by Jenna Kutcher
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I cried on our team call last week. You know the season we’re in is leaving no one unaffected by financial challenges or health worries or our sense of security and normalcy being shaken. I’m overwhelmed and exhausted. And I know I’m not unique in my experience. With layoffs and furloughs and business dropping out from under us — Financial insecurity is impacting so many.
So what can we do about it? How can we manage the fear, make the best decisions, and even just TALK about what we’re facing so our money isn’t a thing of anxiety, but a tool that gives us stability in uncertain times?
The expert for this conversation is Dominique Broadway, millennial money expert and founder of Finances Demystified. Her mission is to help you take action with your finances, so you can begin to live the life you desire. This episode is about taking action with your finances, whatever state they’re in right now, to find confidence moving forward. So let’s get to it.
How She Got Started
Dominique Broadway always wanted to be a financial planner, even in high school. She studied banking and finance in college, and went on to a big internship at UBS Financial Services working with high net worth clients. That internship turned into a job, and that job definitely fit her vision of a dream job.
However, after landing in that role, Dominique couldn’t shake the feeling that she was meant to be doing something else with her life. But she didn’t quite know what that thing was yet.
Dominique had purchased her first home before she graduated college, and her friends wondered what she was doing that they weren’t. They kept coming to her for financial advice, but she couldn’t help them because her firm only accepted people with a certain net worth.
“After telling people over and over that I couldn’t help them because they didn’t have enough money, I realized that there was a market for this,” she explained. A mentor told her she’d never make any money helping people who don’t have money. To which Dominique said, “Challenge accepted.”
When she heard about a conference called For Sisters Only happening in town the next week, she decided to launch her company for that event. Her mission was to help people with their finances and figure the rest out later… And that’s how it all began.
But in full transparency, Dominique shared that since she launched her business so quickly, she didn’t do a great job pricing her services. In the earliest days of her business, while it was growing and she was taking on clients, she lost her home and her car. Her credit plummeted. She was broke.
It was an eye opening experience to work through her own financial struggles while her clients were thriving. In fact, Dominique credits that as valuable knowledge to now help her clients from an entirely different perspective, “I felt like I was getting a masters degree all over again.”
The Conversation You Need to Have with Yourself
I think it’s a fair generalization to say that almost all of us are feeling the economic and financial impact of this new reality. With so much fear and anxiety surrounding money right now, I asked Dominique where to begin to address it.
“Remind yourself you’re going to get through this,” Dominique began. It’s important to limit your exposure to the negative news stories and heavy media coverage.
The biggest conversation to have with yourself right now is to find out where you are financially. “Sit down and take inventory of where you are,” she said. “How much debt do I have? How much credit card debt? How much student loan debt? What money do I have coming in? Where is my savings? What are my investments looking like?”
You need to take inventory of your current financial situation so you can understand where you might need to take action to fix or protect your financial well-being. Knowing where things stand will allow you to chart the course for navigating relationships with financial institutions moving forward.
Next, if you find yourself not able to make some of the payments on your list, then call the institution. Many of these companies have resources for you or pause plans available to help you through this time. Dominique cautioned, “You can’t just assume they added you to the list… You’re thinking about them, but they’re not necessarily thinking about you.”
Smart Money Moves Right Now
No matter what your situation looks like, there are some smart moves we can make with your money right now. Top of the list is keeping lines of communication with the financial institutions you use.
It’s also important that you don’t just ignore your payments. Creating a credit score issue for yourself down the road isn’t a smart move.
Another important piece of advice she shared is this: “If you have investments, do not freak out.” In other economic downturns, depressions and recessions, the market always goes back up.
“Just don’t look at your 401K at all,” she laughed.
“But if you have extra cash, now is actually a really great time to invest. The stock market is down… It is a great time to possibly make more money. And I don’t think there’s anything wrong with making more money.”
Dominique has also been advising her clients that right now might be a good time to refinance with interest rates being down. Everything from mortgages to credit cards, interest rates are down, making it a good time to negotiate a better deal on the things you’ve financed. If you’re in a decent or comfortable financial situation, you can get things for much cheaper than they were before.
What Not to Do
When we make decisions out of fear, we’re often not thinking as clear or as long term as we should. I asked Dominique about the things we should not be doing with our money right now in these uncertain times.
“Please avoid running and taking all of your money out of your 401K. And please avoid running and taking your money out of any account that you don’t absolutely need the money,” she said.
If your circumstances require that money, then do it, but Dominique cautioned, “If you’re just scared and you don’t need the money, let it sit. It’s going to rebound.”
Again, don’t avoid payments or creditors. Don’t sit at home and overspend. Are you guilty of filling up your Amazon cart, buying non-essential items, and justifying the spend because you’re not dining out as much? No shame! Just be aware of those money choices you might be making out of boredom right now.
To put it simply, Dominique said, “Don’t do anything that will cost you money in the long run.”
How to Prepare and Move Forward
There are some things that all financial advisors tell their clients to do, but that clients don’t always follow through on, things that many wish they had done before this pandemic took us by surprise. One of those things is setting up an emergency fund equal to 3 to 6 months of your income.
For entrepreneurs preparing for a crisis in the future, it’s important to be paying yourself so that you have documentation of it and can apply for the stimulus programs. You should also be separating your business and personal finances. This is a great time to put these things in place so you have cleaner financials and better protection in place.
You should also be looking at your different revenue streams right now. Having multiple streams of revenue means more security and scalability. What other skills do you have? What gigs could you take on from home to create a new revenue stream so you won’t fall victim to the next financial crisis?
More from this Episode
What’s the difference between the Economic Injury Disaster loan and the Payroll Protection Program (PPP)? And if you’re an independent contractor, should you apply for the PPP or turn to unemployment benefits? What is Dominique doing for two hours every morning to create a new income stream in her personal life? Press play for the entire interview or find it wherever you get your podcasts.