By Jean Chatzky | Oprah.com
Your Excuse: "I Don't Know Where to Start"
Why You Feel That Way
Here, in a nutshell, is how women make nearly every large, important decision: We do our homework, using the resources at our fingertips—the Internet, newspapers and magazines. We tend to be consensus builders, so we gather the opinions of the people we trust most: our mothers, sisters and girlfriends. We take our time readying a case we could defend in the toughest of courts and then—and only then—we pull the trigger. Most of the time, that sort of decision-making works just fine.
Unfortunately, in the world of money—particularly in the world of investing—there are few right answers. Which stock is the best one to buy? Which mutual fund will rise the fastest? People may claim to know, but no one really does. That makes it tough to get to the starting line, particularly for women.
And there are other complicating factors: The world of money has its own complicated vocabulary. The world of money is shrouded in secrecy. And the world of money involves higher stakes than picking a movie to see on date night. And there are no right answers. Of course you're stuck.
How to Get Over It
You have to get yourself to acknowledge—no, more than that—to really believe that in this particular area of your life, you do not have to be 100 percent right in order to get started. Yes, you heard me: You don't have to be right. And not only that: You don't have to be perfect. You don't have to be the best. You don't have to be at the top of some class. You don't have to be the smartest. Instead, you have to be good enough. And you have to believe that good enough is just fine.
How does that work in practice? Take this example you've no doubt faced a number of times in the past decade: refinancing your mortgage. Say you're sitting with a $200,000, 30-year fixed-rate home loan at 6 3/4 percent. Rates have fallen to 6 percent. Refinancing now would save you $98 a month. But some experts have been quoted saying they see rates falling to 5 percent. Do you refi, or do you wait? If you're expecting the best possible result, you're stuck. But if you believe in the power of good enough, you forge ahead. And then—guess what? Starting tomorrow, you pay nearly $100 less a month, and over the life of your loan you save $35,315 in interest alone. If rates do fall to 5 percent, you can always refinance again.
What else can you do quickly, cheaply and easily?
* Sign up for an automatic savings plan at your bank or brokerage firm and sock away $100 a month. Invest it at 8 percent, and in 30 years it'll be worth $150,129.
* Call a local lawyer and get that will you've been delaying. And while you're at it, get a living will, healthcare proxy and power of attorney. It'll cost $500 to $1,000—or significantly less if you use software like Willmaker to write your own. Not much when you consider you're protecting the people you love!
* Get your credit report for free at annualcreditreport.com. Knowing what's happening in your report is the best way to protect yourself from identity theft.
Your Excuse: "I Like Money—It's Numbers I Can't Stand"
Why You Feel That Way
Think about it. There are many things you like about money. I'm willing to bet you enjoy spending it, earning it and having it. You probably rely on the security that comes with it—having enough of an extra stash to fix the car if it hits the skids—and chances are you take advantage of the opportunities money affords you as well. So it's not money you hate—but what is it?
It could be the effect money sometimes has on people. Perhaps you had a very close friend who came into a load of money and all of a sudden had a slew of new friends, took up golf, spent her free time at "the club" and had no time for you. It could be that your parents argued about money—even divorced over money. Or, you've been in a relationship where finances were a big cause of strife.
But more likely, what you hate is the work involved in managing money and how inadequate or pressured or stressed-out trying to perform those tasks makes you feel. Many of us feel intimidated, overwhelmed and infantile when facing the prospect of coming up with a game plan for our money that will get us from point A to point B. Even going through our credit card statements to see if all the charges detailed are actually ours can send us over the edge. It makes us feel out of control. For 73 percent of Americans, money is the number one cause of stress.
When we say we can't deal with it, or we can't handle it, or it's overwhelming, the it is more specific than money. The it in that sentence is math. We're saying we don't like numbers, can't deal with numbers, can't handle numbers. The numbers overwhelm us.
How to Get Over It
You not only can learn how to handle numbers and handle your own money, but you must learn how to handle numbers and handle your own money. But let's get one thing straight: When it comes to doing math in the adult world, there will not be any final exams. You don't need to have the answers precisely right. You don't need to use particular formulas. And you don't need to show your work, so by all means, use a calculator and whatever shortcuts you find helpful. That means rounding numbers up and down to make them more manageable and estimating amounts to come up with a ballpark figure. Just be sure you estimate up, not down, so you know you have enough of a cushion in your credit line or sufficient cash in your wallet.
