I recently read a shocking bit of information revealed by the 2013 Allianz Women, Money and Power Study. That study claims that almost half of the women in the U.S. often or sometimes fear losing all their money and becoming a bag lady. As you might expect, the highest percentage of those with that fear were single (56%), divorced (54%) and widowed (47%). But perhaps even worse, 27% of the women who generate over $200,000 per year of income also felt that way. Clearly, many women have a deep insecurity about their finances and how to manage their money in a SMART and responsible way. So here are 9 tips that I believe any woman should consider regarding her money.
Of course, I must remind you I am not an expert or a financial planner of any kind. What I do have is over 40 years experience in what has worked in my life and what hasn’t. And while I’ve made quite a few financial mistakes over the years, I am proud to say that I’ve learned from every one of them. With the help of my financial partner (who happens to be my BFF and husband, Thom) we’ve used our experience to become financially comfortable. And although I don’t consider myself money-rich, I have never ONCE believed I would become a bag lady.
With those disclaimers aside, here are my 9 suggestions for women and their finances.
#1 Know exactly what your financial situation is at all times. I often meet intelligent woman who nonchalantly hand this task over to their partners and know very little about their financial picture. But because about 40% of all marriages end in divorce, and with women typically living longer than men, we owe it to ourselves to be an equal financial partner with those we live with. Organize yourself. Know where your money and investments are located. Most importantly, know the costs your lifestyle requires.
#2 Live within your means. Regardless of what advertisers, your neighbors, or even your mother thinks is necessary to live a “good life,” don’t buy things you can’t afford. Know how much money you have and try to spend less than that on a regular basis. Avoid debt of all kinds. Instead, find things you love to do that fit in your budget, and avoid things that cost a lot and bring only marginal enjoyment. Crave freedom, happiness and peace of mind more than you crave possessions.
#3 Get on the same financial page as your partner/spouse as quickly as possible. It took Thom and I about 15 years to really work through all our money issues with each other. We started 38 years ago with different styles, but have learned what works to make us both comfortable and happy. It’s not easy but it’s extremely important. If you don’t get together until later in life, do your best before you marry or commit to another relationship to find out if your financial perspectives are compatible.
#4 Never assume someone else cares more about your money/investments than you do. Far too many single/divorced/widowed women turn their financial life over to a financial planner and passively agree to everything they are told. While that might work for some, there are thousands of examples of what happens when it doesn’t. Bernie Madoff instantly comes to mind.
#5 Find someone you trust to talk to about finances. According to a 2007 study done by Gender Differences in Investment Behavior at Iowa State University, women prefer to receive investment advice in person or in a group rather than seek it out on their own. Much of the time we are uncomfortable talking about money, and will likely talk more about our sex lives than our finances. For that reason alone I am thinking about starting or joining a local Women’s Investment Book Club as part of my 60-for-60 project. The more comfortable we get with investing money, the easier and perhaps more rewarding it will be.
#6 Rightsize your life as soon as possible. I define rightsizing as finding a lifestyle that suits your personal needs, your personality and your finances. The sooner you do that, the sooner you will eliminate living a lifestyle that 1) doesn’t make you happy; 2) you can’t afford; and 3) you can’t maintain. Rightsizing is a big topic that covers everything from the job you take, the place you live and what you plan to do with the rest of your life.
#7 Stop using your money to buy love or acceptance. Regretfully, some women spend too much money hoping it will make other people love them more (their kids?), or that just one more pair of shoes will make them more attractive. Instead, when we are content with who we are and what we have, we seldom spend money that we don’t have. Learn to say NO when others ask us for money.
#8 Realistically began to imagine where and what you want to do and be in the years to come. Because I am childfree, I can’t expect children to bail me out. Yet many mothers I know say they that although they never want to be a burden on their children, they have no contingency plan for retirement or old age. We can’t leave our future lives to chance any more than we can expect others to take care of us if or when the time comes.
#9 Realize that a more simple life with less stuff just might be the solution to most of your financial worries. The good news is that it will probably make you happier as well.
Optimistically, the Allianz Study says that more and more women are hungry for more knowledge about financial planning, with 62% having a strong interest in learning more about finances and retirement strategies. But just the fact that so many of us remain worried about losing all our money and becoming homeless is reason to support and encourage each other. With the New Year just getting started, it is SMART to begin thinking and talking about our finances in a more aware and resourceful manner today.
