Take Your Finances by the Reins with Advice from the Creator Behind Your Rich BFF

How financially literate are you? Research shows that women have lower levels of financial knowledge and confidence compared to men. If that doesn’t sound important, buckle your seat belts because the gender gap in financial literacy has a lot of negative repercussions for women—from retirement savings disparities, higher student debt burdens, less investing, and lower savings. Also, when women get divorced, their finances decrease 41% afterward, more than twice as much as men’s.  

If the lack of financial empowerment for women bothers you, Mary Alice Haney, host of SHE MD, has got you covered. She recently sat down with Vivian Tu, the financial literacy expert behind Your Rich BFF, an online financial literacy community. 

Tu, who is also the author of New York Times bestselling book, Rich AF, and the host of Networth and Chill, is demystifying personal finances for the digital age. She shares her passion for empowering women through financial literacy, practical tips for investing, and money mindset shifts we all need to make. 

Tu encourages financial empowerment for women 

After working on Wall Street for years and meeting lots of “Chads and Brads” who made well over $200,000 while still accruing credit card debt, Tu had a life-changing realization. “If people in finance don’t know this stuff, then people not in finance definitely don’t know this stuff.” 

Her passion for personal finance was born, and she set out on a mission to help people, specifically women, take control of their finances. “The infrastructure is not in place for women to succeed,” Tu explains. 

The biggest takeaway Tu learned from working on Wall Street is that “everything is negotiable.” As an Asian woman and the daughter of immigrants, Tu says she was told, “Don’t make waves; it’s good to be demure, work hard, and keep your head down.” 

But Tu says her reality in her finance career changed her perspective. “All the people I worked with on Wall Street knew their worth and demanded it daily,” she adds.

In order to reach a place of financial empowerment, Tu encourages women to play an active role in their finances. “You don’t get to be a secondary character in your own life,” she says. “If you want to understand your money, you need to be the person to sit down with your partner every month and go over it. You have to know where the money is coming from and where it’s going.”

The “STRIP Method” for financial empowerment

Tu created the STRIP Method, a system for achieving financial wellness and building wealth. It stands for savings, total debt, retirement, investing, and planning. “It’s my special proprietary solution to answer my friend’s common question ‘How do I get rich?’” Tu laughs.

• Savings
  If you are single, you want to build a three-to-six month emergency fund in a high yield savings account that is FDIC insured. If you are the head of the household, you’ll probably need six to 12 months. “Your emergency fund is important because it’s what is going to protect you from further issues down the line in case something happens,” Tu says.
• Total debt
  Strategically pay down debt. You can start by listing all your debts—from the highest interest rate to the lowest interest rate. Make the minimum payment on everything and put any extra money toward the debt with the highest interest rate.
• Retirement
  Tap into key accounts like a 401k, 403b, Roth IRA, or your individual retirement account. “All of these accounts are awesome because you are doing something the government wants you to do, so you get a tax benefit for it,” Tu says. “Either you get to save on taxes today or save on taxes in retirement.”
• Investing
  Diversify your investment portfolio. Tu is a big supporter of investing in a bunch of different things. You can easily do that through ETFs or mutual funds that track broader indexes or sectors. “Do not buy one stock and think you are going to get rich,” Tu laughs. “That is not how that works.” 
• Planning
  Plan for the future if you want to ride off into the sunset and have a happily ever after. Tu says that true financial empowerment means thinking about what would make you happy and what you would need to make that happen. “What is a happy life for you?” she asks. “Because the truth is it’s different for all of us.”

Practical tips for investing 

If you have just $50 in your pocket, Tu says that’s enough to invest. Use technology for your betterment. Fractional shares are a small slice of an investment share, and according to Tu, you can take $5, $15, or $20 and start investing. 

The easiest way to get started investing is using a robo-advisor, which is a digital platform that provides automated financial planning and investment management services using algorithms and software. In simpler terms, the technology builds and manages your investment portfolio with little to no human involvement.   

“They will build a portfolio that makes sense for you based on things like where you live, how much you make, when you plan to retire, etc,” Tu says about the path to financial empowerment. “The best part is the minimum entry is very low. You can get involved as soon as you have a couple dollars, and they will build out this portfolio on your behalf.”

How to avoid lifestyle creep 

Lifestyle creep is when you start making a little bit more money, so you start spending more money. This happened to Tu after two to three years in her career on Wall Street. “I was wondering what happened since my first year in New York,” she says. 

Tu warns that one purchase leads to another, which is why it’s important to create a plan for your finances. “Obviously, I got a nicer apartment, nicer handbags, and I started to go out to eat more,” she says. “It’s easy to convince yourself that the next purchase will make you happy, but it doesn’t.”

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