Good Morning Ladies! I’m going on a limb here, with an epic post on a topic that is a bit risky for three reasons: 1- You will see that I’ve made mistakes – plenty of them – but that’s ok with me; 2- Money is something kind of taboo – people don’t talk about it; which is part of the reason I think so many people suffer with money related issues (been there and I get it!); and 3- I’m not going to give you a “religious” answer here per se. While I do believe having trust in H” is critical in life (finances included!), I also firmly believe that we have to DO our part. I will speak from my personal experience with money and what I’ve concluded are ten steps that can help reduce financial anxiety and make you feel empowered when it comes to your money. (Yes, you can actually feel empowered when it comes to money. It is not an oxymoron!) I hope you find it helpful and please let me know at the end of this post what things have helped you. I’d love to know.
1- Invest in Yourself
Maybe you’re just married and with a few young kids and not working yet. Maybe you have a great corporate job. Maybe you have a small business. Whatever stage you are in life and in your “career,” the number one piece of advice is, do not forget to invest in yourself. You are your greatest resource! – Tweet that! I know many women suffer from being super driven to the point that they will sacrifice everything for their jobs/boss (I’m soooo guilty of this one! Oh if I could give advice to my twenty two year old self!) and/or for their kids. Thus, I’m just reminding you, especially if you’re young and just starting out, work hard either at parenting or whatever it is you’re working on, BUT not at the expense of your greatest resource: yourself. Invest in yourself, whether it be by reading books, taking online courses, exploring and developing new skill sets… Cultivate those talents. This will all be helpful. First, because it makes you a better mommy, better employee, better business owner etc. In addition, because it will be super helpful in the future, allowing you to reinvent yourself professionally whenever and however you might decide – if you ever need to. So, just like with the airplane mask: take care of yourself first! And while we’re on the topic of YOU, let’s go to number 2…
2- Pay yourself first
Pay yourself first, does not mean go shoe shopping! Am I getting blank stares? I’m being serious. Really. I’m not kidding. I’m saying this because when I was twenty two, I thought paying yourself first meant getting a free pass to go to Neiman’s. “I deserve it, I’ve been working so hard (read number 1).” Wrong! Pay yourself first means: Save.
Now, I do have to say that I did save during my early years but I had some weird ways of saving. I laugh now. I would make random nests to hide money from myself in case the urge to go shopping arose (and in case I’d ever leave the office and hit the stores! Oy vey!). It’s funny to me now but I really would do strange things. I’d take half a paycheck and put it into some stocks (DO NOT DO THIS, READ 5 below). I’d take a bonus and buy a CD that would mature in 10 years. I’d buy mutual funds (actively managed funds with super high fees that would eat up half my money. Oy, so sad! Again, Read 5 below). Yes, this kind of saving is better than nothing, and the money definitely came in handy when I had to pay off student loans and other debt (Read 3). But, I’m telling you right now, you can do MUCH better. There is a systematic approach to saving and while I’m no expert (as you can tell), I’ve definitely improved throughout the years and this is the general way you go about Saving:
a- Have a “Rainy Day/When Stuff Happens” Account.
Aim for at least 6 months of your living expenses and have them saved up in a liquid account. No, you don’t go shoe shopping with that money! It’s for when the AC breaks and it’s 90 degrees outside or when, G-d forbid, you lose your job. No you don’t go on a trip to the Caribbean with your girlfriends with this money. :-( Sorry! It really is for an emergency and while going on vacation might seem like one, mhhh no, it’s not an emergency. :-( Sorry again.
b- Save for Retirement
Did I get some eyes rolling? The word retirement might sound yucky. I get it. And I honestly do not believe in retirement per se. So if you’re like me, then just don’t call it retirement. Call it, saving for the day when you might just want the flexibility to do whatever you feel like doing, and not have to work. Does that sound better? Fund your employer’s 401K or retirement plan. Please, please do not pass up this opportunity. You will roll your eyes and say, “Yael, but I have no idea what it all means, so I just checked off a box at the HR manager’s office.” I know. Been there. If this is you, read 4 below. And do not just mindlessly check off the 5% box. Try to do more if you can. You won’t see this money which means you won’t spend it. Ok apparently I have a thing about hiding money from myself, but in this case, it would be a smart thing. Really. Try to live with less and maximize the retirement fund if you can. Or at least, make an educated decision.
