Money is a lot like a good man. Its greatest desire is to serve and support you. In return, all it requires is to be respected and appreciated.
You respect money the same way you would anything else you value, be it a work of art, a treasured friend, or cash in hand.
If you want it to last, you’ve got to take care of it. Throw it around carelessly or ignore it completely and guess what’s going to happen?
How do you respect and appreciate money? Follow the Four Rules of Money:
“It’s amazing what you can do with money!” my daughter said to me the other day.
Her husband, a film maker, is directing a documentary funded by a generous sponsor with very deep pockets. Normally, he’s working on a shoestring. This time, he gets pretty much free rein to do fun things, like travel to far-off places and hire helicopters for various shots.
Yes, it is amazing what you can do with money. What’s puzzling is why are countless women ignoring their finances?
I’m beginning to think its fear of relationship.
In my mind, money is like a Perfect Lover. All it wants to do is serve you and support you. All it requires, in return, is to be respected and appreciated.
In other words, just like a man, money needs your attention; it needs to feel understood, cared about, and valued. Otherwise, it’s not likely to stick around for the long haul.
As in all relationships, there are good times and bad times. Right now, it’s one of those bad times for many. If you’re in that spot, this is not the time to turn your back, throw in the towel or ignore your money. At least not if you want money to be there for your old age.
Now is the time to work on creating more intimacy with your money. Get to know it better. Learn what it needs and how to best care for it. Make sure it feels the love. (The “love of money” is NOT the root of all evil! Deprivation and destitution is.)
Some suggestions for improving your relation$hip:
1. Talk to a professional. Make an appointment with a financial advisor. (Try my book Finding a Financial Advisor You Can Trust)
2. Give it attention. Read something every day about money, even if it’s just a paragraph. (Try the Wall Street Journal)
3. Talk to others. Ask friends and colleagues who are smart with money for advice
4. Be wary of hype, rumors and scare tactics. Bad news can be seductive, but it’s usuallyskewed.
I honestly think it’s time we all start having a love affair with our money. You’ll be amazed at what you’ll be able to do together as a result .
If you have built castles in the air, your work need not be lost;
that is where they should be. Now put the foundations under them.
– Henry David Thoreau
Had a brief, but interesting conversation while shopping in Costco with My Man and his son a few days ago. His son, a senior in college, is a sheer delight. He’s ambitious and charming, with a vivid imagination and a quirky view of life. We were walking down the home furnishing aisle when he made an announcement.
“I’m going to live in a Castle one day, “ he declared, and proceeded to describe how it would have a gym, a pool, a hula hoop court (he’s an amazing hooper!), and all the amenities castle’s typical have, including lots of turrets. The boy was dead serious. I was intrigued.
“Good goal,“ I assured him, and meant it. But even more, I saw it as a wonderful metaphor for the big dreams many college kids have for life after graduation. Problem is, like most his age, he hadn’t really thought through how to make it happen.
“If you start now,” I suggested, “You can definitely make it happen.” He asked for my advice. I was ready to give it, but standing in the middle of Costco, there were too many distractions.
So this blog is meant to help him (and anyone else) build a firm foundation under their future castles.
16 things I wish I knew about money when I graduated college:
1. If you can’t afford something, don’t buy it. Delayed gratification is the gateway to wealth (and a sign of maturity).
2. Despite what you’ve heard, money is NOT power. Money is simply a tool. The trick to getting the most out of any tool is to know how it works and to use it responsibly.
3. Understand the miraculous power of compounding—where your money earns interest, then your interest earns interest, and then that interest earns interest, and before you know it, you’ve got a lot more than when you started.
4. Make savings a habit. Every month, have a small amount–say $5 to $10–automatically transferred from your checking account to a savings account.
5. Consistent savings, no matter how tiny, adds up quickly.
6. Always have a Safety Net…just in case—accumulate at least 6 months of living expenses, to be used for emergencies only.
7. Create a Fun Fund for short-term purchases, like a ‘gotta-have’ video game or a weekend getaway—open a separate savings account, or simply drop spare change in a jar.
8. Begin now building good credit. Apply for a credit card and use it responsibly, which means paying it off every month (refer back to #1!)