I'm also a huge fan of banking online and personal finance software programs. These programs make it easy to input your financial information by asking you questions in plain English. The setup may seem tedious, but once you're up and running, using finance software is a piece of cake. And you'll actually save time in the long run—particularly if you start paying your bills online.
What else can you do quickly, cheaply and easily?
* Save some. Start by putting 3 percent of every paycheck into a savings account. If that's easy enough, try 5 percent, then 10.
* Spend some. Buying things you can't afford isn't going to make you happy, but setting a goal for yourself—a dream vacation, membership at a new yoga center—and then taking the necessary steps to achieve that goal will produce a feeling of satisfaction.
* Give some away. But before you do, make sure that you'll be donating wisely. Take the time to do at least cursory research with the website Guidestar.org to make sure at least 70 percent of the money donated to an organization goes to achieve its underlying mission.
Your Excuse: "But My Husband Does That"
Why You Feel That Way
There are two big reasons (and a host of little ones) why you let your husband or partner take control of your financial life. Either he wants control or you want him to have it. It makes you feel taken care of, coddled, indulged. It makes you feel loved and brings out your inner princess. The trouble is, indulging your inner princess—allowing her to sit primly on her throne and have all the "icky" stuff taken care of for her—is a dangerous thing to do. You will in all likelihood be forced to handle your own money at some point in your life. You want to know how to do that before some event—some life emergency—puts you in a position where you don't have any choice.
The interesting thing is, you may have run your own finances quite successfully before you got married or settled into a permanent relationship. You may even have found that you have a knack for managing money. Yet after a walk down the aisle, the urge is to get those money management jobs off your plate, to give them up.
How to Get Over It
Once you get past the emotional barriers that are causing you to give up control of your money, you have to understand the tactical advantage of keeping at least partial control. Money is boring and uninteresting unless you have a personal stake in the game. If you give up control of your paycheck or control of the household accounts—even to a spouse—you lose that personal interest.
Over the years, I have come to believe that everyone needs some financial autonomy, some independence. The best way to go in any relationship is a combination of joint and separate accounts. One for you, one for your partner and a household account for both of you—in other words: yours, mine and ours accounts. You can either have your paychecks direct deposited into separate checking accounts, then have a preset percentage of your income funneled into joint checking, or you can do it the other way around.
What else can you do quickly, cheaply and easily?
* Talk—and listen—to each other. Paychecks and housework aside, the factor that most contributes to whether you are happy in your marriage is whether your partner is engaged emotionally.
* Date. You may have to get each other out of the house, out of the busyness of everyday life, in order to pay attention to each other's needs. Once a week is a must. Twice a week is a plus.
* Focus on the endgame. Discuss your paychecks—both of them. But try to do so in the context of getting somewhere as a family. What are your shared goals?
Your Excuse: "I'm Too Disorganized to Deal with My Money"
Why You Feel That Way
Whether your clutter takes the form of books, piles of paper, gadgets, clothing or all of the above, when you strip it down to its essence, what it's doing is surrounding you. It's enveloping you. It's providing you with a warm, cozy wrapper, a form of shelter from the cold, critical, difficult outside world.
The problem is—and it's a problem shared by people with every type of addiction—that this clutter doesn't bring the feelings of safety and security that you're looking for. So, you pick up some more, and then some more. Then all of a sudden you're surrounded with so much stuff that you can't think straight anymore. How do I know? I know because you and I live in America, and because in America, more is better. In America, the person who dies with the most stuff wins. Except really, she loses.
How to Get Over It
You probably think you have no idea how to sort and organize your finances. But, in fact, you have a very good model. You know how to clean a closet. And you are going to use the very same skills to get your financial paperwork in tip-top shape. I call the following steps the Four Ds.
Dump. If you clean a closet like I do, the first thing you do is pull everything off the racks and toss it onto your bed or the floor. Do the same with your bills and paperwork. Don't forget to go through your briefcases, tote bags, desktop and pocketbooks for any straggling receipts or bills.
