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3 Steps Women Can Take to Get Smarter about Money

Too many women bury their head about money matters

I have banged my head on my desk over and over again, just not understanding why women still place money on the back burner. Overall, women just don’t make money issues a priority in their lives.

As a financial advisor and a woman, I feel it’s important to empower women through free financial education. Along the way, I have discovered that it’s a huge challenge to try to convince women that they need to know more about their money.

Don’t get me wrong. Women do think about money. Our gender is very good at worrying about it all the time.

According to the American Psychological Association report “Stress in America,” women are much more stressed than men, and our biggest stress is money. Dr. Helen Coons, president and clinical director of Women’s Mental Health Associates, explains. “It’s the socioeconomic and relational context of women’s lives here in America,” she said. “A high percentage of women have dependent children, work outside the home and then come home to a second shift, often with inadequate support.

“We still see gender inequity,” she adds. “Women earn less, and if they’re employed part-time, they’re less likely to have health benefits and financial resources.”

A recent Prudential study on the “Financial Experience & Behaviors Among Women” shows, unfortunately, that women have not come a long way when it comes to money. Women feel no more prepared to make smarter financial decisions today than they did three years ago — or even a decade ago.

When asked about their confidence in themselves to achieve their financial goals, women had responses that startled me. This so-called “confidence gap” has not improved over the past 10 years, either. Really? No improvement?

“Women have been disenfranchised,” said Dr. Kate Levinson, psychotherapist and author of “Emotional Currency: A Woman’s Guide to Building a Healthy Relationship with Money.”

“Society doesn’t empower us,” Levinson said. “We’ve been acculturated to stay dumb about money — legally, and culturally, for generations.”

After reading these studies, I was quite shocked.

The studies did get me thinking, and they helped me understand why women have what I call the “ostrich effect” when it comes to money. Women, overall, refuse to accept reality, preferring to ignore the truth that we need to know about money. Instead, we bury our head in the sand.

We don’t get in the money game, because we do not want to get messy, and money can be a little intimidating. You could make a mistake or two, and you probably will. Heck, I would say that I have made at least that many mistakes. This is coming from a woman who thinks, breathes and lives her life learning as much as she can about money.

And while I will admit that I have made many mistakes along the way, I have made many more fantastic money decisions. The goal is to take action and take control of your financial life.

I would like to share three simple steps you can take now to become smarter about your finances.

  1. Get educated: Learning about money is important, and the more of a role you take, the more enjoyable it becomes. I started off taking a few classes at New York University and loved it so much that I have devoted my entire life to educating others about finances.

This might be a little extreme (I admit that I am a total nerd), but I can guarantee that you will be better off if you start to get a handle on your finances. There are hundreds of books, podcast, blogs and videos that can help you gain a better understanding of your personal finances. Dr. Levinson insists that we can’t “stay dumb” about money. “It limits our options in the world, not to mention feelings of self-worth and competency.”

  1. Track and budget: In order to make smart decisions about your money, you have to understand where your money is going. Start by tracking your expenses for one to two months. Once you see where your money is going, you can start to weed out the unnecessary expenses. Use this information to create a budget that reflects your needs instead of your wants.

To help make tracking and budgeting easier, you can download smartphone or tablet apps such as Mint, GoodBudget and Expensify. Creating and keeping your budget is one of the simplest ways to not only learn about your finances and spending habits but to be more informed and involved so that you can make smart decisions about money.

  1. Start saving now: Retirement might seem like an eternity away — especially for women in their 20s, 30s and even 40s — but saving for it is incredibly important for financial security. The earlier you start saving for retirement, the better your financial picture will look in the future.

If your company offers a 401(k) plan or 403(b), make sure you contribute as much as you can. This is especially important if they offer to match your contribution. Remember, this is essentially free money going into your retirement account. If your company doesn’t offer a 401(k) or 403(b), consider opening a traditional or Roth IRA. The sooner you start saving, the longer you are allowing your money to grow.

Women can be very smart with money. All we need to do is start getting in the game and stop believing that financial issues are too complicated for us to understand.

(This article was originally published on CNBC.com and has been reprinted by permission of its author, Stacy Francis.)

Early in her life, Stacy Francis witnessed how devastating life could be for women who were not empowered through financial education. Her grandmother stayed in an abusive marriage because she did not have the skills to effectively deal with money. That experience changed Stacy’s life and drove her into the finance field.

Stacy is president and CEO of Francis Financial, a fee-only boutique wealth management, financial planning, and divorce financial planning firm, and the founder of Savvy Ladies, a non-profit that has helped over 12,000 women across the spectrum of ages, life experience, and income levels identify their goals, make proactive choices about their finances, and lead richer, more rewarding lives.

 

 

Although SAS for Women® periodically features links to and writing by other professionals on the SAS website, SAS for Women® is not responsible for the accuracy or content of that information. As for what is best for you and your future, SAS always recommends you speak to a professional to discuss the particulars of your situation.

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Divorce Recovery: 10 Things to Do if Suddenly in Charge of Your Finances

Are you somewhere in your divorce recovery, facing your fear — the sudden, terrifying reality of managing your money?