Share the kindness—Win one of five free gifts to five readers of SMART Living 365. As a kindness initiative started by my blogger friend Carol Cassara on her blog, I will randomly choose five people from the comments below–these five will receive a prize from me at some point during calendar year 2015. It could be anything: a postcard, a book, a home-made something–that’s why it’s called a “surprise!” You’ll get no warning–I’ll send your kindness package when the mood hits me and I’ll try to pick something I know you’ll appreciate. So if I we’re not friends yet on social media, make sure we are at least on Facebook so I can learn more about you!
Here’s the catch: Those five people chosen? They must make the same offer on THEIR blog and share on social media. If you don’t have a blog, you can use your Facebook account, G+ and/or Twitter. Then during the next week I will send this post to winners privately (so please be sure I have your email address and please wait until the five are chosen) so that you can do the same. I’ll also come back to this post and announce them here.
This is an effort to do sweet and loving things in the new year for no reason other than to make each other smile and show that we’re thinking of each other. Let’s spread some kindness, shall we?
I held a drawing and Thom picked out 5 very anonymous winners from those who left comments here and on FB. They are:
1) PJ Purves
2) Carol Cassara (you have good karma Carol!)
3) Mary Buchan
4) Beverly Diehl
5) Jodi Aman
I will send each of these ladies an email reminding them to make the same offer on their Blog and/or Facebook page and getting their mailing address. Thanks to everyone who left a comment for playing this kindness game with me and I look forward to sending you a surprise sometime in the coming year.
All good points, even more so if you are single and depend on yourself for all financial transactions and decisions.
Hi Lydia! YES! I very much hope that anyone who is single is taking the time to manage their finances that control their budget. Either way, all women should know what it takes to be independent enough should the need arise. ~Kathy
Hi Kathy—–Sure need more direction/discussion on just how to cover yourself when you are single and have no children or others to step -up for you in anyway when or if you become unable to make or speak of any life altering decisions for yourself. Any ideas are extremely welcomed. Thanks for your help. – Patti
Hi Patty! I surely can’t answer your question in an easy way beyond what I write about here on SMART Living 365 on a regular basis. I am not an expert or a financial planner, just a person like you doing my best in my present circumstances. While I do have a husband, I don’t have children, and we are both self-employed (meaning we don’t have pensions or employer retirement plans to rely on.) What I find critical is to educate myself as much as possible about my options both from the government and from the financial world. Save what we can, learn to live frugally, explore cohousing options. There are things we can do. Not always easy but doable. Good luck! ~Kathy
I love this post. I never knew what was going on in our finances as a married couple over the past 32 years. As a result of that difficult situation I am now in the financial loop with my spouse. I now have a wonderful new job and a financial plan for my future. Thank you for sharing this needed information.
Hey Mary! And congratulations for jumping in and taking the plunge to greater financial awareness. As long as we are learning from our past experiences and moving forward then every situation is a gift. It sounds like your financial picture is not only much clearer now, but I’m guessing that you now feel a sense of peace about it that you never had before. Good for you! ~Kathy
Kathy,
You always have great tips and info on your blog! I will try to follow these. My situation is different since I take care of the finances in my coupledom. But Ted and I often agree so there are no worries there. I think I am going to try to learn more about investing this year!
Hi Jodi! Yes it isn’t always the woman who sits back and let the man do the finances. In fact I did read that a LOT of women do the household budget–but at the same time (and you sort of hint to it) they don’t do anything creative with the investing. Most women find that intimidating but there is lots of evidence that women are also better at investing than men. (i.e. we’re more patient and tend to research investments better than men overall) So there are plenty of reasons to give that a go. ~Kathy
These are all great tips Kathy. You would think that we being in middle age this would be just common sense but I guess it’s not for everyone.
Hi Rena! Yes, you would think we would know better by now but I’ll bet you know as well as I that so many women just don’t want to think about such things. While I agree it can be a bit “dry,” I am challenged to see if I can create a club that would be fun, interesting AND helpful at the same time so that we can turn our thinking about this around. ~Kathy
Kathy, you outdid yourself this time. It amazes me every day the number of people who think nothing of living paycheck to paycheck when they don’t have to. It’s like money burns a hole in their pocket and they think nothing of tomorrow.
