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Insights From Michelle Singletary: Financial Health and Independence

“There are trade-offs. Figure out what makes you happy and spend your money in that.”

Editor’s note: Read the latest on how the coronavirus is rattling the markets and what investors can do to navigate it.

These days, investors of all ages and stages find themselves confronting uncertainty as the coronavirus pandemic continue to shake the world and their savings and investing plans. Achieving financial independence and retiring early are goals many investors keep in mind while making plans. But during these times of uncertainty, how can investors safeguard their plans and finances? 

Author, writer of "The Color of Money" column in The Washington Post, and TV and radio guest Michelle Singletary addresses the impacts of the coronavirus and how investors can gain financial independence with Christine Benz and Jeff Ptak on The Long View

Here are some excerpts from Singletary’s conversation:  

The Pandemic’s Effects 
Michelle Singletary:
If you've been working all your life and you're a hard worker, losing your job or being furloughed or having your income cut can be devastating to your ego and to your pride. And you need to grieve that. Spend the time that you need to grieve that. As I've written in my column in The Washington Post, I thought about this in the sense of an emergency room. The hospital does something called triage. They treat the most critical patients first. And you need to look at your bills the same way. You are the critical patient with the heart attack, and you can only do a certain amount. Pay what's necessary. 

Your Financial Health  
When I was a new parent, the first time I flew on an airplane with my infant child I remember the flight attendant saying, when the oxygen mask drops down, put your mask on first, and then attend to your child. And as they kept going with the instruction, she said, because if you're gasping for air, you're both going to pass out because you then won't be able to help your child or yourself. That's the same thing with your financial health. You have to first make sure that you've got your emergency fund that you have your financial house in order, and that you're saving for retirement, you've done all the things, you're paying down your debt. And then, if you have extra, and many people do, you give from that extra, you give from abundance because you can't forgo paying your mortgage payment or your rent payment or something to help someone else. 

Once you've taken care of your financial health, you're making sure that you've got your oxygen mask on, then come up with a plan to help other folks.  

Frugality and Financial Independence 
I think there are a lot of younger adults in the 20s and 30s and even maybe stretching to 40 who don't want to work in their jobs until they are 65, 70.  

They are not saying they don't want to work. They just want the freedom to work the way they want to. People sort of think of frugality as self-denial. I look at frugality as freedom so that I can afford to live below our means. And we are aren't talking about people who can't actually afford to do that--there's some people who are, you know, they're just trying to put food on the table. So, we're not talking about those folks, although we do need to figure out a way to have a living wage. And part of that is also having affordable healthcare.  

By living on less, that's how we found the money to put in 529 plans for our children. And now, we have changed their life, their financial legacy, because now they won't graduate with any debt and they can go and do the things that they were gifted to do. We discourage kids from going into some fields by saying they're not going to make a lot of money. And I think that's a disservice. 

By living below our means, we have given our children the freedom to be who they want to be and pursue the career that is best for them. We have taught them how to live below their means and they will be able to have a career and have a good life and buy a home and do all the things that we aspire to do in the middle class without having a lot of debt and a lot of financial pressure because we taught them the benefit of being frugal. 

Sitting Down and Making a Plan  
You have to have a financial plan. No matter what you make, it's a limited amount. You have a limited amount of time. What do you want to do with that? 

Early in my life and early in my marriage with my husband, we sat down, and we looked at where we want to be in 20, 30, 40 years with the money that we are bringing in. One of the first things we decided is that we wanted to give back. We put that on paper. Then we knew we wanted to have kids. OK, let's set up the 529 plan. And then, we wanted to be able to have money that we can help relatives. Because we're minorities, many of our relatives were still struggling, still trying to make it. We put the money aside to help. This was all part of our plan like a mission and vision statement. 

Even if you are 20, 30, 40, sit down. You make this amount; you want to do what with it? You know, cut out the coffee budget. If that's your thing, make that part of your plan. But if you're going to get that expensive cup of coffee, then bring in lunch. If you're going to get that expensive coffee, then maybe you keep your car for 10 or 15 years. There are trade-offs. Figure out what makes you happy and spend your money on that.  

This article was adapted from an interview that aired on Morningstar's The Long View podcast. Listen to the full episode. Read more on Singletary’s views on diversity in financial services.