9. Never, I mean NEVER, get into credit card debt (not for a castle or the carpet or even a couch). Mounting credit card bills destroys your peace of mind and your quality of life. What good is a castle if you can’t enjoy it?
10. Keep your checkbook balanced. Even better, put everything on Quicken. Clarity (knowing precisely how much you have) is power.
11. Learn about investing. Take a class. The only way to make sure your money grows (enough to buy a castle and also maintain it!) is by putting at least some of your cash in long term assets (like stocks & bonds) that will grow faster than inflation and taxes will take it away.
12. Never invest in anything you don’t understand. Otherwise, you won’t know what you’re buying; you won’t know when to sell; and you can’t accurately evaluate the advice you’re given.
13. Don’t put off investing until you’re older. If you start now, regularly investing small amounts (in mutual funds), that money will grow into millions. Really!!!
14. Own and respect your value. Never settle for less than you deserve or desire. Always ask for more than feels comfortable.
15. The biggest financial risk you can take is to ignore your money, and do nothing at all.
16. Read biographies of wealthy, successful people. They’ll inspire you to think bigger about what’s possible, and give you the fundamentals for making it happen.
That’s my advice. But it’s certainly not a definitive list. I’d love to hear from others. What would you add?
Barbara Stanny
The leading authority on women & money
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www.barbarastanny.com
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Join me in the inspiring tale of a woman (I’ll call her Jane) who discovered the stunning power of women joining with other women to take their financial lives higher.
I’ve never met Jane. But recently, she emailed me to say a good friend started an Overcoming Underearning® Book Club, and she became a member. Five women meet monthly, at 7:30am for “OU Power Breakfasts.” The group reads one financial book a month. I am proud to report the first was mine — Overcoming Underearning®. Next was On My Own Two Feet: A Modern Girl’s Guide to Personal Finance by Manisha Thakor and Sharon Kedar.
Here’s how the club works: “We have assignments for our breakfasts, like writing our Contracts with Ourselves and our Wish Lists to share with the group. We also share our successes in the group in person and via email. We often include some variation of “underearning is no longer an option!” in emails!
“I feel AMAZING afterwards. It gives me such a boost throughout the day, knowing that I had done something really great for myself and spent time with supportive, uplifting, inspiring friends before going to work.”
But the group gave Jane more than good feelings. It gave her guts.
“I have a job where I’ve done several extra assignments over the past few years,” she explained, “but have never gotten paid extra for them. I was initially told there was no extra compensation for them and I never asked again. I was happy for the exposure.”
After she turned in her latest extra assignment, however, her supervisor asked Jane to do more revisions. The request followed her first book club. Bolstered by the Power Breakfast, she refused to do more because she wasn’t getting compensated.
Guess what happened?
“My supervisor then said, ‘We can compensate you!’ and within a week all the email approvals had been done to process me getting paid.”
Like most people, she had just assumed a bad economy precluded any extra pay.
“In this climate of cost-cutting I initially did not think that this was going to be possible, but once I verbalized it I realized how much work I had done and that I deserved to get paid, and felt confident that I would. This was a turning point for me in terms of now getting compensated separately for the extra work I do within my company, outside of the responsibilities of my job.”
But the story doesn’t end there. Her credit card debt, once $10,000, “is now under $1,000 and I am very close to paying it off altogether, and when I do I’m going to have a party – I will invite you and if you’re in New York I would love to have you there!”
I’d love to come. There’s nothing more inspiring than being around women empowering other women. If you’ve had any successes with similar groups, I’d love to hear about them!!!
Barbara Stanny
The leading authority on women & money
[email protected]
www.barbarastanny.com
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The Money/Happiness debate continues. Just today, USAToday http://www.usatoday.com/news/health/2009-08-05-happiness-apa-money_N.htm asked the age old question, yet again: Does money bring happiness? Well, I’m here to resolve this issue, once and for all! (drum roll, please).
Money does NOT make you happier. But poverty doesn’t either. What DOES make you happier?: taking control of your money, instead of allowing your money to control you!
Let me give you an example. Here was a woman (a successful attorney), who for the last three years, felt helpless, hopeless, and (obviously) very unhappy as her life, and her debt, spiraled out of control.
