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“It’s super boring,” Vivian Tu, the social media maven behind TikTok’s uber-popular @YourRichBFF admits when we talk about the traditional structure of financial advising. “Historically, financial services and financial education has been so male, so pale, and honestly, very stale. And these aren’t lessons that we’re taught in the classroom. This is information that rich dads pass on to their rich sons.”
Tu is intimately familiar with the gatekeeping that goes on in the world of finance. She migrated from Wall Street to the tech sector before starting to dispense advice on TikTok at the constant insistence of friends and coworkers who clearly saw the value of her specific brand of financial guidance — tips that were easy to understand, accessible to marginalized communities, and rooted in the simple yet powerful idea that knowledge is the best form of currency when it comes to closing the wealth gap.
Her social media how-tos worked. Fast. She went from 100,000 subscribers in her first week to 1 million followers this year. Her page has over 10 million likes and each of her videos consistently nabs hundreds of thousands of views. So why is Tu’s brand of financial literacy so popular? She’s not offering some kind of magic trick. Part of the charm is that, amongst all the noise, hype, and get-rich schemes, Tu offers practical and implementable advice that feels revolutionary. Advice she was willing to share with us for this quick primer.
The STRIP Method
Tu says that when most people come to her hoping for financial advice their first question is, “Where do I start?” So much goes into boosting our bank accounts that it can be daunting for young people (or those like me who can’t do basic math) to get going. To help, Tu came up with a clever acronym to empower finance newbies.
“When people ask, ‘What can I do to make my finances better?’ I’m like, ‘You should STRIP.’”
Let’s break it down. “S” stands for savings, “T” is for total debt, “R” is for retirement, “I” for investing, and “P” represents planning. When it comes to savings, Tu recommends having a three-six month emergency fund at the ready should the worst happen.
Once you’ve secured a little nest egg, it’s time to tackle your debt — that’s everything from credit card bills to student loan repayments. Tu has a trick for managing your debt plan. She calls it the “avalanche method” and it involves ranking your individual debts on a scale. The higher the interest rate, the more you need to prioritize them. “You want to pay off any debt with an interest rate of 7% or higher,” Tu recommends. “And then you can start paying down your lower interest rate debt a little bit more slowly while moving on to the rest of STRIP.”
Up next is “R” for “retirement.” The sooner you start paying into some kind of retirement fund — such as an IRA, Roth IRA, or a 401k – the better. That’s money that can’t be taxed, accrues value, and will be there when you need it down the road. Retirement is a form of investing and once you’ve set up that account, Tu says it’s time to diversify your portfolio. We’ll get into the “how” in a bit but the why is pretty straightforward: investing is a way of letting your money work for you.
The final step of planning is also a simple one. “You are saving, budgeting, investing this money for what?” Tu asks when describing why having a plan for your future bank account is so important. “Everybody’s goals are different, and depending on your goals, you will want to build your financial foundation a certain way. So it’s important to plan. And I find that if you put pen to paper, you’re more likely to actually stick to those goals.”
So now that we’ve got a method, let’s dig into some of the pillars of building wealth.
Aren’t you exhausted by the narrative that we need to devalue our own wants in order to save, pinning the blame for our generational financial insecurity (and angst) on avocado toast and daily lattes? Tu is too.
“You cannot save more money than what you take home,” she says. “Yes, you’re going to be able to find extra money by cutting back on these discretionary costs, and these little luxuries in your life, but you’re also going to be miserable. I think it’s more important to be advocating for people to go and ask for raises at the end of the year.” Why? Because it’s easier to save money from a bigger paycheck than it is to squeeze a few thousand dollars a year from your Starbucks trips. Tu has shared advice through her TikTok account on how to negotiate a pay raise and advocate for a higher starting salary when applying for a job but, if that seems totally unrealistic in your current situation, picking up a side hustle might be the answer.
