Control Equals Freedom

by admin 19. June 2013 09:58


There are a lot of areas in your life where you can, and should, take risks. Your money is not one of them. Not without the right plan, anyway.

The right plan includes taking control of your money and finances. And control equals freedom—the freedom to take certain risks and chances. For example, if you have savings to fall back on, you can take a professional risk—launching your own firm or going to work for a start-up.

We will talk a lot in this column about how to take control of your money. But let’s start with the big picture. You need to focus on two things immediately: retirement and emergencies. Emergency funds are your rainy-day money. You should have six to nine months of living expenses in an easily accessible and safe account, an FDIC-insured savings account. Remember, if you dip into the funds for an emergency, you need to replenish it.

Next, it is never too early to start saving for retirement. As with any type of savings, the earlier you start, the more time your money has to grow. This is when being younger actually helps. If you’re still paying off law school or undergraduate loans or some other debt, I know the idea of also saving for retirement can be daunting.

Do it anyway. Just start small.

Put away $5, $10, anything—you can increase the amount as your debts get paid off or your budget becomes more flexible. If you have a 401k at work, take advantage as soon as you can. If you don’t have a 401k, please set up a retirement account.

I often suggest a third type of savings account before you start taking risks: a general one for things you want to do or buy in the near term. For example, set up an account to save for a house or a big trip. It’s fun to have some attainable near-term goals. You work hard and should be able to enjoy life.

Now for the risk-taking. It’s fun to take some chances. You might have a friend with a great business idea you want to help fund. The idea could end up being a home run. But please—please—make sure the money you invest is money you can afford to lose. Do your research, and make sure the person with whom you’re investing is trustworthy and that the investment makes sense. If you don’t understand the investment, don’t do it!

Diversification is key: You don’t want to put all your eggs in one basket. Find a variety of investments.

But, remember, none of this can happen until you take care of you, and your future, first.

Heidi Albert is a lawyer, a financial expert and the co-founder of School2life, which teaches students, recent graduates and young professionals how to transition confidently from campus to career. Heidi, who graduated from New York University School of Law, has worked in investment banking for Morgan Stanley and in institutional sales at Lehman Brothers. In 2003, Heidi followed her entrepreneurial dream and co-founded Dr. Bobby Skin Caring for Kids with a dermatologist. As CEO, Heidi grew the product into an established brand that was sold in more than 80 stores globally. Her column, aimed particularly at law students and young lawyers, appears on The Legal Balance once a month.

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Heidi Albert | Let's Talk Money

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