Then, last month, she called me for coaching. We’ve only had 3 sessions so far. And most of our time was spent dealing with her resistance (“I’m NOT going to change my lifestyle,” she told me firmly) and getting her out of denial (“OMG, I’m spending way more than I earn!!”).
Finally, last week, she sprang into action. I share her latest email with you because its proof positive how much happier life can be when you take charge of your finances.
“I have been working diligently to shave my monthly expenses and I am having a blast!” she wrote.
Of course, it wasn’t easy, she admits. “One thing I will say: it’s a lot of work and takes a lot of discipline to save money, and was much easier to stay in debt – which is how the system is designed. But I like the power I feel now much better. Saving money is actually making me feel very sexy, and probably the sexiest thing I have ever done!”
You’ve got to admit—she’s one happy camper!!! How did she do it? With this 7 Step Formula. She:
Ultimately, this woman created her own happiness by making 2 crucial changes: she changed her behavior along with her attitude.
Getting out of debt, she told me, has become “such a fun game. It’s amazing to see where my money goes! Wow – to be conscious is incredible. Thanks Barbara – I am loving this!”
Don’t YOU want what she’s having??
Barbara Stanny
The leading authority on women & money
[email protected]
www.barbarastanny.com
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Just as the cherry blossoms were bursting into bloom, Obama was issuing instructions to his cabinet: cut $100 million from the budget. Three months later, mission accomplished — $102 million in expenses had been slashed.
When I read this in the Wall Street Journal, http://online.wsj.com/article/SB124882436513388423.html, my immediate reaction: “Why hasn’t the media made more of this fact?” We hear, ad nauseum, about the stimulus (read: spending) packages, dragging the nation deeper into debt. But what about these recent efforts to save money? Now, in my mind, that’s news!!
Granted, that $102 billion is a microscopic portion of the general deficit, 0.0006%. But the real story is how quickly and seamlessly government made those cuts… and the public never even felt the pinch. If a giant bureaucracy can do that, certainly each one of us can too.
Washington called this program “The $100 Million Savings Challenge.” Imagine if you began your own “$100 (you determine the zero’s) Savings Challenge?” Imagine if you started today, right now, shaving small amounts from your spending every month. Then imagine if you took it one step further, and stashed the savings in the bank. Imagine what that would do for your personal fortune!
There is a saying; “It’s easier to find 500 ways to save $1, than one way to save $500“. That’s exactly what these government heads did: found all kinds of ways to trim small amounts. For example, making double-sided photocopies, emailing documents instead of printing them, cutting unused phone lines. Small. Simple. Painless. Very effective.
I’ve always said, small steps consistently taken create remarkable results. Now what about you? What teeny-tiny cuts can you begin making right now? I’d love to hear your ideas.
Barbara Stanny
The leading authority on women & money
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www.barbarastanny.com
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Does this sound like you?
“It’s a new year! I’m finally going to tackle my finances. Yep, I’m really ready to get smart about money. Well…sort of. I mean, I do want to learn…but it just seems so overwhelming. Where do I start?”
Start with this article: http://www.creditcards.com/credit-card-news
/savings-money-club-comeback-1264.php. Not just because I’m in it! The author, Dana Dratch, does a fabulous job of explaining how to make financial education fun! FUN????
Yes, FUN! Invite some friends, bring some food, and start a Money Club.
“The idea has been around for years,” Dana writes. “A small group of friends, co-workers or, in some cases, complete strangers meet regularly to polish money skills, discuss money challenges and set concrete goals. Don’t confuse money clubs with investment clubs, in which members focus on investing skills and may even make investing decisions as a group or pool their money. “
Dana also interviewed Ginita Wall, the co-founder of www.wife.org (which I believe is the best financial education site on the internet for women) and a major proponent of money clubs. Ginita created the site; www.TheMoneyClub.org, where you can download a free Leader’s Guide for “individuals interested in starting a club, and a menu of lesson plans for meetings.“
Money clubs are exploding in popularity. I’d love to hear from anyone who’s in a money club…got any tips or advice for the rest of us?