Or, are you a brave woman saying, “It’s time to get real and start acting on behalf of myself!”? No matter what brings you to this point, a split, a divorce, or the fact that you are suddenly single, first thing – take a deep breath! There are many who have come before you, many who have taught themselves how to get out of this dark place of disempowerment. They’ve successfully navigated full divorce recovery, they’ve successfully broken from their past and it’s patterns, to become fully empowered women. Embrace this idea — that you are not alone — and accept the learning process. It’s the beginning of your showing yourself just what you can do.

After you’ve considered this learning process, let’s roll up our sleeves so to speak and discuss where to begin:

1. Get organized.

Start your divorce recovery, your new, financial “taking over” by understanding what you have TODAY. Just like setting your GPS before starting a road trip, knowing where you are today is key to planning out where to go next. Start by collecting reports such as bank statements, recent tax returns, insurance policies, retirement accounts and estate and trust documents. You will soon see why you need this step and the importance of maintaining your incoming data. Take this time to create a list of passwords and log on instructions to sites that involve the financial items listed above. Keep this newly minted list in a safe place, but make sure someone you trust knows where it is, too.

“If you don’t know where you are how do you know where you’re going?”

2. Define your goals.

Once you know where you are (YOU ARE HERE on the map), identifying your goals will give you the destinations. Allow yourself to dream big with goals like owning that summer cabin by the lake, or traveling around the world without a budget, to the more realistic goals such as “I want MONEY for a down payment”, or “I want to have a fun life when I retire — how much money will I need?” Knowing your goals will give you parameters and focus on how to move forward. Knowing your goals directs you to where you need to go.

3. Know what you OWN.

Sounds simple, but do you know where every items, asset or thing that you own or has your name on it is kept? How is it titled? What is it’s value, and how do you access it? If your answer is, “Umm, I’m not sure,” you’ve just reinforced your vital need to go through this process. Refer again to Step 1 and list the assets you have. The more precise your statements and documents are, the more accurate this part of the equation (as well as steps 4, 5 and 6) will be.

4. Know what you OWE.

Again, what accounts have your name attached to them, meaning you are obligated to pay back monies that were borrowed to maybe, buy a house? What credit cards are issued to you? Car loans? Student loans that are yours or that you co-signed? Do you know what each debt charges you in interest? Do you know when you have to pay it back? Again, “Umm, I am not sure” is not the answer you want. The good news is, you are going to change this.

5. Know what you are spending money on and how much.

EXPENSES include both the essentials as well as the discretionary which is best looked at as the stuff you spend money on that you can live without or change when push comes to shove. Services such as doing your nails yourself versus having them done, or cutting back on new shoe acquisitions are just two examples. Although I know to some they are mandatory purchases, let’s face it, if you really have to cut back temporarily, these really are discretionary and not mandatory. Learn to hold yourself accountable for separating out the “must-pays” from the “I can cut this expense for now” when calculating your cash flow. There may need to be some short-term compromises as you get your financial house in order. And that’s all right. You can do this.

6. Know what you are earning.

INCOME can come from several sources, not just your job. So don’t forget to list interest income from investments, possible royalties from work sold in the past, residual income, and others.

7. Know how much risk is right for you.

Try to recall how you reacted to market changes in the past. When you heard on the news that the market corrected or crashed by X% did you react by crying out “I can’t lose another dollar or I’ll be living out of a shoebox!” or did you call your broker and say “buy, buy, buy!” Your reaction to these corrections will help you assess how much risk your portfolios can tolerate. Since you may be feeling some anxiety set in right about now, I may suggest that you arrange to meet with a recommended financial advisor who can look at your financial story and help you take your next best steps.

8. Be tax smart.

Create an environment of teamwork between your accountant and your financial advisor so that together your investments and taxes are aligned to pursue more efficient returns. Begin by making sure each one has the other’s name and email address. Encourage them to connect.

9. Avoid common investor pitfalls.

Try not to panic at every news cycle or market change by switching course within your portfolio. In other words, second guessing yourself and your team will invariably mean you’ll buy high and sell low which is exactly the opposite of what you want to do.

10. Get involved with the pros.

Meet at least quarterly with your financial advisor, who should be a fiduciary. This term means he or she is structured in a practice that is meant to have your best interest at the core of her/his advice. In other words, getting commissions paid out is not the priority, aligning your needs is. Working for you and with you should be the goal. You are on the right track with the right advisor if s/he asks you a lot of questions, not just about now, but those long term goals, answers your questions with patience, and is willing to educate you no matter how silly you think your question is.

Finding the best financial advisor for you and your needs — one who understands you as a woman in the crossroads of your life — will give you the sense of security you need as you move forward another step in your divorce recovery and your new, exciting, second chapter.

For a free consultation with Ronit who specializes in helping women financially untangle the chaos of life transitions, call her at 516.596.8581, email her directly at [email protected] or check out her website. 

Rogoszinski may transact securities business with residents of the following states: CA, CT, FL, NJ, NY, to have you engaged, asking questions and learning how to best manage your financial house as a part of your overall life. Securities and Advisory Services offered through LPL Financial, a registered investment advisor. Member FINRA & SIPC. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. *LPL Financial does not offer legal or tax advice.