Personal finance is something that many people can wind up feeling daunted by, especially when it’s not presented by someone who you can relate with. This month we interviewed Jeremy Biberdorf from Modest Money. He’s been an employee and an entrepreneur who admits to having made some bad financial decisions of his own along the way. Jeremy’s goal at Modest Monet is to present financial information to users in a clear, friendly, and honest way so that they can either learn from his mistakes, or learn along with him.
1) As someone who blogs about finance, what has been the most important piece of financial advice that you have ever received, and why was it so crucial?
I think it would have to be from one of my first bosses after college. She told me that to get ahead financially people need to find ways to make money beyond their day job. While that doesn’t apply so much to people earning high salaries at their day job, it really was a light-bulb moment for me.
It definitely helped kick-start my entrepreneurial drive. For years the side income was just icing on the cake but now it has grown into full-time self-employment.
2) a) As someone who has started a career based on an online business, how do you see social media and technology affecting the way that businesses either succeed or fail?
I think it really comes down to how young your target demographic is. The younger they are, the more likely they are to expect companies to be on social media. If a big chunk of your customer base is on social media, you want to be sure you’re on there to address any questions or complaints.
If you don’t have that open line of communication with your customers, your reputation is at greater risk and customers may go elsewhere. In extreme cases, unchecked complaints could seriously harm your business.
b) How important do you think it is for any business to have an online presence?
These days it really is so important for companies to have some kind of online presence. Even if your company doesn’t have the resources to create a full website, a small company should at least setup something like a Facebook page.
People today want to be able to quickly find more info about a company online. If they can’t find it, they might not trust the company and go elsewhere. On the flip-side, if they do have a strong online presence that opens up a great source for potential new business.
3) a) Personal finance can be overwhelming and intimidating to many people. What does Modest Money do differently to appeal to users in a way that they can relate to and understand?
Well as the name applies, I take a modest approach. There are many personal finance bloggers out there boasting about their net worth, how much money they make and how well their investments are doing.
I know that for some people that info is highly motivating but for many others it makes them feel discouraged about their own situation. So I try to offer advice without the ego. I’m more than willing to address various financial mistakes I’ve personally made. I also try to present content that isn’t filled with jargon and is at a level that anyone can comprehend.
b) In your experience, are people more often daunted by personal finance because of the way that it is approached, or because they don’t have the resources they need to make good financial decisions?
I think a big part of it is the approach that many financial professionals and finance bloggers take. Many of these people are so set on selling themselves that they overlook that finances are personal.
What works for one person may be a disastrous approach for someone else. Everyone’s financial situation is unique. Their skill set and experience level is unique. Their personality that affects their financial decisions is unique. So when they are presented a one-size fits all approach, they often see aspects that wouldn’t work for them.
The other big factor is lack of early education about personal finances. When this stuff hasn’t been drilled into our heads at a younger age, it’s that much tougher to change our ways later in life. Rather than trying to improve how we approach finances, many people just follow similar paths to those around them.
4) You mention on your website that your parents had a profound influence on your financial life, but not everyone has these resources. Where should beginners start looking for information, and how can they be sure to head in a positive direction?
In today’s world, I’d say find some personal finance blogs to follow that you can relate to. There are literally hundreds of finance blogs out there with new ones being created every month. So there are bound to be some with similar situations and writing styles that you enjoy.
If you want to take things a step further, it’s actually quite easy to start a finance blog of your own. Even if you don’t have great advice to give, you can help other people by sharing mistakes or lessons you’ve learned. Then you start to become more accountable as you share your financial progress on your blog or you publicly set financial goals.
As you get active in the blogging community, other bloggers end up encouraging you and providing all kinds of helpful advice. You can even write anonymously to make it easier to be open about your finances.
5) As someone who has been self-employed, what are some tips that you can give to contractors who are starting their own home-based businesses to be successful, but also to protect themselves?
Because this is actually my 3rd stint of self-employment I have certainly learned some things both from when it was successful and when it failed. The first tip is to not trick yourself into thinking that you suddenly have all of this free time and flexibility.
Technically you can take a day off whenever and set your own hours, but if you’re not willing to consistently work hard and put in a lot of hours you’re setting yourself up for failure. Even if things are going well now, you need to keep working hard to build a safety net for when things eventually slow down as they almost always do.