It’s the finale…the last installment of popular questions. I hope they’ve been helpful. And if you have any questions for me, feel free to ask. I’d love to hear from you! So here we go:
1. I’m getting married next year. Should my fiancé and I keep separate accounts or have one joint account?
It’s fine to have a joint account for bill paying, etc, but be sure you have one for yourself too. Every woman needs an account in her own name.
2. How can I stop being such a compulsive shopper?
As my mentor, Karen McCall, a pioneer in financial recovery, always said: “You can never get enough of what you don’t really need.” The problem isn’t the shopping, but the “hole in your soul” you’re trying to fill. I highly recommend attending DA (Debtors Anonymous) meetings, a 12 step program for over-spenders, chronic debtors, and underearners.
3. What is one of the most common money mistakes women make and how can I avoid it?
Without a doubt; it’s doing nothing because you’re afraid of making a mistake. My advice is to spend 3-6 months educating yourself. How?
I also encourage women to find a financial advisor they can trust, who will hold them accountable and keep them on track.
4. I’m always worrying about money. How can I calm my fears?
5. As a young career woman, what’s the single smartest thing I can do with my money now?
Automatic savings. Arrange to have the bank, every month, withdraw money from your checking account or paycheck and deposit it monthly into a personal savings account. Even small amounts ($10 or $20 a month) consistently saved accumulate quickly. It’s money you’d otherwise fritter away. And you don’t miss what you don’t see!! Do the same with your company’s retirement account.
6. My current salary is under 50K. How can I make more money?
If you love what you do, ask for a raise. If you get a ‘no’, ask your boss what you need to do for a pay increase. If you feel dead-ended, or dislike your current job, start looking for a better, higher paying one. Figure out what you’re passionate about and network like crazy. From my interviews with six- and seven-figure women, I discovered that four factors are essential for financial success and quality of life (both are important):
Maybe I’m over reacting. I just heard yet another conference speaker warn me, along with a few hundred other women, that unless we take action, most of us will never retire because we can’t afford to.
Enough with the bad news already! The financial industry, along with the media, seem to believe that the best way to motivate women is by frightening us with scary statistics, alarming statements, and worse case scenarios. But clearly fear tactics haven’t worked. Women hear these gloomy statistics and instead of taking action, just get depressed and go into avoidance.
I would love to see the financial industry/media do away with (or at least down play) those depressing statistics. And instead, talk about how financial success allows women to help her kids, her parents, people she loves. Tell us stories about the joys of philanthropy, the thrill of leaving a legacy. Give examples of how proper financial planning will give her the resources to contribute to causes she feels passionate about.
To most women (and I suspect some men), helping others and making a difference is what financial empowerment is all about.
Does anyone else feel as strongly as I do about this?
Let me suggest a foolproof strategy for achieving financial savvy…especially if you’re having a hard time doing it. Think big. Act small. And never, ever stop until you reach your goal.
One reason so many have trouble with money—saving more, investing wisely, or paying off debt—is because it seems so overwhelming. And indeed it can be. But I truly believe the secret to success is this: small steps consistently taken create remarkable results.
I am convinced:
A big part of attaining financial freedom is simply changing your habits.
Early on, I devised a 3-step plan for myself that was amazingly effective at changing my habitual avoidance. Try these 3 steps for 4 months, and see what happens:
1. Everyday, read something about money, even if it’s just for a minute or two, even if it’s only the headlines of the business section of the newspaper, or a money magazine while you’re waiting in line at the grocery. So much of getting smart or smarter about money is understanding the jargon and the current trends.
2. Every week, have a conversation about money, especially with someone who knows more than you. I learned this from my interviews with financially savvy women. Whenever you meet anyone who knows more than you, ask them how they got smart, the mistakes they made, and what’s worked best for them. I think it’s our secrecy and silence about money that keeps us stuck.
3. Every month, save. Automatically have money transferred from your checking account or paycheck to your savings account. How much? Better to save say $10 a month, than try to put aside too much and eventually give up because you feel the pinch. Small amounts really do add up surprisingly fast. And as the saying goes: it’s easier to find 500 ways to save $1 than it is to find 1 way to save $500.