If you don’t have an employer or your employer does not offer a retirement plan, then open yourself a Roth IRA and start funding it systematically. Please, do not just open it and forget to fund it!!! (Yeah, you’re talking to the woman who left a good portion of funds sitting in cash inside the IRA account instead of them being invested. For Y-E-A-R-S. Why!? Because I wasn’t doing number 4 or number 5 below. More on that later.) The power of compounding is incredible. You will regret it if you don’t start saving for retirement ASAP.
c- Set up different subcategory accounts for your different savings goals
You obviously have to make the goals first, my friends; and surprisingly, that’s kind of a tricky part. I’ve also been guilty of making goals and being wishy washy about them. If you don’t set the goals, you won’t get anywhere, so just do it. Let’s assume you do make those goals, then, set up a system to fund those goals. You might include your kids education (this might be a 529 or a Coverdell account which is a whole subject in itself); down payment on a house; remodeling, vacation, son’s Bar Mitzvah etc. Whatever it is, go for it. You can and should be saving for those awesome goals. That’s empowering, my friends!
3- Spend less than you make
Shocker, I know! Cut off those credit cards if you need to! As a recovering spender, I can tell you, this step will reduce financial anxiety and make you feel empowered immediately, even if you haven’t mastered steps 1 and 2 above. You’re thinking, “are you saying don’t use credit cards?” Yes, actually I am. I can feel the stares. You want to kill me. You think I’m ridiculous. What about the miles? The points? Yeah, yeah… Unless you’re very disciplined and/or have achieved your financial goals and are comfortably living on passive income and working just for the fun of it, I’m not buying the credit card argument. Most of us are not that disciplined and/or are not there yet financially, so I’d say, stay away from credit card debt. If you have to use them because you’re new to the United States and need to build your credit, make sure you put an inexpensive monthly bill that you will always pay no matter what, and leave that card locked up at home. (Sorry, again with the no shoe shopping splurge! Oy!) Trust me, if I can live without credit cards, anyone can. I am a spender by nature. But, the most empowering and anxiety reducing financial step I’ve ever taken is to pay off all my credit card debt and never, ever, touch a credit card again. (It’s been five years and I ain’t going back my friends.) If I don’t have cash in my bank account to buy it. I don’t buy it. Period. Practice some self control – it’s called Gevurah if you were missing the Jewish perspective :-) – and apply 2b above. Save for the things you want in life. Set those goals and make them happen. Over spending is not going to get you there.
4- Do NOT delegate your finances
Be your own boss. Understand EVERYTHING. Ask questions. I can’t even begin to tell you how much money I got ripped off in brokerage account fees because I never stopped to ask the right questions. If you’re single, do not keep pushing off your finances thinking one day you’ll get married and your husband will take care of it. If you’re married, don’t delegate this to your husband. Please, be involved. This is your life and your future. Take ownership over it. Learn how much you and your husband are actually contributing to your employers’ 401k’s and learn if the employers are matching the contributions. Evaluate if either of you can increase the amount you contribute to 10-15% of your take home pay. Make goals together and plan for them. Don’t just buy an investment without understanding it (ie. random stocks or even worse, some fancy looking investment deal that your first cousin pitches you and your husband, but you don’t understand…) Don’t just hire a financial advisor because your friend told you about him/her, or because your parents use him/her. Do your own homework! Which brings me to number 5…
5- Get educated and keep it simple
I should say, demand that it be simple. Personal finance is not complicated – contrary to popular belief and to my own belief up to maybe a few years ago. There’s an entire industry built on making it all seem so complex (trust me, I worked in that industry #embarrasing) and while personal finance might seem scary, it doesn’t have to be. Educate yourself. Read books, listen to podcasts. Keep it simple and demand that it be simple. If you’re already working with a financial advisor, demand answers, explanations. Do not be scared to ask. It’s your money. It’s your life. Do not make any moves that you don’t understand. BUT do not use lack of understanding as an excuse to stay paralyzed and do nothing about your finances (Been there too!). Instead, force yourself to understand. Get educated. Look for answers until you start finding them. Don’t give up.
6- Be organized and disciplined
Yeah, well I have to bring up the dreaded word that sends the chills down people’s spines: Budget. I know the budget gets a bad rep, but having a budget and sticking to it, just means being intentional with your money and your spending. So, if you have to call the spreadsheet the intentional spending sheet, go for it. Whatever works, but do it. Get yourself organized. Have separate accounts for all the large upcoming expenses like home insurance, taxes, flood insurance etc. Automate everything so that it happens without you even having to think about it, but at the same time keep close tabs. Check your bank account often, make sure all transactions are accurate. Make sure you’re saving appropriately for the large expenses during the year. Make sure you’re funding your other savings accounts appropriately etc. And if you have a trillion accounts scattered all over the banking industry (Like some of us once did… Chase, Morgan Stanley, Fidelity, Etrade, Bank of America, Citibank, Capital One… at the same time! I’m not kidding you!) start streamlining everything. Being so spread out might not be a good sign. Look into why everything is all over the place (see number 4 above) and you might realize that you’re better off streamlining things. Oh and please please, if you have a family, buy life insurance and make a will. All those “adult” things… Yeah. Those. It’s not expensive and it’s not that hard. Once it’s done… you will have dropped another few points off of the anxiety scale and gained a few points on the empowerment scale! So what are you waiting for?