Another great way to add some additional dollars to your savings account is by budgeting, but toss any ideas of sticking to strict spreadsheets in the trash. Tu says a monthly budget doesn’t have to be “painful” to actually work. Instead, try the 50/30/20 method, another easy-to-remember model that keeps your spending in line without forcing you to count pennies. Take 50% of your monthly paycheck and put it towards necessities – think rent, utilities, groceries, and gas money. The 30% goes to your wants. That might be getting drinks with friends, shopping trips, or a date to the movies. The final 20% goes to investing, which covers everything from paying off debt to putting money into accounts where the interest will eventually help you earn more.
Investment Starter Pack
Tu says the biggest secret that the rich are in on that the rest of us should know is this: if you’re only saving your wealth, you’ll never build it. That’s where investing comes in. She suggests going with a Robo-Advisor — a program that does the hard work for you — or doing research on index funds and target-date retirement funds. They’re easy to understand and offer the most bang for your buck.
Tu knows that investing can feel a bit like the Wild West. Despite her years on Wall Street she still had to overcome some of her attitudes towards money that were instilled in her since childhood. “I come from a Chinese immigrant home,” she explains. “So saving has been woven into my DNA. Frugality is something that I have known forever. I mean, we were washing Ziploc bags.”
But, being around a bunch of Wall Street execs who were constantly divvying up their money across multiple investments taught her that being frugal probably wasn’t going to help her bank account in the long run.
“Nobody else was focused on washing their Ziploc bags,” Tu remembers. “Everybody was focused on the next investment that they could deploy capital into. ‘How I can grow my money, let my money work for me so I can retire earlier so I don’t have to work as hard?’ It was eye-opening.”
The final topic Tu gets quizzed on often through her social media platforms is something we’re all wrestling with, debt. That can mean credit card debt, student loan payments, medical bills, and other forms of money owed to a company or institution. If it’s any kind of educational debt, Tu suggests looking into post-graduate scholarships – they exist – and checking with your state to see if there are forgiveness plans in place for people working in healthcare, local government, or the education sector. If none of these apply, prioritize private student loans first. These are ones with higher interest rates and the government can’t stall payment plans on them.
And, while there’s still a moratorium on federal student loans (with the hope being that perhaps a portion of them might be forgiven one day) Tu says if you’ve got the money it’s a good idea to keep to your regular payment schedule regardless. “Right now you are not paying any interest, you are just paying principle,” Tu explains. “The lower you can get that principle, the better off you’ll be.”
Credit Card Debt
When it comes to credit card debt, Tu suggests we start thinking about it the way wealthy people do.
“When poor people take on debt, we call it debt. But when rich people take on debt, they call it leverage,” Tu shares. “We villainize borrowing other people’s money, but rich people do it all the time.”
Tu explains that credit is just another tool to use to build your financial portfolio and while it, in itself is not a scam, the way credit scores are calculated is. To avoid getting the short end of the stick, it’s best to understand how financial institutions determine your credit score. The biggest factors are your payment history – are you paying enough on time every month? – and your credit utilization – how much of your credit line are you using monthly? A good rule of thumb is to use about 30% of whatever your limit is. Other factors like your credit history and your credit mix – how long and how many different types of debt you have – eventually come into play but if you can control the first two, you’ll be in much better shape when it comes to your overall score.
One mistake Tu admits to making when she was younger is something that’s been touted as a “good practice” for people with credit card debt. She closed out her beginner credit card and opened a new one. The problem? Closing out a credit line, especially if it’s one you’ve had for years as Tu did, can damage your credit score.
“When I clipped it my credit history shortened by four years and that was really bad,” she explains. Instead, Tu advises people to pick credit cards based on the things they value (besides money). “If you pay on time, if you spend responsibly, credit cards are a great way to get travel points, to get cashback, to get rewards for being a responsible user.”
Ultimately, the biggest goal Tu has with her massive TikTok following is just to make the topic of money less taboo, especially amongst women, minorities, and younger generations.
“We as a society just don’t feel comfortable talking about money,” she says. “But not having those conversations works to our detriment and to the benefit of corporations and large financial institutions. When we don’t talk and we don’t compare, we don’t know what other people are doing, and we don’t know what other people are getting.”
And keeping ourselves in the dark isn’t going to help us close the wealth gap.