Create Financial Freedom

How do you create financial freedom?  What is holding you back from achieving your financial goals?  The answer may be more esoteric than you think. As Furnham and Argyle write in the Psychology of Money “ In most cultures women have had much less opportunity than men to handle significant sums of money.  Pocket money and allowances are negotiated with the fathers by the boys, though girls may be encouraged to charm their fathers into opening their wallets.  Hence some girls come believe that financial wheeling and dealing is a masculine activity and shun all money matters for fear that it renders them less feminine.  On the other hand, if boys equate money with masculinity they feel very inadequate in the company of others with money, overspend that which they have a means of making a statement about their “male assets”.

Women’s Financial Literacy

As I give lectures and teach classes on women and finance, I am so heartened to see the confidence and sisterhood that emerges from these programs.  As our economy slowly heals from the greatest collapse since the Great Depression, more and more women are taking their financial future seriously.  There is a silent revolution going on among American women, in which they are finding real solutions to the issues of our day.  Women are more conservative investors than men.  They are the primary drivers in the implementation of college savings plan; life insurance and long term care insurance.  In addition, many women are deeply passionate about the world they live in, and feel committed to investing in companies and programs that are enriching our planet and our future.  They seek socially responsible investments, and are voting with their dollars for causes they believe in.  I identify with the women of my generation balancing work and family life.  I work with the Baby Boomer women who are beginning to retire; many of whom have watched their retirement plans dwindle in the economic fallout.  I have learned from some of my most elderly women clients, who remember the Great Depression, and have always avoided debt and live in homes they own outright.  It is an honor to be part of this revolution, and my goal is to see financial education become accessible to all women.  

Women Pay Their Debts

Why is it that microfinance programs around the world focus on women?  In part, of course, because it is the women of developing nations that are the most vulnerable people on the planet.  But why not lend to the men in these nation?  The micro lending banks and non-profits have learned from the facts; the women pay the loans back.  The women use the proceeds from their business to send their children to school, which protects their own future.  It is an amazing contradiction that women are the trustworthiest recipients of a loan, but American women are still so insecure about personal finance.  There are many reasons for women being afraid of financial knowledge.  In our society, many women still feel that creating their own wealth and managing their own assets makes them less “feminine”.  Many women pay the bills, balance the checkbook and manage the family budget, yet have no idea how their retirement plans are invested or how to handle estate planning. Women are hungry for financial knowledge, and many have never had a safe place to learn about money.  

There are specific issues facing women and personal finance; saving for retirement, caring for our parents and children, our increasing longevity.  Women today face an ironic risk to their financial plan; we are living longer than ever.  Thanks to modern medicine and the fact that we take good care of our health and get regular checkups, many of us will live into our nineties.  Generally, retirement begins in your sixties.  That’s a long time you need money to sustain you for.  For many women, unexpected life events through monkey wrenches into the best-laid plans.  Divorce rates continue to rise, women are widowed at many different ages, children get sick, and husbands get laid off.  

Be Prepared For The Unexpected

We have no control over many of these things happening to us.  We simply do the best we can to plan for the future, and try to have a back-up plan in the event of emergency.  However, if life deals you a cruel trick and your life doesn’t seem to be working out the way you planned, the only thing you can do is take stock in your current situation and find help in how best to move forward.  Whatever your situation is when you come into my office, whether you are fifty and haven’t saved a dime, or have been through a bitter divorce and lost everything, or have inherited vast sums of wealth you don’t know what to do with, my mantra is that I will “meet you where you are”.  We will develop a plan together to deal with the situation the best we can and move forward in a positive way to reclaim your dignity and get your life back on track.  

Sherry:

Sherry is a childhood friend of mine.  Growing up, she dreamed of the big, traditional wedding.  When she fell in love with her college sweetheart Michael, he seemed to represent all the security and structure that been lacking in her childhood.

After they were married, Sherry and Michael continued in their respective career paths, she in pharmaceutical sales and he in Insurance.  Because of her dynamic personality and amazing work ethic, Sherry was quickly promoted, and found herself managing a region that included most of the Western United States.  Michael stayed put in his position, and his income didn’t rise like hers did.  Soon she was making six figures.  They went on fancy vacations, and bought a beautiful home in a lovely community outside of San Francisco.  When they decided to have children, Sherry found herself juggling an enormously demanding job with the work of raising two little boys.  She began to notice that Michael seemed to be chronically depressed and critical of her.  He made cutting comments and didn’t support her career.  Sherry felt at a loss of what to do.  She was the main breadwinner, yet was expected to wake up in the night to nurse the baby, manage the play date schedule, and still call on her work clients up and down the West Coast.

As the years went by, Sherry began to realize that she had fallen out of love with Michael.  She was simply exhausted.  She was tired of trying to cheer him up, and playing her own success down so he wouldn’t become bitterer towards her.  When she finally mustered the courage to ask for a divorce, she got the shock of a lifetime.  They were over $100,000.00 in credit card debt!  Michael had always managed the bills as he had more time at home.  She assumed that her salary was more than enough for their lifestyle.  When he bought a new barbeque, or suggested they go on vacation to Italy, it never dawned on her that he was putting it on credit.   Now, the even worse news- because she had been the primary breadwinner, and they agreed to joint custody of the children, the judge ordered her to not only pay child support and alimony to her husband, but to continue paying half the mortgage of the home that he now lived in with the kids, while she had to rent a home for herself nearby with room for the boys when they came to stay with her every other week.  How could this be?  

As a result of assuming Michael had the financial skills to manage their financial life, Sherry found herself equally liable for this enormous debt, and shortly after the divorce was final she found she had no choice but to declare bankruptcy.  This was all the more crushing to Sherry, as she had decided that she finally wanted to pursue her lifelong dream of becoming a home based skin care consultant, which she had been fitting in on the side for the last ten years.  She had finally had enough of the long hours of her corporate job, and desperately wanted more time with her kids.  She had just left the security of her job when the truth of their financial situation came out.  Now, she is working harder than ever to get her business off the ground just to pay the bills.  

Sherry is a very smart woman.  She is capable, organized and successful.  What happened?  She trusted her husband, who had always wanted to play the “traditional” role in their marriage, to manage their finances.  In fact, she had so little education in investing, she didn’t even know what questions to ask about the state of their retirement plans, the kids college funds, the type of mortgage they had on the house, and lastly how on earth they got into that level of credit card debt.  Sherry and I have worked out a budget for her, and she is building her savings and credit back up after the bankruptcy and divorce.  No one expects these things to happen to him or her.  When we were little girls, with our childhood fantasies of home and family, we assumed like so many other little girls, that the “other stuff” would take care of itself.  It doesn’t.  You have to take care of it yourself.  And if your husband takes care of those details, you need to be equally involved in the decision-making, and you need to read the statements every month to see where you are.  

You may also be interested in our articles on college saving, raising money wise kids, life insurance, budgeting, Roth IRA, socially responsible investing, psychology of money, money and relationships and planning for the unexpected.