Are You Prepared For Change?

You love enjoying your financial security; you’ve established your career, you earn a nice income, and you’ve already paid for a home and college tuition’s. However, drastic changes like disability, illness, job loss, divorce, or aging parents can blindside you and your finances. You need to prepare yourself for unexpected changes to protect the financial security you already worked hard for.

Facing Disability, Illness, or Job Loss:

The greatest costs you retain when you become disabled or ill are medical provider charges. These charges include hospital, doctor, and medication bills. It pays to have health insurance especially if you can obtain reduced rates through your employer’s group plan. You may consider disability insurance if it pertains to you. Researching and picking the right insurance for you will provide the coverage that will protect you from paying high medical bills out of pocket.

Losing a job is always a drastic and immediate change. You need to develop some risk management like setting up an emergency fund that will cover all expenses while you are between jobs. Also, think POSITIVE. A job loss can lead to a new career, or a better position in your field of expertise. You may also decide to take some time off to travel, spend time with your family, or try out a new hobby during this time.

(Morris, A Woman’s Guide to Personal Finance)

A young woman executive in a financial meeting

Women, Don’t Retire Without…

A practical financial checklist for the future.

 

When our parents retired, living to 75 amounted to a nice long life and Social Security was often supplemented by a pension. How different things are today!

 

The good news is that life expectancy for women – as measured by the Centers for Disease Control – is now 81.1 years. The Social Security Administration estimates that the average 65- year-old woman today will live to age 86. 1,2

 

Given these projections, it appears that a retirement of 20 years or longer might be in your future.

 

Are you prepared for a 20-year retirement? How about a 30- or 40-year retirement? Don’t laugh, it could happen: the SSA projects that about 25% of today’s 65-year- olds will live past 90, with approximately 10% living to be older than 95. 2

 

How do you begin? How do you draw retirement income off of what you’ve saved, and how could you create other possible income streams? How do you try and protect your retirement savings and other financial assets?

 

Talking with a financial professional – a female financial professional – may give you some good ideas. You want an advisor who walks your walk, who understands the particular challenges that many women face in saving for retirement (time out of the workforce due to childcare or eldercare, maintaining financial equilibrium in the wake of divorce or death of a spouse).

 

As you have that conversation, you can focus on some of the must-haves.

 

You should plan your investing. Many women (and men) retire with a random collection of investments, and no real strategy. Some are big on “chasing the return” – assuming risk they really shouldn’t in pursuit of a double-digit yield. Others are very risk-averse, so fearful of what stocks might do that they stay out of the market entirely – and in the current low interest rate environment, that represents an easy way to fall behind and lose purchasing power to inflation.

 

You need a middle ground. When you are in your fifties, for example, you have less time to make back any big investment losses than you once did. So protecting what you have is a priority. At the same time, the possibility of a 15-, 20-, or even 30- or 40-year retirement means you have to keep a foot, if not both feet, in some kind of growth investing. Your initial retirement nest egg has to keep growing.

 

You should look at long term care coverage. It is an extreme generalization to say that men die sudden deaths and women die lingering ones; however, women often have longer average life expectancies than men and can require weeks, months or years of eldercare. Medicare is no substitute for LTC insurance; it only pays for 100 days of nursing home care, and only if you get skilled care and enter a nursing home right after a hospital stay of 3 or more days. Long term care coverage can provide a huge financial relief if and when the need for LTC arises. 3

 

Claim those Social Security benefits carefully. If your career and health permit, delaying Social Security  is a wise move for single women. If you wait until full retirement age to claim your benefits, you could receive 30-40% larger Social Security payments as a result. For every year you wait to claim Social Security, your monthly payments get about 8% larger. 4

 

Married women can look at spousal claiming strategies such as the “file and suspend” approach and claiming spousal benefits first. This may help to maximize the Social Security benefits you and your spouse receive.

 

Above all, retire with a plan. Have a financial professional who sees retirement through your eyes help you define it on your terms, with a wealth management approach designed for the long term.

 

1 – http://cdc.gov/nchs/data/nvsr/nvsr61/nvsr61_06.pdf

2 – http://ssa.gov/planners/lifeexpectancy.htm

3 – http://medicare.gov/coverage/skilled-nursing-facility-care.html

4 – http://money.usnews.com/money/retirement/articles/2012/04/02/what-older-workers-dont-know-about-social-security

Why Women Are Prepared for Financial Success?

We have the ability to excel financially; it is a matter of shifting our outlook.

Statistics don’t mean everything. Read enough about women and money online, and you will run across numbers indicating that women finish a distant second to men in saving and investing. Only 42% of women save a specific amount money each month for retirement, the State Farm Center for Women and Financial Services at the American College finds. Aon Hewitt says that the average 401(k) balance for a man at the end of 2012 was about $100,000, while it was only about $59,300 for a woman. And so forth. 1,2

Depressing? Well, consider that you can be the exception. (Maybe you are right now.) You may already have the discipline and patience central to smart investing and saving.

Is making a household work all that different from making your money work for you? You may or may not have to broaden your skill set a bit to save and invest well for retirement; chances are, though, you already have some abilities you can draw on effectively.

The latest edition of Prudential’s “Financial Experience & Behaviors Among Women” study (2010-2011) shows that 54% of women either feel “very knowledgeable” or “somewhat knowledgeable” about financial products. The previous edition of the study noted that 95% of women are financial decision makers within their households, with 84% of the married women surveyed solely or jointly in charge of household finances. 3

Given that level of participation and control over household finances, is it such a stretch to believe many women could become equally financially literate in their understanding of stocks, bonds, commodities, and insurance? It isn’t a stretch, especially when you think about how much good financial knowledge is out there, some of it free of charge.