Distribute. Take the statement and bills out of their envelopes. Open them to full size, and staple the pages of each month's statement together so they don't get lost. Then put the paperwork into the proper folders, oldest bills first, so that when you open a folder the newest statement is on top.
Diminish. When I'm cleaning out my closet, I get rid of anything I haven't worn in the last two years. With paperwork, the rules vary. Here's a cheat sheet:
* Toss immediately: Credit card solicitations; marketing material included in bank and credit card statements.
* Throw out after one month: ATM receipts; prospectuses and other information about investments you're considering; receipts for purchases, assuming you're keeping them or there's no warranty.
* Throw out after one year: Bank statements; brokerage statements; cell phone, cable, telephone and Internet statements (except when deducting for work-related expenses); credit card bills; pay stubs; social security statements; utility bills.
* Throw out after seven years: Childcare records; flexible spending account documentation; 401(k) and other retirement plan year-end statements; IRA contributions; purchase records for investments; records of charitable donations; records on houses you've sold; tax returns and backup documentation.
* Keep as long as you have the underlying asset: Insurance policies; receipts for important purchases; receipts for renovations or other investments made in your property; titles; warranty papers.
* Keep forever: Adoption papers; appraisals; birth certificates; citizenship papers; custody agreements; deeds; divorce papers; financial aid documents; military records; powers of attorney (medical and financial); stock certificates; wills/living wills.
Due diligence. Now that you have a system, you have to maintain it. Every day, when the mail comes in, get your file box and open up the bills one by one. Write checks, deduct the amounts from your check register and put them directly in the mailbox. Do not procrastinate.
What else can you do quickly, cheaply and easily?
* Pay your bills online. It saves you time, money and clutter. You can schedule certain repetitive bills to be paid every month and easy enter variable bills as they come.
* Remove yourself from the junk mail lists. Send a letter or postcard with your name, home address and signature to:
Mail Preference Service
Direct Marketing Association
P.O. Box 643
Carmel, NY 10512
* Create a place for receipts. Make a compartment in your wallet into the holding pen for receipts you need for expense records or tax purposes.
Your Excuse: "I Don't Have Time to Deal with My Money"
Why You Feel That Way
If I'm not mistaken—and I don't think I am—there are 24 hours in a day now just as there were when you were a kid and your parents were kids. Your folks may have had stressful days at work, yet they were still able to get home at 6 p.m. to have dinner with the family, to take both Saturday and Sunday off, to get away occasionally for real vacations. Why can't we?
In our parents' generation, stay-at-home moms were the managers of family time. Today, more of us are in dual-career families. When both spouses work, that function becomes more difficult to maintain. And when both spouses work as long and as hard as many American couples do today, it flies out the window.
So we try to multitask, and that becomes the biggest time suck of all. Recent studies in Neuroscience, the Journal of Experimental Psychology and other publications have concluded that if you stop working on a particular task and pick it up later, it takes your brain 15 minutes to get back to the point where you left off. If you're constantly stopping and starting because you're trying to do too many things, you're losing hours a day.
How to Get Over It
In order to conquer this time conundrum, you have to approach it in a bigger way. You have to understand that poor time management is an issue in your life and that there is so much to gain by getting a better grip on the clock. And then you need a way to make it happen.
In the world of time management, simpler is better. To get the most important things in your life done and still have a little time for things like money management and fun (yes, I believe in fun!), you need to know (1) what is important to you, (2) how to move those things to the top of the to-do pile (and get rid of the things that are lower priority), (3) how to accomplish well what you need to accomplish, but in as little time as possible, and (4) how to prevent things from slipping through the cracks. If you learn how to do those four things, you'll eliminate time management issues from your money—and from your life.
What else can you do quickly, cheaply and easily?
* Shop for groceries online. It's safe—as is all online shopping as long as you're using a secure website—and it's fast. Once you have a running list in the computer, the actual act of shopping takes about 15 minutes.
* Learn to delegate.
* Turn off the e-mail and let your voice mail pick up calls. When you think about it, e-mail and voice mail are intended to receive messages meant for you when you're not available. You need to see for yourself that the world won't implode if you don't check your e-mail every 10 minutes.