Then there are the women who don’t want to be bothered and let their spouse control the money. My grandparents were like this because it was just the way things were done in their time. My grandmother always had her pocket money but my grandfather brought home the actual paycheck and paid the bills. My grandmother never even looked at any of the bills. When she retrieved the mail she set it aside for him to open and deal with.
One day when I was 16 my grandfather had a stroke which left him for several hours with no memory of the last several years. He didn’t know he had retired and he kept asking if he had any money left. The thing was we didn’t know becuase he never told his wife or any one else how much money he had banked or in the house.
While I was always very independent and believed in equality between the sexes, even when it came to money, that day reinforced my opinions. I never forgot that lesson.
Hi Lois! I’m glad you liked this one….and thank you so much for sharing your own story with us all. I think if most of us take the time we will find that there are a LOT of us who have something similar to tell. And what’s tricky, is because we aren’t talking about it with each other it can be rather shocking to find out that a friend or relative of ours is pretty destitute when tragedy strikes even if their lives appeared rather perfect beforehand. While I would never advocate that we put off living happily today, I do think that we should be awake, aware and responsible about our choices in the present as much as possible. ~Kathy
Too many women (and many men) take the hiding under the covers approach, money makes them fearful so they avoid talking or learning about it and it perpetuates a vicious cycle. We should all know how to handle money, and it CAN be addressed in small chunks, so as not to overwhelm.
Fabulous tips here, Kathy.
Hi Beverly! You’re right. It isn’t just women that hide from talking about our finances. I think one of the reasons so many of us have issues with money is BECAUSE we don’t talk about it more. It certainly hold a lot of “shadow energy” if you are familiar with that term. And yes…I’ll bet if I titled it SEX and money I would have already gotten many more readers 🙂 ~Kathy
It’s amazing how we avoid financial discussions, a little embarrassed, maybe, to bring them up. But I think your advice is thoughtful and super-helpful. You know, the best piece of advice I ever read was from super-rich people who suggest that living BENEATH your means is smart.
Hi Carol! I’m glad you think some of my suggestions are helpful. I know they aren’t rocket science but I do think more of us women ought to get that conversation out in the open. And of course I love your statement, “the best piece of advice I ever read was from super-rich people who suggest that living BENEATH your means is smart.” ~Kathy
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Very important tips, agree with you Kathy, finance has always been an issue in our family life; as I began my married life in a joint family, wherein it was a challenge to come to an agreement on financial matters. I am grateful to God now; that we are on our own,( as the other members of the family are settled in marriage and living on their own) there is an improvement after 15 years of marriage and now we are talking about living debt free, making goals for visiting the places we dream off, getting our daughter educated and equipped, going out for holidays… so far things have improved; and with gratitude I still hope that we become financially healthy and share most of our resources with those who need… I try my best to keep sharing whatever possible with those around me and the community I belong to…. thanks for sharing !!
Hi G Angela! Good for you for taking steps to improve your financial situation. Us women need to encourage each other for sure. I’m not sure how different your “economy” is over in India and how that effects you life on a day-to-day basis like it does ours, but surely being debt free is a HUGE way to be secure and more peaceful regarding our finances. And I’ll sure bet that living in a “joint family” would complicate things–the more people involved to make decisions the more challenging.
And while I agree that it is important to share our resources with those in need in the ways that we are able, I also tend to agree (at least for those of us here in the U.S.) that we must also strive toward ensuring that we have some resources to take care of our basic needs. I’m reminded of the airplane hostess suggestion, “In the event of an emergency, always put the oxygen mask on yourself first before helping others.” Perhaps the most rewarding plan for the future is to arrive at a place where you have the resources to help others and ourselves as needed. Thank YOU so much for adding this aspect of a SMART woman’s financial future. 🙂 ~Kathy
Excellent post, as usual! My husband and I married later in life so our personal spending habits were pretty much entrenched. Fortunately, we are both savers and frugal and – for the most part – live below our means. Hubby handles a lot of our financial planning but he’s very good at encouraging me to pay attention. #8 is a biggie for us too. We have long-term care insurance but not much (other than our savings) beyond that.
