|Every little bit counts. I bet she’s got about $40 in here.|
Ladies. Ladies! We need to talk. But that is why you’re here, yes?
Wells Fargo did a study on how well women prepare for retirement and found that we are sorely lacking in the financial fitness department. A key finding: “Almost 30% of women between the ages of 40 and 69 are ‘not sure or can’t estimate’ how much they will need to withdraw from their retirement savings annually while in retirement, and about 32% of women in their 40s and 50s estimate they will withdraw 11% to 30% or greater each year.”
The survey also showed that in addition to increased household tension since the recession began, “Women in their 40s are the most likely of all respondents to have cut their spending on both discretionary items and basic necessities (42% vs. 29% overall) and reduced their retirement savings since the recession started (25% vs. 20% overall) and the most likely to say they cannot save more because of other financial priorities (69% vs. 55% overall). They are most worried about health care (59% vs. 47% overall), inflation (58%vs. 37% overall), meeting day-to-day expenses (30%vs. 17% overall), and the potential to outlive their money (30% vs.17% overall).”
I know the economy is sucky. I know that most of us are still trying to save up for a house, kids’ college, the bathroom remodel, the Christian Louboutains, Whole Foods, or even just the rent, and that we keep putting off retirement planning for just a couple more years. It’s magical thinking that someday the money will sort itself out, and that we’ll be rescued by an inheritance, a lottery ticket, a better-paying job (which is the premise of Barbara Stanny’s book, Prince Charming Isn’t Coming: How Women Get Smart About Money). Those things may never happen. And even if they did, how would you know what to do with the money if you got it?
40licious women learn all they can about taking care of themselves and their families in the future. Even if all you can do is put away $20 a month, at least you’re on the road to retirement and security.
If you haven’t started thinking about this, it’s bewildering and overwhelming. (And if you have, please share your stories and tips with us!) Here’s a good first step: Have a conversation with someone who is smarter than you about money, and ask, “What’s the most important thing I should know about money?” Your answer will lead you to another question, and that to another answer, and so on. And then one day you’ll wake up and you’ll be really, really comfortable about making financial decisions, and working with people who can help you.
Here are some resources to get you started:
- Wells Fargo’s advice for women in their 40s
- Kiplinger personal finance website – good calculators, quizzes and articles
- Barbara Stanny – leading authority on women and money
- Suze Orman’s financial resource page
COMMENT: How are you feeling about your retirement fund?
My best money tips:
– Learn learn learn
– Trust yourself – no one knows your situation like you do. If something makes you uncomfortable, don’t do it.
– DO NOT buy something you don’t understand. If you don’t understand how the restaurant business works, don’t invest in your cousin’s (or anyone else’s) restaurant.
– DO buy things you buy. If you buy Hunt’s ketchup, think about buying their stock – AFTER you research the company, learn about how stocks work and decide that it’s the right thing for you to own.
– If you’re going to buy stock, buy dividend stocks – the things you own should produce income for you.
– If you buy a fund of any kind, read the prospectus until you understand it. Know the fees, know the risks, know the stewardship, know the philosophy. If there is something you don’t understand, call the fund and ask about it – believe me, they want your money, they will be happy to help you!
– Make time for this on a regular basis, like you do brushing your teeth, or eating. It’s important and can feel very overwhelming, so put some time aside on a regular basis to learn. And take your time.
– DON’T FREAK OUT and “invest” because you think you should have already. Yes you need to “grow” your money, but it’s better to have a pile of cash than buy something you don’t understand.
– BELIEVE that you can understand all this – women routinely underestimate their ability when it comes to finance. YOU CAN DO IT!
Hope to see some other ideas here – this is super important!!
Oh yeah – last tip. Don’t take anyone’s advice as gospel (including mine) and blindly do anything with your money. We are all just making this up as we go along. No one is an expert in this, even the so-called or self-titled experts (actually, especially them!). There’s a reason why no one agrees on any of this stuff – it’s because no one really knows. Just keep learning and do what you think/feel/know is best for you!!
Thank you for this post about finances! At this point in my life particularly I am contemplating the meaning of MONEY, FINANCES, SECURITY, so it is good to read what you have to say and to actually sit down and ponder it, after a lifetime of never having consciously done so.
I have never worried about money and have been fortunate to have had enough (not too much, but enough) to keep me going, keep me in shoes (not Louboutains, of course!) and any other little treats I want, partly because I don’t take it so seriously.
BUT it is interesting to reach an age when one can no longer say, in the context of making money or achieving any goal really: “I’ll do that, I’ll get there, I will be able to… SOMEDAY.” Now it is all about NOW and thinking about how many years there are left to be able to be an earning member of society. This recession has brought that home in many ways as well.
Even before I started reading your post, I was thinking about a book my friend gave me years ago, Prince Charming isn’t Coming, that you mention. I never read it, though the title always appealed to me! Now I will be picking it up and seeing what lessons I can learn.
But I also think that I come equipped from a childhood of being taught how to be fiscally responsible because in the country I grew up, we did not use credit cards or spend more than we had and we were taught as kids how to keep accounts, how to budget, how to save. That was a HUGE gift from the culture, from our parents, and from our teachers.
I think women (& men) in the USA need to be taught at an early age how to manage money so that they don’t have to wait till they are 40licious to begin to think about it. I wish there was a subject at the elementary school level about finance. I certainly want to teach my daughter from this age on, how to manage her money!
Thank you for the suggestion to save at least $20 a month. That is a great, small step that most of us can take. Something I like to do is every time I persuade myself NOT to buy a cafe latte or a croissant when I am out, is to put that money aside and see how much it adds up to at the end of the month! You’ll be surprised at how much you save! Then I use it for something I really need, like a new sports bra (man, they are expensive!) or deposit it in the bank! There is a feeling of satisfaction that comes from that.
On the flip side, I do think that worrying about money too much leads to unhappiness. Life is short and we can’t let money ruin or run it for us!