Vivian Tu, trusted by over 2 million followers to dispense sound financial wisdom, has a word of advice if you’re looking to get your money in order: STRIP.
It’s an acronym that Tu, 28, has developed since launching personal finance TikTok Your Rich BFF nearly two years ago after colleagues began asking the former Wall Street trader for financial advice. In the time since, she’s posted at least one video a day breaking open the floodgates on taboos around salary, saving, and budgeting in an effort to make financial literacy digestible with relatability and wit. “STRIP” is essentially a starter pack for getting started in building wealth, a method that Tu followed herself.
S stands for savings: Tu recommends always having three to six months of living expenses tucked away, should your car break down or your roof cave in. If you don’t have it, you’ll rack up debt and put yourself in a bad spot.
Without adequate savings, even minor emergencies can become huge financial burdens. Plus, per a recent Bankrate survey, fewer than half of Americans have enough savings to cover a $1,000 emergency expense, and more than one-third would finance an emergency with a credit card or a personal loan, or by borrowing money—which is bad practice.
“Relying too heavily on debt as a financial safety net can lead to bigger problems down the road,” Bruce McClary, senior vice president of communications at the National Foundation for Credit Counseling, told Fortune Recommends. “And it can have consequences for your credit score if the debt becomes unmanageable.”
T represents total debt. Rank your debt from highest to lowest interest rate and pay down the highest first, Tu advises. “We’re talking mostly credit card debt,” she explains, adding that federal student loans can be put on the backburner.
Without a payment plan, debt can quickly become near-impossible to manage. If you have debt, figure out how much you owe and nail down the corresponding interest rates. After that, you can determine how much you can afford to invest while still making minimum debt payments, leaving you room for the next two steps in Tu’s method: retirement and investment.
Investing in your retirement account, as Tu likes to say, is the easiest way to legally avoid paying taxes. 401(k), IRA, HSA, anything. “Do it,” she says. “Your dollar will go further.”
After you’ve maxed out your retirement accounts, Tu suggests opening up an individual brokerage account or investing in things like real estate or your own personal side hustle. For example, Tu has invested in her TikTok account—buying a ring light and a digital camera counts, too.
Even if you’re starting with very limited means, it’s important that you start small, working up to investing somewhere around 15% to 25% of your post-tax income, Mark Henry, founder and CEO at Alloy Wealth Management, told Fortune.
Plus, many types of investments, including IRAs, buying stocks through brokerage accounts or with a robo-advisor, or opening a high-yield savings account don’t require much money to get started.
But it’s hard to get all of these money strategies in order without a plan, which is what the P stands for in STRIP. It’s often the most overlooked, Tu says, but not by her.
“I do a quarterly business review of Your Rich BFF to help align my goals. When I put them down on paper when I set a date next to each item, it forces me to go back and look at how well I’m tracking,” she says. “If you don’t write your goals down—if you don’t put them into the ether—you’re never going to hit them.”
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