How to Grow Your Net Worth with Becca Brenner
A live interview with onomy and creator Becca Brenner on How to Grow Your Net Worth.
Becca created Blonde Broke & Bougie in February 2018 to help millennials save money and normalize talking about their finances. She shares the tips and tools that allowed her to save over $100k before turning 26 and to continue to grow her net worth (well over $300k today)!
In this interview we’re talking to personal finance expert & blogger, Becca Brenner of Blonde Broke and Bougie. Becca grew her net worth from $1k to $300K in just a few years while living in NYC and paying for a Masters degree — now she’s explaining how. In this interview you’ll get Becca’s best tips for growing your own net worth and some quick strategies you can use right away to start saving more money.
Onomy: Hey Becca! Why don’t you introduce yourself?
Becca: Hello, everyone! I’m Becca, I created Blonde Broke and Bougie over three years ago now. I started out by finding random cashback apps and little things to save money that I thought were cool. I was also budgeting and I wanted to share these things with people who cared about it. My friends didn’t want to hear about it anymore. So eventually I kind of was putting all these different pieces together. And it just became this whole personal finance brand. So I’ve been doing that for about three years. And yeah, I love all things personal finance!
Onomy: Can you just describe for us for those who might not know, what is a net worth?
Becca: Sure. So if we’re talking math, net worth means your assets minus liabilities. So it’s everything that you have minus everything that you owe. This is important because it’s the one number that really pulls everything together. So you know, you can say I have a million dollars in my bank account. But if you owe $2 million on a $3 million house, you may still be in the negative for your net worth. So you can’t look at any one individual piece of your personal finance picture. Looking at your net worth is really the thing that pulls it all together. So it’s super important!
Onomy: So when did you start thinking about your net worth as something that you really wanted to focus on and actively grow?
Becca: So I’ve always been really into budgeting. So I’ve always been focused on you know, making sure I was saving, but I wasn’t necessarily focused on my net worth at the time. I wasn’t putting all the pieces together. And I think the thing that really got me started on it was when I went to grad school, I was going to be starting to pay for grad school while working full time. And I was really thinking about the larger picture of all my money in versus all my money out. And how do I make sure that that’s a positive number that things are still growing?
That’s when I really started projecting well, if I’m spending this much, and I’m making this much, where does that put me and I think that really hyper focus me on my net worth. And from that point on, all decisions I was making was, “how can I maximize my net worth? If I get $1? Where do I put it to make sure that my net worth is going to be maximized?” So I’m always thinking like that. But I think, you know, making a $40,000 investment in my education was really the thing that kicked me into high gear.
Onomy: What are some of the ways that you’ve been able to really grow your net worth that you’ve seen the most success with?
Becca: So I think there’s two different things that I like to focus on. And they kind of overlap. But one thing is just investing. So I think a lot of people when they first graduate from college side, they’re focused on saving. And you know, I’m going to put as much as I can into my savings account, if they’re thinking about finances, I think that’s really what people are thinking about, you know, my savings is going to grow. And even people who have student loans and things like that coming out of college are often you know, still so focused on their savings account and their debt. And if you pull investing into the picture, investing is the thing that’s really going to make you wealthy, no one has ever gotten rich by saving, it’s always by investing.
So I think making sure that you’re thinking about investing is one of the important pieces. And the other really important thing that I like to focus on to people, especially people who are just getting started is automating. And you can be automating your savings or automating your investments. But basically what I mean when I say automating is making sure that your money moves from, say, your check in account to your savings account, or your check in account to your investments without you having to do anything.
So whether that’s you know, splitting your paycheck from your employer into two different accounts or setting up an automatic transfer so that the day you get paid, it goes into your savings account, things like that. The automation is the number one thing that’s helped me and I always say, you know, I don’t feel like I save a lot. And the reason I don’t feel like that is because it’s all happening in the background without me doing anything, because it’s all automated. So, you don’t miss it, if you don’t see it, if the automation is happening, and taking the money and putting it somewhere better, your net worth is going to grow. And you’re not even going to have to think twice about it.
Onomy: Yeah, and if you don’t check it for a while, thanks to automation, you go back into your account and you’re like, “Oh, wow it’s grown so much!”
Becca: So many people set up the 401k. And then forget about it. And then they’re like, I think I have a 401k. And there’s 1000s of dollars.
Onomy: So let’s say I just wanted to get started now and like starting to grow my net worth — you mentioned investing. What are some tips for first time investors?
Becca: Yeah, so if you’re a first time investor, the first thing that I always recommend to people is to figure out if your employer offers a 401k. And if they do figure out if they match any contributions they make. So it’s a really common benefit for companies to match your contributions. Yeah, up to a certain point. So that’s something you can ask at work, ask a coworker they may know, ask HR if you have an HR department, but you know, do some digging and figure that out. Because that’s a great way to start investing.
If you are not in a place where they offer a 401k, I still recommend looking at the retirement option like an IRA, which is an individual retirement account for and this is, the names here at US. Specific if we have any international folks on but the IRAs a great option as well. And the reason I specify an IRA or 401k retirement accounts is because they have tax benefits. And so you’re gonna find that you’re able to either invest more money up front or withdraw more money at the end, because you’re not paying as much taxes.