Your Excuse: "I Have Nothing to Wear"
Why You Feel That Way
First of all, let's leave need out of it. There are things that you need—no doubt about it. There are other things that you think about wanting, make a decision to buy and then go out and purchase. That's not the sort of shopping we're talking about here. We are talking about unconscious shopping—the sort of shopping that can get you into trouble if you do too much of it.
You've probably heard the term compulsive shopping. It's the name of a psychological disorder that affects between 2 and 5 percent of the population. But there is a much bigger slice of the population—15 to 18 percent, according to researchers at the University of Richmond—that shops "excessively." Like compulsive shoppers, people who shop excessively spend more than they would like to spend and buy more than is good for their financial well-being, but they do it less often. Even more than that 15 to 18 percent engage in occasional "retail therapy."
Knowing what prompts you to shop can help you channel your energies into more productive pursuits. So...why do you shop? Is it because you're feeling blue? Because you want to feel powerful? Do you want to be someone else, or maybe you just don't want to be you? Is it because you think you deserve it? You'd rather shop than, say, go to the movies? Did you have a fight with a spouse and now you want to show him that no one can tell you what to do? Do you feel like you need a friend, or at the very least, a compliment from a salesperson? Are you on autopilot? Did it just look good at the time? Or can you honestly just not stop?
How to Get Over It
The good news is that understanding why you're shopping may be all it takes to keep you from the stores. But you may need a little more ammunition. Start by asking yourself five crucial questions:
What am I doing here?
If you're at a store or website because you have a reason to shop—you're out of paper towels or a friend's birthday is next week—fine. But if you're shopping just because, it's time to do something else instead.
What was the trigger that sent me here?
If you're shopping for emotional reasons, your wallet will reward you for getting a grip on what they are.
How do I feel?
A shopping excursion shouldn't feel frantic, fraught, pressured or manic. If it does, even in the least, it's time to go home and put your feet up, watch bad cable or take a bath.
Is the thing I'm about to reach for something I need?
What happens if I don't buy it? Wants are optional. If you don't end up with them in your possession, your health will not fail, you won't go hungry, you will not end up running down the street naked. Needs are the opposite: heat, food, shelter, love. If you don't have them, something bad will happen to you: frostbite, starvation, illness, severe loneliness.
What happens if I do buy it?
Research has shown that most purchases never make us as happy as we think they will for as long as we think they will.
What else can you do quickly, cheaply and easily?
* Give yourself nonshopping options. I suggest exercise. Like shopping, it makes you feel good. Unlike shopping, it's good for you.
* Break the habit. Figure out what happens to get you to the point of purchase, then find two things you could do instead. Fall back on those options every day for three weeks. By that point, your new habit will become your default, and you'll be home free.
* Steer clear of the dressing rooms. Despite the notoriously bad lighting, research has shown that if you actually try on the clothing, you're more likely to buy it.
Your Excuse: "I'd Love to Start Saving, but I Don't Know How"
Why You Feel That Way
A bill goes unpaid. You meant to do your taxes or go to the bank or make an IRA deposit or whatever. You planned to do it, but life got in the way.
Look, there are a million or more reasons you can give yourself for not doing something—anything —to ensure that you'll really save some money this time around. You can tell yourself you'll be fine without the savings, that someone will come along and take care of you. You can push it off until next month or next year.
Or, you can simply own up to the fact that retirement is a very, very scary proposition if you don't have savings and resources to back you up. You can acknowledge concerns that you'll have to live in poverty during retirement, that you'll have to work part- or even full-time after the age at which you'd prefer to retire or that you're afraid you won't be able to adequately sock money away for later. These are very common fears. They take many different forms. And getting past them means doing only one thing: saving more money.
How to Get Over It
You have to learn to think of life as an equation. If you need to keep more of the money you have coming in, there are two ways to do that: (1) You can spend less of it, or (2) you can save more. They are interlocking pieces of the same puzzle. You have to do one in order to do the other. Here's what I want you to do:
Step 1: Eyes on the prize
Know what you're saving for and how much it's going to cost you.
