Ellevest CEO Sallie Krawcheck on the Dumbest Financial Advice She’s Ever Heard


Sallie Krawcheck knows a thing or two about money. 

As the former CFO of Citigroup and President of Wealth Management at Bank of America, Krawcheck rose to the top of Wall Street to become one of the most powerful women in the financial industry. Now her latest venture, Ellevest, helps women take control of their finances and make their money work for them.

Many young women are light years away from buying their first home or starting their own business. In fact, many of us don’t have the slightest idea what to do with our money. It’s to us that Krawcheck offers her expert financial advice. In this interview, she shares her own journey towards financial freedom, her advice for young couples who are about to tie the knot, and the dumbest piece of money advice she wishes every person would just ignore.

Tell us a little about your own path towards financial independence.

Well, I had no choice. The unspoken, unwritten agreement with my parents was that they would send us to school and that was that. Then I showed up in New York with a job and never took another penny from my parents from that moment onward. I don’t want to say I arrived empty-pocketed - I worked during college, high school, and all that stuff. But I was on my own. It was sort of terrifying. 

I had some credit card debt coming out of school and I quickly paid that off. But I was fortunate because, unlike this generation, college was much less expensive, so happily I didn’t come out with all the student loan debt that so many young people are saddled with now.

What about those young women who are starting off their careers with student debt? What’s your advice for them?

From that point onward, be as strict as you can about buying nothing on credit. We’re not talking about a house, we’re not talking about a car purchase, we’re talking about the “I want to go out with my friends, but I don’t have any money in the bank so I’ll put it on my credit card.” No, no. If your friends really like you, then they’ll go to a cheaper restaurant. And then really work at paying off your high interest debt as quickly as you can because it just bleeds you. If you have credit card debt that is costing you 15 - 20%, you have to prioritize paying that off. Student loan debt on the other hand, if you are paying 4 - 6 %, you absolutely should pay it on time, but you don’t have to pay that off right away; those are more manageable interest rates. 

What was the most important step in achieving your financial independence?

It was not living beyond my means. It was targeting to pay off that credit card debt right away. It was not being tempted to get the bigger apartment. My roommate slept in the same bedroom out of college. I don’t know if a lot of people are doing that. I know that a lot of people don’t want to do that, but that is literally what we could afford. (Thank goodness she didn’t snore!) It was bagged lunches to work. It was not getting caught up with bright lights big city — this was the 1980s. It was understanding that I needed to first, get that credit card debt paid, and second, build that emergency fund. Like I said, the crash had just happened; things felt precarious, my friends were losing their jobs and I had to have money put aside in case I lost my job, too. 

What do you think are some of the biggest financial mistakes young women make?

What’s interesting to me is how many women who appear to be doing financially well still have credit card debt. It’s surprising to me. Women who you think are OK have run up $10,000, or $15,000, or more in credit card debt. They seem so together but they have this albatross around the neck. 

The thing that bothers me to almost no end is that there have been a number of female-focused financial writers that for whatever reason tell women to build their emergency fund before paying down their credit card debt. This may be the stupidest advice I’ve ever heard. You see it again and again. 

If you think about it, money is fungible. If you owe $1,000 in a credit card and you’re paying 20%, that’s costing you $200 bucks a year. And let’s say you happen to have a $1,000 and someone says to keep that in an emergency fund. Well OK, that earns zero a year! You are paying 200 dollars each year in after-tax dollars in order to keep those two things outstanding. Just pay off the credit card! Save yourself $200!

The other stupid advice is to wait to invest in your 401K. And that advice feels so easy to take because you can spend the money now and not when you’re older. But the power of compounding your investments is so massive that it’s really worth giving up something today to have that money compound for you in your golden years. Grandma you will thank you.

What would your financial advice be for a young woman about to get married? 

First of all, it’s pretty obvious advice that you have to get completely financially naked with somebody you’re going to marry. It’s funny that we get physically naked way before we get financially naked. In our society, you can talk about sex all the time but talking about money is still taboo. Before you get married you have to put together the spreadsheet: This is how much I make, this is what I got, this is how much I spend, this is what I spend it on. This is what I do with my money. It’s tough after you get married to figure out that he likes to hitchhike and stay in youth hostels, when you like to stay in nicer hotels. 

How would you suggest couples handle their finances once they get married?

In terms of how to marriage your money, there is no right answer. An answer that works for a number of people is for the household expenses to be split in the proportion of your earnings. So what that means is, if you have $200 and he makes $100, you have a joint account and you’re splitting the expense bill so that you pay a double what he does. That to me is much fairer than splitting it equally, because in some cases one person doesn’t have any money for fun and the other has more money. 

The other recommendation I would have is that 90% of women manage their own money at some point in their lives. We live longer than men, half of marriages end in divorce and you’re not expecting any of this when you get married, but it all happens. So do not cede control of the money over to him. I have seen nothing more tragic than friends of mine who have lost their husbands and don’t understand where their money is, what they’re doing with the money. I know that’s a little 1952, but you still see it. You have to be financially savvy and financially aware. And you have to control your own retirement. We hope you do it at Ellevest of course, but regardless of where you do it, women live longer than men. On average, he will die five, six, or eight years before you do. Make sure you are investing and taking control of yourself. 

What would you say to young women who are putting off marriage and having kids until they’re done paying off their student loans or in a better financial state?

You know, I’ve told my kids they’re not allowed to get married until they’re 30. I don’t think you know who you are until a certain age. I got married right out of college, which is what we did in the South, and you’re still changing a lot at a younger age. My now ex-husband and I changed a lot and ended up divorced. But I’ve found there’s no good time to have a baby. You can talk yourself out of that your whole life. There’s no particularly good time to get married. It’s a personal choice, but I think if you’re waiting to get married until you’re financially stable, maybe you should see a psychologist - maybe something else is going on there!


Patricia Garcia for The BeeHive

CareerAndee Olson