And what if you just, you know, open an investment account on the side. So there’s really easy ways to do an IRA as well, if you’re, you know, super hands off, you can use a robot advisor. If you want to learn a little bit more, you can use something called a target date fund. So you can create a fund and it’s still really easy only one thing you have to really buy, just want to make sure you do your research. And make sure you educate yourself first, but there’s really easy ways that you can get started with either your 401k or your IRA.
Onomy: But what if you’re not working for someone? Is the Roth IRA is a good option if you’re not working for an employer?
Becca: You do have to have an income. So if you make $0 you can’t contribute anything. But as long as you have income coming in, and whether you’re self-employed or you work for somewhere where he doesn’t offer any benefits or anything like that, you can do a Roth IRA, and there are income limits to that. So you just want to make sure, if you don’t make too much money, they will let you contribute. But but as long as you’re making something you can, you can start there.
Onomy: Do you have any tips for someone who might be in that position where they want to grow their net worth AND save and invest, but also have debt to pay off?
Becca: Yep, yeah, this is a super common question. And there’s two things I like to think about. Number one is personal finance is personal. So if you wake up every single day and say, you know, like, this student loan is killing me, like, I hate it, it is a dark cloud over my head. I don’t care what else you have to tell me, I want to pay it off, I don’t want to focus on anything else. Like, if that’s going to help you feel better focus on that, that’s fine. But on the other hand, I like to think about the math, I was a math major in my undergraduate career, so I’m always doing the numbers. And you have to think about the interest. And interest can be something you pay, or it can be something that you earn, and you can experience growth.
And so if you have a student loan, that say is 4%, you have to pay 4% interest on that. If your money can grow in the stock market at 10%. Now, it’s not guaranteed, but it could grow at, say, 10%. If you invest $1, you’re going to make 10%, but you’re going to owe 6%, that’s still a positive number. You’re still going to make 4%, given those two, the 10 minus the 6%. So there are opportunities where you may want to invest despite having student loans, in particular. Because student loan interest rates tend to be pretty low, like compared to credit card interest rates tend to be very, very high. Yeah, you want to pay off your credit cards most of the time first before focusing on investing. But there’s still opportunity to invest.
And I know people say debt is bad, hands down, I need to get rid of it. That’s okay, if that’s the route you want to go. But I do challenge you to just think about the math and say, if I can make more in the stock market, I can actually use that growth in a way to pay off my student loans. And I’ll still end up with more money. So I do challenge people to kind of open their mind to doing that.
Onomy: I know that you track your net worth, in a lot of very awesome ways that the audience loves to see. What are some tips to help track net worth?
Becca: So I go a little bit crazy when it comes to tracking things, nobody has to do it to the way that I do it. But, I do track it like a Google sheet and all that stuff. But if you don’t want to do that, not a spreadsheet person totally fine. I actually recommend an app called Personal Capital, you can hook up all your accounts there, and it’s free. If you actually use a referral code they’ll give you a $20 amazon gift card for setting it up. So you get like paid to use this app. But it does automatically refresh everything you have and graphs it for you. And you can look at the trends. And it’s really nice, because even in my spreadsheet, I only track once a month. But when I’m in the app, it’s every single day. So it’s really easy to set up. And I recommend that for people who are just looking to get some insight into what their net worth is and how it’s changing over time.
Onomy: So I think a lot of people have been tracking your net worth journey. It’s been super exciting to watch. We know that you’re around the 300k threshold. What’s your next big goal?
Becca: It’s, hard because you know, no matter how much you have, you can always have more so I think I know that there is never a number where I will be satisfied. But I will say that I’m at a point now where I’ve reached what’s called Cost fi. And so fi, the FI part of that essentially means financial independence. And Cost fi means that if I don’t save another penny, like I don’t need to put one more penny into my investments, one more penny into savings. What I’ve already invested will grow enough that when I reach a normal retirement age, like in my 60s, I’ll still be able to retire.
So I don’t have to save anything else. Do I want to work until I’m in my 60s, right now? I don’t think so. I’d like to retire before that. So I’m still saving. But there’s something really comforting I think when you reach a cost FI number to say, I’ve done the hard work, I’m already secure in my retirement. Everything I do now is just icing on the cake. So that is kind of how I think like I still am saving aggressively whenever I can, but I’m looking towards early retirement, but I’m comforted by the fact that I know at least a normal retirement has been set for me.
Onomy: Is there a number that might be a good range for people to think about when it comes to growing net worth to be able to retire at a comfortable amount?
Becca: Yeah, there’s some, I mean, there’s no one number, obviously, like cost of [inaudible 16:43], right. But there’s some formulas to help you figure that out. So a common thing that exists in the personal finance community is the 4% rule, which basically says that you can withdraw 4% of your investments a year without experiencing any loss to your net worth. And some years, obviously, it will change, like go up or down just as the stock market moves.
But the idea is that if you can get to a point where you can live off of 4% of your investments, you don’t have to work ever again. That’s kind of the theory. And but that also assumes that you’re going to die with a lot of money and your money is never going to go down. So it kind of depends on what your goals are and what you want to do. But the 4% rule is definitely something I encourage people to look into. Because that’s something that you know, you can you can stop working and you should be sustained for a long time.