Step 2: Know what's coming in
To live within your means, you have to know what you're making. That means setting up some sort of record-keeping system. I use a personal finance software program, but you could just as easily use pencil and paper. Record what you receive from all sources, subtract the taxes you owe on all of these things, and what's left is your monthly nut.
Step 3: Know what's going out
Lay out your fixed expenses—what do you spend each month on rent or mortgage, car payment, insurance, debts, utilities and the like? Next, take a look at your variable expenses. How much did you spend the past three months on food, entertainment, clothing and so forth?
Step 4: Make changes
Once you know what's coming in and what's going out, you can make the needed changes to keep yourself living within your means.
Step 5: Automate to force your own hand
Once you figure out how much you should have left, you can start to save the money you're not spending. The best way to save—the way I do it—is by asking the bank to move some money out of checking and into savings automatically each pay period. If it helps, set up separate savings accounts for separate goals.
What else can you do quickly, cheaply and easily?
* Direct-deposit. Most employers will automatically deposit your paycheck into the bank account of your choosing. You can even split it between checking and savings!
* Open an automatic investment plan. In the same way you can invest automatically in your 401(k) through paycheck withdrawals, you can invest automatically in most mutual fund companies and brokerage firms.
* Automate your bill payment. Just as you can elect to have money funneled into savings automatically, you can elect to have bills paid automatically by your bank. This system means less check writing, less stamp buying and fewer late payments that can sabotage your credit score.
Your Excuse: "I Would Invest, but..."
Why You Feel That Way
For many women, there's a huge disconnect between making and spending money and investing money. When it comes to investing, you don't trust yourself. I know half a dozen accomplished professionals and fabulous stay-at-home moms, all of whom can do just about anything, except invest.
Why do they feel this way? There are a few reasons. For some, investing is boring. Just the words "Wall Street" elicit a big yawn. For others, it's the numbers. If you can't get past the basic math, it's very difficult to get yourself to make even the simple decisions about how much of your money you want to invest and what percentage of your income makes sense.
And still others are just plain scared. When it comes right down to it, they're afraid that if they invest their money, they'll lose their money. If this is you, you probably keep your money where you think it's "safe" in the bank. Let's face it—losing money is no fun. In fact, it's a horrendous experience. If you saw your tech-stock-heavy 401(k) get cut in half by the market bust a few years ago, or if someone you know bought Lucent, IBM or—more recently—Enron and lost his or her shirt, you've got plenty of reasons to be wary.
But you have to realize that investing losses are like any other losses. You have to lament them and move forward. That means understanding why you made a mistake or had the problem and determining what you need to do to have a better experience in the future.
How to Get Over It
As a formerly fearful investor myself, I'm here to tell you that the most successful investors use fear to their advantage. They see a best friend get divorced and her standard of living plummet. Forget about trips to Europe! She has to curb her trips to the mall. And they decided, "That's not going to happen to me." They see their mother lose a spouse and have little to no idea of how to run the family finances, and they decided, "Not me. I am never going to be in those shoes."
The key is positive thinking. Where investing is concerned, I need you to become a glass-half-full person instead of glass-half-empty. Instead of focusing on possible losses, think instead about all you could accomplish if you started investing a little bit today.
If you don't invest, you won't have the money you need for a long, comfortable retirement. You won't have any extra cash to give your kids a helping hand, and you won't be able to survive the burden of an ill or dependant parent. You can decide today that you don't want to be in that situation tomorrow.
What else can you do quickly, cheaply and easily?
* Open your statements. Each quarter, you need to keep track of the direction your investments are going in and where you stand. Paying attention means you'll spot any errors in your account immediately.
* Ask questions when something seems wrong. If you don't understand something on your statement, call the toll-free number and tell the customer service rep what's on your mind.
* Make changes when appropriate. Changes in your life will dictate changes in your retirement and other investing plans. What sort of life changes? A raise, bonus, tax refund or inheritance.
Your Excuse: "I'm Too Old—It's Too Late for Me"
Why You Feel That Way
You're over 40, and you haven't started saving—seriously saving—for retirement, or you haven't started facing up to your other money issues. Let's just acknowledge upfront that this is not a great situation to find yourself in. But you know what? You are not alone. Not in the least. In fact, 75 percent of female baby boomers are not prepared for retirement.
