you’re the average person who wants a shortcut, the 4% Rule is your guide to how much money you’ll need to have invested and how much you can take out each year so that you can live on those investments for the rest of your life.
So, now you might be wondering how do I run the math to know how much money I need to have invested so that 4% is enough to live on?
There’s actually a very simple calculation to tell you how much money you have to invest for the 4% Rule to work for you. That number is the number 25.
Let’s look at an example. Think about how much money you’ll be spending each year during your retirement, your annual expenses. Take that number and multiply it by 25, and it will tell you how much money you need to have invested. If you were living like Mr. Money Mustache and his wife on $25,000 a year, $25k x 25 is $625k.
So, in order to retire, you would need to have $625,000 invested in the stock market and 4% of $625,000 is $25,000. That means each year, you’d be able to withdraw 4%–your $25,000–and live on that for the year.
That is how the 4% Rule works. Take your annual expenses in retirement, multiply them by 25 and that gives you the total amount you need to have invested in order to retire.
FIRE Inspiration
There are plenty of examples of people who have done this. If you’d like to read some of their stories, two of my favorites are the anonymous blogger of A Purple Life. This is a young woman who retired with $500,000 invested, which means she’s living on $20,000 a year and she was able to retire at age 30.
Another example are the bloggers of Our Rich Journey. This is a married couple with two school-age girls and they retired on a total of 2.5 million dollars at the age of 40.
Even if you love your job and don’t plan to retire anytime soon, it could be interesting to think about putting yourself in the position to be able to retire whenever you’d like. Keeping these numbers in mind and knowing how the 4% Rule works can be incredibly empowering on your own personal finance journey.
At very least, think about how much money you currently have invested in your 401k or any other accounts. Compare that with how much money you actually think you need to live on each year. How can you get your own investment portfolio closer to the point where the 4% Rule would work for you?
If the idea of early retirement sparks your curiosity, I would definitely encourage you to learn more. You can pick up my book, The Black Girl’s Guide to Financial Freedom. You can read blogs of folks who followed this path. A few of my favorites are Mr. Money Mustache, A Purple Life, and Our Rich Journey. And if you want to read more about the investing side of things, one of my favorite books is The Simple Path to Wealth by JL Collins.
Here’s Your Homework
First, run the numbers for yourself. Think about how much money you would need to live on in retirement. And if you’re serious about retiring early, get clear on the minimum amount of money you would need to spend in order to buy your freedom from needing to work. Multiply those annual expenses by 25 and get that target retirement number in mind.
The second thing I want you to do is check your understanding of the 4% Rule. How do we check for understanding? Try sharing this with a friend or family member and explaining it to them. You really know you understand something when you’re able to teach someone else.
Finally I challenge you to learn more. Read inspiring stories, ask questions, and join the movement.
How do you define financial wellness in your life?
Earlier this week, a young woman asked me the question: howdo you define financial wellness? In turn, I responded by asking her how she might define it for herself.
Her definition was that if she lost her job tomorrow, she would feel okay. I think that’s a great definition–removing any stress that you have financially and no longer relying on your job for money.
I also recommended one of my favorite books to her, Your Money or Your Life by Vicki Robin. In this book, Vicki really challenges us to ask ourselves what is enough when it comes to money. So often we get used to needing more and more money, and as we get more money and buy more stuff we think the next step is to need even more.
This puts us on a dangerous cycle, always needing more and never having enough. The trouble with this is that we make things all about the money–more, more, more and not about what the money allows us to do in our lives.
If you were to ask me, I would suggest financial wellness isn’t about the money at all. It’s about with the money allows you to do and how you feel about your life as a result.
In my Queen Money Moves™ coaching program, I teach women my ACE Method of Money Management. The “A” stand for “assess,” the “C” stands for “choose,” and the “E” stands for “execute.”
Today I want to invite you to do a financial wellness assessment of your own life. To do this assessment, we are going to turn to Your Money or Your Life by Vicki Robin. In her book, she lists 10 financial indicators that I think will work really well for our assessment today.
Wherever you are, I want you to pause and answer these questions for yourself (from pg. ix in Your Money or Your Life):
Do you have enough money?
Are you spending enough time with family and friends?
Do you come home from your job full of life?
Do you have time to participate in things you believe are worthwhile?
If you were laid off from your job, would you see it as an opportunity?
Are you satisfied with the contribution you have made to the world?
Are you at peace with your money?
Does your job reflect your values?
Do you have enough savings to see you through six months of normal living expenses?
Is your life whole? Do all the pieces–your job, your expenditures, your relationships, your values–fit together?
How did you do on this assessment? Wave you been using your money to create more freedom and satisfaction in your life?
If not, I would encourage you to think about what steps you can take today to turn things around and use your money to create more freedom and satisfaction. That is the path to financial wellness.
If you’d like a suggestion on one thing you can do today, I would recommend taking a look at how you’re currently spending the money that you have. Think about your values and the vision that you have for your life. Then look at that budget and ask yourself how well your current spending decisions align with your values and your vision.
Are there things that need to be cut from your current budget? Are the things you need to add?
There is no set ideal budget. Your money is a tool for you to achieve the things you want in your life, so start with your budget and start making some different choices today.
And if you get a chance, definitely pick up Vicki Robin’s book, Your Money or Your Life. It’s one of my favorites and one that should definitely be on your shelf right next to my book, The Black Girl’s Guide to Financial Freedom.
