What's the best advice you've ever heard?
“The best advice I’ve ever received — and I really abide by this — is when it comes to people who want to start a company, who want to be entrepreneurs, once you get to the point where you know you want to do it, you have to just do it. Someone once told me, ‘If you know what it takes to start a company, you’ll never start it.’ Another piece of advice is to take every day one day at a time. You have to make each day the best it can be.”
How do you balance taking an entrepreneurial leap with managing your finances?
“This is probably the most important question. You have to have a financial plan — you must! When it comes to being an entrepreneur, you’re in a position where you need to know how much risk you can bite off; meaning [in my experience], an emergency savings account that had one year of savings — I didn’t want to borrow any money from anyone. I took my own savings and put some money in the start-up. Doing those two things, I knew I had one year. After one year, I turned into a pumpkin. I wasn’t able to keep running the business. If I hadn’t raised enough money to pay myself, if I hadn’t made traction, I knew I would have to go back to business school and my time was done.”
Looking back on your dropping out of Harvard, do you think business school is really worth it at all?
“Here’s the thing: One day in, running your own start-up is like one semester in business school. I mean that literally. You’re dealing with everything from accounting, to leadership skills, to marketing, and product management. You have to be pretty good at all of it because you can’t not know how to do it. I really do believe knowing the operating skills of running a business is really important because it helps you understand all the different challenges, and shows you that problems are harder than they look from the outside. What goes into making a small website is more complicated than you think. I wouldn’t exchange my time at business school for a second — I met so many great professors and incredible people, the networking is phenomenal and I did learn good skills — but do I think you need it? No. Do I think you learn so much running your own company? Absolutely. My own personal advice is: When you’re thinking about anything in life, whether it’s who to marry, or whether or not you want to start a company, quit a job, or leave a boyfriend, I always put everything through this filter of wondering when I’m 90 years old, will I regret not doing this or that? If I’m going to regret not doing something, why not just do it.”
What’s the biggest financial lesson you personally had to learn the hard way?
“I make a ton of mistakes — well, used to. I think many people are really ashamed of finances. I’ve had the privilege of talking to thousands of people about their money, and what I’ve found is this common theme: Everyone feels like they don’t know what to do. It doesn’t matter if you went to Harvard business school, work at Goldman Sachs, or went to community college; everyone has the same questions. My own mistakes are dumb ones: For example, I once didn’t get a dental plan. I’ve never had a cavity, my teeth are in great shape, and of course I get a cavity after I turn down this six-dollars-a-month deal. It was really expensive to fix, where I could have paid the six bucks and prevented it. That’s what got me thinking about how no one asks the right questions, when we should know and be unafraid to ask.”
So, what kind of questions should we be asking ourselves before we go out and invest in a Céline bag or a pair of Louis Vuitton shoes? Is there a way to recover from a pricey impulse buy?
“I love fashion, and I love personal finance. I don’t think the two have to be enemies. I have the Chanel and Céline bags, but on the flip side it’s really about making the purchases that are good investments. My own advice would be to not do impulse purchasing. Whenever I feel like I need something, I’ll shop my closet first. I’ll take the things from the back, and put them in the front so I’m aware of what I have. When I’m in a position to go to a black-tie wedding, I’m lucky to have friends who are similar in size and I’ll borrow first. In general, I invest in good basics like black Chanel flats and nude pumps instead of buying the Day-Glo purple. I’m obviously not going to wear something like that in 30 years. I want to buy something that I’ll still want in five years. The other thing I think about is an item's cost per wear. For example, I’d love a bright red winter coat. Let’s say it’s $1,000. I try to get a cost per wear down to 50 cents, which would mean I’d have to wear this bright-red jacket 2,000 times. Am I going to wear this same jacket for decades? No, because it’s bright red, so let’s just go for the black one. The things I splurge on are the timeless pieces I can pass down to my daughter and granddaughter. Oh, and shopping sample sales.”
Is it ever okay to make impulse purchases? How do you recover from it?
“Financial judgment is not about not letting you have things. Good financial judgment is about you living big when you’re older. I don’t know about you, but I’d love a beach home at 65. Everyone always thinks of finances as a force telling them ‘No, no, no’ and abstaining. It’s really about spending in ways that’ll allow you to really love it. You shouldn’t want to go against the judgment. Retirement savings isn’t something you cram for. It’s allowing you to travel and afford to see your kids when you want to. It’s not about living miserably with walkers. Thirty percent or less of your paycheck should go to lifestyle purchases like your gym membership or getting your hair blown out. The goal of having a really balanced budget is building in splurges. When you come to work with a financial expert, we’ll teach you how to build in splurges. You shouldn’t want to bend the rules. Money is really empowering if it’s done the right way. For any smart, savvy woman out there, having a financial plan can change your life.”
When it comes to women, finances, and the workplace, there's still a pay gap we often have to consider. What’s the best way we can ask for a raise or a salary we deserve?
“I think that every single person needs to ask for a raise every year or two years at the most. There’s inflation of 2 or 3% every year. If it’s going up, you’re losing money. As a result, you need to keep up! The worst case scenario is you ask. Your boss will respect you for it. Here’s how you do it: Don’t ask your boss when they’re running around; plan a meeting. The meeting should be around your review. Be proactive and find out how you can help the company, show them what you’ve brought and what you want to bring. If you can sit down and really articulate that you want more responsibility, you’ll indicate your interest in a raise. You need to know what you’re worth! There are great sites out there like salary.com that you can use to find out what other people in your field are getting paid. The worst case is you ask, and your boss could say no. Just ask.”
What fuels your own personal sense of empowerment?
“I have this motto that I use every day: Get up, dress up, show up. You know, get up on time, dress the part — whatever that means for the day — and show up with a smile. You feel good when you wake up on time, put on something that’ll make you feel great, and show up with a great attitude. I try to do that every day.”
Photo: Courtesy of LearnVest