Oh gosh, I kick myself for this one until this day! Seriously, what is it with women and not negotiating for what we think we are really worth!? Apparently it’s not only me. I’ve learned that it’s a real phenomenon. It’s time to change that, ladies. If you’re the type that takes a job offer immediately even though it is NOT what you were expecting or what you wanted, and/or if you haven’t renegotiated your salary in a long time, perhaps it’s time to take number 1 and number 5 to heart. Learn about the art of negotiating. It’s an investment you’re doing in yourself and quite a useful one indeed. Ask advice from a trusted friend if you need to, but please negotiate for what you want. Be realistic of course, but when you need to, do not be scared to negotiate. My mother always said, “What’s the worse that can happen, “They say No!?” ;-) Speaking of which…
8- Learn to say No
This one might shock many of you. Yes, the best thing you can do for yourself sometimes is to say “No.” Say No to that expensive dinner/girlfriend trip/donation you can’t afford (yet). Say No to that volunteer engagement that will take up so much of your time that you will forget to check your account balances, pay your bills, or revamp that new website for your side business. Whatever it is, women are givers by nature. Sometimes to our own detriment. (See number 1). I’m not giving you a license to be selfish, though. Not at all. Whenever you can help, or you can join, you should! I’m just telling you to be mindful and recognize when you have to politely say No. Finally, the best way to say No, is to say No, with a Yes: “No, but this is how I can help you…” You’re not offering exactly what they asked for, but you’re offering what you can give. Reduces anxiety and it is definitely empowering. Try it.
9- If and when you are ready, hire a fiduciary financial advisor – only
If and when you are ready, hire a fiduciary financial advisor (and no, you don’t have to have a million dollars in the bank. I know. Shocker.) You’ve been turned off by all the so called “financial advisors” who end up trying to sell you all sorts of insurance, brokerage accounts, the sun and the moon? Yeah, well tell me about it. I’ve met my share of those guys, and have handed my money to a few of them as well – yeah those behind the mahogany desk that talk fancy Wall Street jargon that left me wondering what were my Economics degree and my MBA for!? Stop. Go back to number 4 and number 5: Do not delegate and Get educated. If you’ve done your proper homework, you can actually work with someone you trust because they are working solely for you. They are called a fiduciary financial advisor. You still want to have in place all of the above, but if and when you’re ready to work with someone, make sure they are working for YOU, as opposed to making a commission or fee from another company at the same time as they offer you “advice”. And of course, even if you enter a relationship with a fiduciary advisor, always apply number 5: Get Educated and Keep it Simple.
And this my friends, is the icing on the cake! Get in the habit of giving. Without this one, ultimately you can be super disciplined about steps 1-9, but you won’t reap the real benefits. You will always feel anxious about money if you don’t share it; even if you have trillions in the bank! – Tweet that! So, be disciplined about giving, even when you have a little to give! Otherwise, you’ll never give when you have a lot. I like to give immediately from my top line. Many people like to have a maaser (donations) account which they systematically fund with a portion of their top line and then give it at the end of the year (fiscal or Hebrew). If you are super disciplined about this approach go for it, BUT I still recommend you also give small amounts on a consistent basis. And if you have a maaser account, please, make sure that you have filled or are filling your “Rainy Day/When Stuff Happens Account.” Otherwise, you know where the money for that broken air conditioner in the middle of summer is going to come from!? Either from that maaser account or from those dreaded credit cards! (How would I know? Experience, my dears, experience.) Both are terrible options. Giving is the most rewarding thing you can do and the BEST thing you can do with your money. – Tweet this! So, get into the habit of giving, even if it’s a tiny amount every time you make some cash. I bless you all that you will always be in a position to give as much as you’d like and to anyone in need who crosses your path! That, my friends, is an awesome goal to strive for.
So there you have it…
Tell me, any other tips I missed? Anything that has helped you reduce financial anxiety and feel empowered about your money? Anyone can relate to my past mistakes/mishaps? (Btw, I felt so old writing this post. I have a big birthday coming up, so it might all be related haha) Anyways, was this helpful? Go for it, talk to me, I’m all ears…
Have a great week!
Disclaimer: I am not a financial advisor or professional. The content on this post is my personal opinion and should be used as a resource for educational and general informational purposes only. This information is not intended to provide specific advice or recommendations for any individual. None of this information should take the place of consulting with a certified financial planner, tax, legal or other financial advisor.