MP chatted with Ba Minuzzi, Founder and CEO of UMANA, a self-made entrepreneur who leads conscious investing and wealth management for high-net-worth celebrity clients, about personal finance. With UMANA, Ba is redefining wealth through purpose-driven efforts that will create a legacy for the next generation.
What is financial literacy, why do so many people struggle with it, and how can we become more financially literate?
Financial literacy is critical to achieving financial independence. It means freedom. As you learn how to manage your money, you will learn about income, expenses, life roadmaps, goals, dreams, investing, budgeting, debts, savings, cash flow, and so on.
All of these are components of financial literacy.
Unfortunately, many move to adulthood with little to no personal finance knowledge.
How can we manage our money more confidently, and what would this look like in practice?
In my experience, either with my financial wealth or the work I do for my clients, it all comes down to starting it right, which means establishing clear goals.
They become pretty clear when you think through them and then write down your goals.
That clarity can then be broken down into small action items, which should result in a roadmap, and a realistic roadmap will give you confidence.
How does our health affect our wealth, and what can we do to ensure we’re on track to a prosperous future?
An individual is a person - from the Latin word, indīviduus. In technical terms, it symbolizes everything that cannot be divided. And in general terms, it refers to the human being who cannot be divided or fragmented.
I’m a big believer that we are a whole.
It will probably spread to another if we are affected on one side. We need to take very good care of all aspects of our life.
Our health involves our spirit, mind, body, heart, soul, and wallet.
For me, the formula is always: discipline, joy, and balance! If you can find discipline in all aspects of your life, without going extreme, where you find joy, you will achieve a good balance. And although we all love a formula, trust me, that’s not an easy one to thrive, but highly worth it.
Budgeting and Saving
What are some out-of-the-box strategies you can share to help us improve our personal budgeting, and why these three?
Create a Written Budget
Personal budgeting is a pretty straightforward thing to do, but it’s a matter of becoming a habit. It should be part of your routine. The more aware you are of your expenses and income, the easier it will be for you to develop healthier spending habits.
Track Expenses Using Technology
In terms of strategies, I would suggest leveraging tech and efficiency. We are all very busy, and if you don’t think tracking your expenses is fun, you should find tools to make it as easy as possible to make that task part of your routine.
Tracking expenses is not fun, but once that habit is in place, it will help you save, invest, and, ultimately, financial independence.
You will love that freedom.
Money is a very powerful tool - the more you are conscious about the benefits money can bring to your life, the better you treat it, and the better your relationship with money will be.
Don’t deny money or make money-related tasks a duty when it’s a wonderful tool that can bring you great joy in life.
What strategies should we use to save more, and why might these be the most effective?
I always say, “we can have it all, I have it all,” but it wasn’t always the case; things take time.
So first, keep that in mind: everything is a process. It does come down to the basics: if you can’t afford something, do not buy it; track your expenses and your income; to have savings, start saving. Knowing your finances is a crucial step to building your financial wealth.
Saving is very important, but investing and sweat equity will get you to build meaningful financial wealth.
What should we look for in a bank account, how might this change based on our financial situation, and why?
It all depends on where you are in life, your financial situation, and what you are looking for. I would suggest learning about all the tools and services available for you and then deciding if it is worth using any of them.
I’m not a big fan of the traditional financial world. While I work with banks like Chase, Bank of America, and others, I prefer combining new alternatives like Mercury and Aspiration with investment apps like Coinbase, Public, and Alinea.
Public, as an example, is an investment app that lets you invest as little as $5, and little by little, you’ll start building part of your financial literacy through the information that is available there from other investors, as well as the exposure you will get from your investments.
What steps should we take to reduce our current debts, and why?
I know people see debt differently, but assuming you are in the early days of building your financial wealth, remember that debt is terrible.
I don’t like that debt makes you play financial catch-up your entire life if you don’t resolve it quickly.
To reduce your current debts, it’s very important you don’t create more debts, so don’t buy things you can’t afford.
A quote says, “We buy things we don't need with money we don't have to impress people we don't like.” It’s true.
To reduce your current debt, add that to your financial budgeting. By doing this, you will have more clarity on when you will have it all paid, and it will help you create goals of generating more income to pay it faster.
What are some commonly made debt reduction mistakes, and how can these mistakes be avoided?
Not Understanding Interest Rates
Understanding interest rates means you know what you are earning and, more importantly, what you are paying to borrow money.
Don’t Allow Money To Work Against You
As I mentioned before, money is a very powerful tool, and if you don’t treat it well, chances are very high that it will turn against you if you don't understand it.
What three out-of-the-box tips can you share to help us better approach personal investing, and why these three?
1. Trust in Value-Aligned Investments
You should first understand your values and then pick your investments based on that. Maybe stocks and ETFs are the first way you want to get exposure to investing, so I suggest an app like Public.
Through Public - besides building a community to guide you around your investments - you can pick stocks and ETFs based on themes and things you care about, such as gender equality, climate change, etc.
In my experience, value-aligned investments are great because you are not betting. You are investing in things that make sense to you and companies you trust and want to see thrive.
That will also make you a better, more conscious consumer. A second step is diversifying through real estate and venture capital. For this, I highly recommend platforms like YieldStreet, Republic, and AngelList.
2. Don’t Fear New Asset Classes Like Crypto and NFTs, but Educate Yourself
Don’t fall for “get millionaire or get rich quick” schemes.
3. ABL = Always Be Learning
This is one of our “family values” at UMANA. “All the world's knowledge is at our fingertips. The half-life of knowledge gets shorter by the day. Learn, baby, learn!”
Should investments into VC funds be included in one’s portfolio? If yes, why? If not, why not?
I think venture capital is the most exciting investment class, but it has so much meaning for me that if I lose money, I see it as philanthropy. I believe backing founders is a way of moving our world and economy forward and backing conscious founders even more.
But I don’t think VC is for everyone.
Again, checking platforms like AngelList, Republic or Sweater could be a way to start learning about the industry, and if it feels right, then yes, go for it.
What tax complications can entrepreneurship present, and how can entrepreneurs protect themselves from the beginning?
When founding their first business, entrepreneurs might choose to go with platforms like Clerky, or LegalZoom, which can be very quick incorporation. Still, I highly recommend first-time founders hire a law firm and get proper guidance on their legal structure.
I think no differently about taxes: until you learn about your taxes and get proper guidance, at least so you can start educating yourself, and as you grow, I recommend having a tax person to advise you or to handle your taxes.
What types of insurance should we consider being covered by, and why?
This is a lesson I learned from the author Cary Siegel. In his book, he has four principles for Insurance, which are:
Always choose the highest deductible for home and automobile insurance.
Renter’s insurance - don’t forget to get it.
You must have health insurance.
Term life insurance works best for young adults.
Is there anything else you would like to share?
Yes, one of the investors I admire the most is Naval Ravikant, and I agree with him when he says: “If you don’t own a piece of business, you don’t have a path towards financial freedom.”
We live in an era where sweat equity is accurate, and I highly suggest making yourself available to exchange your skills and time for sweat equity.
That can be a side hustle.
You can still be at your full-time job and build your “sweat equity wealth” in parallel.
And just like investing in venture capital, you need to diversify, as we know the chances of succeeding if you only have exposure to one business are pretty challenging.
So, build equity, and get it in multiple businesses that you can be of value-add.