I wish you and I lived closer – I’d love to join your book club! May I also suggest the blog Mr. Money Moustache. He does a great job showing how most of us can really live quite happily and comfortably by stepping off the consumer-go-round.
Hi Janis! How good for you that your husband and you were compatible about spending. I see that as such a huge issue in couples so the sooner we can find a place of harmony with our finances the better. We’ve looked into the long care insurance ourselves but just gulp every time I get a quote. Meanwhile, we have been investing as heavily as possible in real estate to do what we hope will cover us. More than anything, I can’t help but believe a key is settling in on what is important to you. And yes, I’ve read the Mr. Money Moustache site on and off for a while now–but he does come from such a “guy” perspective on much of it. It’s time us women spoke up more right?
And yes, I do wish you lived closer. We could talk blogging AND money 🙂 You’re really not so far away. We will have to plan a get together real soon. ~Kathy
Great suggestions Kathy for guys too. Before I get another “thing” I really question whether I NEED this thing and what kinds of hassles I will have if it breaks.
Hi Gary! Thank you. I’m glad you liked my ideas and yes–they work equally well for men. And asking yourself that very important question REALLY helps you live below your means (not to mention to consequences of all our actions!) Thanks for that idea. ~Kathy
Kathy – this is a great article. Living below our means is truly an essential skill and discipline. Being informed about our finances is another must-do for all women, no matter how distasteful it seems at first. It won’t take long before it feels empowering, once you get into it – just leave room for a learning curve, like learning a new language.
Hi Annette! Thank you. Living below our means AND staying informed are two of my favorites too. And I really do think we can do as you say, make it feel empowering and maybe even a bit of fun if we do it together. (that’s why I’m thinking strongly about an investment book club.) I think if we do make it fun and interesting then we’re more likely to keep it up. ~Kathy
Fantastic tips. Women and men I think sometimes keep their heads in the sand about their finances or in my experience are not connected to their age and their finances. Some one who is 60 can not say I have plenty of time for long term investments to mature. At age 60 health issues creep up and long term investing might be needed sooner than later!
Hi Haralee! I’m glad you like my tips. I suppose there are many more but I really thought these were the most important. And yes as we hit the big 60 (or more!) we really need to be thinking about it all in a more clear way. ~Kathy
Great, common-sense, recommendations for women and men alike. I’ll sheepishly admit that I am still not where I should be on #1. As I’ve focused more on career-building and taking on the primary breadwinner role, I’ve defaulted to leaving financial management to hubby, how is a bigger spender than I’d like, often. A good remnder for me to get in there and start inspecting our portfolios a little more.
Hi Nancy! I agree that these tips apply to women AND men but I do think a lot of women are really good at playing the ostriches! And I also agree that it isn’t the most fun topic or conversation that Thom and I have, but I do think it is empowering for us all to fill like we have the “big picture” view of our financial life. That’s one reason why I think an Investment Book Club might be interesting and fun (wine included of course!) After all, most women I know love their book club so why not make it about a subject that will actually help improve our future? ~Kathy
Absolutely spot on tips, Kathy! My husband and I were not on the same page about money until four years ago, when we ha to go through an unnecessarily tough time sorting out our finances – it taught us a solid lesson and new, while both of us are not simultaneously active in keeping track, one of us always is and is reporting to the other. Works well for us. And decisions are always jointly made. Our greatest strength, I think, is living within our means. With that firmly in place, we are on the right track.
Wonderful post!
And what a lovely initiative! I am practising the giving and loving in my own community with the local welfare homes and the street dwellers – by donating my “extras” My goal is to completely be free of clutter before April 15 this year. 🙂
Happy New Year to you! Hugs!
Hi Vidya! I do think it takes any two people a while to learn how to “partner” their finances effectively. (it sure took Thom and me a while.) And as you say it can be a bit tough for sure. And yes, we too sort of divide and conquer when taking on financial tasks but I think a real key is that your decisions are jointly made and that you keep each other informed. And YES! YES! YES! to living within your means….you are definitely on the right track…and the “free of clutter goal” is a great one too. ~Kathy