Jan 20 2014, 8:47am CST | by Forbes
I recently caught up with personal finance guru, Alexa von Tobel, on the tour for her New York Times bestselling book “Financially Fearless: The LearnVest Program for Taking Control of Your Money“. Tobel is the founder and CEO of LearnVest.com, a company that intends to bring financial literacy to women everywhere.
A graduate of Harvard College, she was a trader at Morgan Stanley on their Proprietary Trading Desk, before leaving to be the Head of Business Development at Drop.io. From there, she attending Harvard Business School up until she took a leave of absence to launch her company. Tobel has received a lot of recognition in the past years including being listed on the Forbes 30 Under 30.
In the following interview I did with her, she talks about the origins of her company, her 50/20/30 financial plan that she offers people, her view on how Hollywood has portrayed her industry and her best advice.
Dan Schawbel: How and when do you originally create the LearnVest program and what did you do in order to get people to start looking at it as a viable option?
Alexa von Tobel: The LearnVest Action Program has been in the works for the past few years—it highlights best-in-class financial planning principles and puts them into a format that allows people to really make progress on their money.
Critical financial planning steps—like making sure you have the right insurance—can be daunting. Our 7-Step Program makes these steps actionable, and our team of LearnVest Experts holds our members accountable to take action.
Traditional financial plans cost something in the $3-$5k range, which is out of reach for most Americans. We think it’s important that financial planning not be a luxury, so we’ve worked hard to leverage technology to offer a subscription service with affordable pricing.
Since we’ve started, we’ve been spreading the word about LearnVest and Financially Fearless is a great way for people to engage with the company. Each copy of the book comes with a free check-in call with our LearnVest Experts and a $50 credit toward the Action Program.
Dan: Can you explain the 50/20/30 plan and share an example of someone who used it successfully?
Tobel: There are a lot of budgeting frameworks out there, but this is the method I like best as it gets straight to the big picture of your finances. Budgets don’t have to be synonymous with deprivation. This budget is about making room for your important financial goals, while also leaving room for you to enjoy what you earn. What’s the point of creating a budget if it’s not possible to follow through?
The 50/20/30 formula is a macro-level budget. It suggests that 50% of your take-home pay goes to your essentials (rent/mortgage, utilities, groceries and transportation to work), 20% goes to your future (emergency savings, debt repayment, retirement funds), and 30% goes to your lifestyle (travel, shopping, eating out, etc.).
One of the most important times to think through this method is when you’re in the process of moving. It’s so tempting to overspend on our homes, but whatever your home costs you, it’s recommended that it stays within your essentials. If you get the big stuff right, it’s much easier to stick to everything else.
Tobel: Movies like The Wolf of Wall Street and Boiler Room often show the glamorous, “sexy” side of the financial services industry. They suggest that there’s massive wealth to be had with the right investment decisions and perhaps a few shady moves. The financial services industry has had a rocky reputation over the past few years, and that’s something LearnVest is actively trying to change. We’re committed to being a trusted and unbiased resource for people nationwide. Our mission is to help people feel amazing about their money—that’s what excites me and that’s what I’m passionate about.
Dan: Why do you believe that financial literacy isn’t taught in our school system? Do you have any plans to partner with schools?
Tobel: I can’t tell you exactly why personal finance is not part of our education system today, but I can tell you that it absolutely should be. I have a whole TED talk on the topic; there’s a negative domino effect to not educating our younger generations about money. I’m talking basics here—the importance of saving for retirement early, checking your credit score, being thoughtful about student loan debt./>/>/>
As LearnVest grows, financial literacy will remain a core mission of ours, and I hope to do more with bringing money education to schools. That’s part of why I’m so excited about the Financially Fearless America book tour—we’re speaking to thousands of people, students included, to spread the word.
Dan: What are your top three career tips?
1. When everyone zigs, zag. Be a risk-taker. I dropped out of Harvard Business School in the heart of the Recession to launch LearnVest. Was it a crazy idea? Probably. But I was passionate about my mission and had a solid business plan in place. Diving in is a scary move, but the rewards make it all worthwhile.
2. It may sounds silly, but one of my favorite work mottos is get up, dress up, show up. It’s important to be ready to go, whatever day you have ahead of you. Show up with a smile and a great attitude.
3. Be OK with failure.
Source: Forbes Business
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