Women will have substantially less money to live on than men. And, on average, we will live four years longer. Unless something changes, too many of our gooses are cooked.
And we know it. That's why so many of us get back into bed and pull the financial covers over our heads. It's a strange mentality, but it's common enough: The less you've saved in the past, the less likely you are to start saving now. Every time you think about starting, the thought of all the time and opportunity lost are overwhelming. "You'll never catch up," you say to yourself, "so why start now?"
How to Get Over It
You can catch up, and you can win. But a number of things will have to change if you're going to do it: Your savings habits will have to change. So will your investing, spending and other habits that are preventing the wealth and life you could build. But before attempting these changes, you have to change something even more important—you have to change your mind.
You can have a do-over starting today. But you have to get over the feeling that it's too late to save for retirement. That attitude is simply not acceptable. Why? Because your future—and by future I mean being able to afford the things you want for you and your family after age 65—is far too important to simply throw in the towel.
And the truth is, it's not too late. True, by starting late you've lost the advantage of years of compounding. You simply won't have 30 or 40 years to watch your nest egg grow, as 20-something savers will. But older savers have plenty of reasons to be optimistic, anyway. Today, baby boomers are reinventing the whole notion of retirement—the majority say they expect to keep working and earning during their later years. And why shouldn't they? They've already got decades of experience behind them and plenty of confidence to continue advancing.
What else is on your side? If you're in your late 40s or 50s, your kids are likely teens, which gives you a big burst of time that can be used bringing in extra cash. Your house is likely paid off, or very close to it, and you're seasoned enough to handle what life throws at you. An age-appropriate, well-balanced portfolio will be your modus operandi. And you'll have the wisdom to protect your hard-earned cash from the next market turndown.
What else can you do quickly, cheaply and easily?
* Max out your 401(k). I am a huge believer that everyone should max out 401(k) contributions if humanly possible. I can't stress it enough, though, with late starters.
* Use more generous IRAs. You can make larger contributions to both traditional and Roth IRAs. If you're older than 50, you can put more money into an IRA than the rest of the population.
* Use as many of these accounts as you can—combined. As you start socking away as much as possible, you may find that you're able to do more than satisfy the maximums of one particular account.
Your Excuse: "I Don't Want to Think About It"
Why You Feel That Way
Death. Divorce. Disability. What is it about these d-words that makes us turn our heads? That makes us feel as if we can't—here's another d-word—deal? It's our own sense of superstition, our own sense of impending...doom.
So what do we do instead of thinking and instead of dealing? Not a thing. Instead, we walk through our lives wearing blinders. We don't take action beforehand. We suffer the consequences after.
How to Get Over It
Here's the thing: Thinking about death or divorce or disability or other negative life events is not going to make them happen. Personally, I don't believe there's such a thing as tempting fate. Give me a ladder, and I'll walk under it every single time. But even if you are a big believer in tempting fate, in superstition, let me respectfully suggest that doing nothing could quite possibly make those fate-oriented gods pretty peeved.
The bottom line here is that there are some things that adults have to deal with in this life. It's part of being a grown-up and most certainly a parent. It's part of not leaving a big mess for someone else to clean up. It's your responsibility. And not thinking about or acting on that responsibility can result in some pretty dire consequences.
Life, health and disability insurance; wills, living wills and healthcare proxies; and prenuptial agreements help you protect yourself, without worry, so you can enjoy the rich life you're building.
What else can you do quickly, cheaply and easily?
* Get a will. You can make one yourself with software for relatively cheap, then have a lawyer take a look at it before you sign. Use the search engine at findlaw.com to find a list of lawyers in your area who specialize in estate planning.
* Pick up a disability insurance policy. This will pay out to you if you're unable to work. Look for a policy with own-occupation coverage (this means it will pay if you're unable to work in your chosen field), inflation protection and a 90-day waiting period before your benefits kick in.
* Name a durable power of attorney for finance. This gives another person the power to make financial decisions for you—including writing checks and conduction transactions on your accounts—if you're unable to make them for yourself.
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