The other big lesson is to be aware of the importance of diversification. Just like how you should diversify investments, you also need to diversify your self-employment strategy. Instead of over-relying on one marketing strategy, one income source, one supplier, you need to diversify.
Think of what would happen if something were to happen in any of those areas. Do you have a backup plan to turn to? Will you still be making money from other sources if something bad happens? The more diverse your approach is, the more stable it is. You don’t want to leave yourself vulnerable, otherwise you might suddenly be forced back into getting a day job.
6) Most businesses experience at least a few ups and downs over time. What problems have you overcome with Modest Money, and how did they affect the way that you manage your website now?
Modest Money has actually been quite smooth so far. I was unemployed when I started the site and was hoping I could build it up quickly enough to not need to find a day job. Things didn’t quite end up that way but that was for the best as it allowed me to grow the site more gradually and have a much more solid base when I did end up self-employed.
As mentioned in the last question, I did have a few stints of self-employment. In the past I’ve made the mistake of not working hard enough and not diversifying my strategies. Based on those mistakes I work that much harder this time around. I also made a point of developing multiple income streams and try not to rely on any one stream too much.
I’ve also learned to work smarter and outsource where it makes sense. If I try to do everything myself there is no way I can gain any kind of momentum. It would all be one big uphill battle. The better approach is to focus on my strengths and hire contractors to help in other areas.
7) As someone who has experience both as an employee and as an entrepreneur, what are some differences between the two, and what are your favorite parts of both types of employment?
For me the main difference comes down to motivation. When I’m my own boss I’m super motivated to keep building up all of my projects in the pursuit of success. When you’re working for someone else though, it’s usually more about just putting in the time. If you do well you might get a raise but it’s not like all of your efforts are snowballing into something with a ton of potential. As an entrepreneur you really need that extra motivation though because it is also a lot more work. An 8 hour work day is rare and so is a 5 day work week.
With being an employee it is nice to be able to actually disconnect from work once you leave the office. It’s nice to have a stable paycheck without the stress if business happens to be slow or faces obstacles.
As for being an entrepreneur, I do like having the extra flexibility. I can go spend 2 hours at the gym in the middle of a weekday if I choose to. I can take a random Friday off work for a road trip. For the most part I try to avoid milking that freedom though as I know if I work harder now I can develop more freedom down the road. If I play my cards right my business could eventually run itself to some degree.
8) What is the most common financial mistake that people make, and what can they do to avoid it?
Probably the biggest mistakes would be not investing early enough and not taking finances more seriously early enough. I was one of those people who blew most of my money in my 20s and didn’t think I had to worry about saving for the future.
Avoiding this comes down to just vowing to be more responsible with your money. You should look into the retirement calculators to see how much more money you’ll save in the long run if you start now. The difference is considerable.
9) As someone who features topics that focus on both American and Canadian finance, what are the biggest differences, if any, that you see between the two?
There really isn’t much difference at all. Our societies are so similar that it is mostly just minor differences such as retirement savings plan incentives and terminology. The area that is most different is the resources available. There are all kinds of investment platforms, credit cards, financial software, etc., that are not available in Canada. I tend to get my US staff writer to review those resources, partly so that I don’t get too jealous.
10) What inspired your interest in personal finance, and what are your goals with Modest Money?
It was really my Mom that inspired my interest in personal finances. I saw first-hand how a single mom was able to essentially start from scratch financially to later build up a business and become very successful. This was due to both hard work and smart money management. So I think I inherited some of that entrepreneurial spirit and I wanted to achieve similar success.
With Modest Money my goal is to build it up enough to provide a level of financial freedom. Some finance bloggers eventually sell their blogs for a large amount of money. While I likely wouldn’t say no, I’d be content with it bringing in a steady income that allowed me to work less or possibly focus on other interests.
11) And lastly, as someone who lives modestly, if you had to choose only three material items to keep, what would they be and why?
First of all, one would need to be my laptop. I simply rely on it too much for business that I couldn’t get by without it.
Second would be my TV. I rarely sit down and watch TV, especially without doing work at the same time. Still I do really enjoy watching sports even if it’s just in the background.
Third would have to be my car. I did make the mistake of splurging on a nice car several years back, but I do really like it. I’d actually be happy with almost any car, but I just couldn’t see myself going back to exclusively relying on public transit to get around.