Most household financial decisions are short-term decisions. They are geared toward this month or this year, and often relate to cash flow management or debt management. The simplest step toward financial freedom for many women – perhaps the most valuable step – may be moving from a short-term financial outlook to a long-term financial outlook.

Think about becoming the “millionaire next door.” In many cases in this country, wealth is grown slowly and steadily. We all dream of a windfall, but usually individuals amass $1 million or more through a variety of factors: ongoing investment according to a consistent financial strategy, the compounding of assets/savings over time, business or professional success, and perhaps even inherited wealth.

When the focus moves from “how do we make it work this month” to “how do we make moves in pursuit of our financial goals”, the whole outlook on the meaning and purpose of money begins to change. What should money do for you? What purpose should it have in your life? What can you do to make it work harder for you, so that you might not have to work as hard in the future?

Women have the wisdom, prudence and patience to make superb investors. Understanding the financial world is ultimately a matter of learning its “language” and precepts, which will quickly seem less arcane with education. Today, do yourself a money favor and ask to talk with a female financial professional who can help you define long-term and lifetime financial goals and direct some of your money in pursuit of them.

1 – http://www.cnbc.com/id/100732440

2 – http://blogs.marketwatch.com/encore/2013/08/14/401k-gender- gap-is- bigger-than- pay-gap/

3 – http://prudential.com/media/managed/Womens_Study_Final.pdf

4 Money Blunders That Could Leave You Poorer

A “not-to- do” list for the new year & years to follow.

How are your money habits? Are you getting ahead financially, or does it feel like you are  running in place?

It may come down to behavior. Some financial behaviors promote wealth creation, while others lead to frustration. Certainly other factors come into play when determining a household’s financial situation, but behavior and attitudes toward money rank pretty high on the list.

How many households are focusing on the fundamentals? Late in 2014, the Denver-based National Endowment for Financial Education (NEFE) surveyed 2,000 adults from the 10 largest U.S. metro areas and found that 64% wanted to make at least one financial resolution for 2015.

The top three financial goals for the new year: building retirement savings, setting a budget, and creating a plan to pay off debt. 1

All well and good, but the respondents didn’t feel so good about their financial situations.

About one-third of them said the quality of their financial life was “worse than they expected it to be.” In fact, 48% told NEFE they were living paycheck-to- paycheck and 63% reported facing a sudden and major expense last year. 1

Fate and lackluster wage growth aside, good money habits might help to reduce those percentages in 2015. There are certain habits that tend to improve household finances, and other habits that tend to harm them. As a cautionary note for 2016, here is a “not-to- do” list – a list of key money blunders that could make you much poorer if repeated over time.

Money Blunder #1: Spend every dollar that comes through your hands. Maybe we should ban the phrase “disposable income.” Too many households are disposing of money that they could save or invest. Or, they are spending money that they don’t actually have (through credit

You have to have creature comforts, and you can’t live on pocket change. Even so, you can vow to put aside a certain number of dollars per month to spend on something really important: YOU. That 24-hour sale where everything is 50% off? It probably isn’t a “once in a lifetime” event; for all you know, it may happen again next weekend. It is nothing special compared to your future.

Money Blunder #2: Pay others before you pay yourself. Our economy is consumer-driven and service-oriented. Every day brings us chances to take on additional consumer debt. That works against wealth. How many bills do you pay a month, and how much money is left when you are done? Less debt equals more money to pay yourself with – money that you can save or invest on behalf of your future and your dreams and priorities.

Money Blunder #3: Don’t save anything. Paying yourself first also means building an emergency fund and a strong cash position. With the middle class making very little economic progress in this generation (at least based on wages versus inflation), this may seem hard to accomplish. It may very well be, but it will be even harder to face an unexpected financial burden with minimal cash on hand.

The U.S. personal savings rate has averaged about 5% recently. Not great, but better than the low of 2.6% measured in 2007. Saving 5% of your disposable income may seem like a challenge, but the challenge is relative: the personal savings rate in China is 50%. 2

Money Blunder #4: Invest impulsively. Buying what’s hot, chasing the return, investing in what you don’t fully understand – these are all variations of the same bad habit, which is investing emotionally and trying to time the market. The impulse is to “make money,” with too little attention paid to diversification, risk tolerance and other critical factors along the way. Money may be made, but it may not be retained.

Make 2016 the year of good money habits. You may be doing all the right things right now and if so, you may be making financial strides. If you find yourself doing things that are halting your financial progress, remember the old saying: change is good. A change in financial behavior may be rewarding.

Citations.

1 – http://denverpost.com/smart/ci_27275294/financial-resolutions-2015-four-ways-help-yourself-keep

2 – http://tennessean.com/story/money/2014/12/31/tips-getting-financially-fit/21119049/

Boomer Couple in Front of Their Beach House

Women and Financial Power

Too many women lack the confidence necessary to take control of their financial lives. Women fear making investments, managing their finances, planning and monitoring their spending, managing investments, and increasing their wealth.

Why aren’t women more confident with their finances?

The answer is that women are stopping themselves from being assertive. Many women leave their financial lives to their husbands, boyfriends or parents, and because of this way of thinking, they lack financial power. Financial empowerment must come from within. Women must seize it with fervor, reflecting an unshakable determination to take control of their financial lives. You must tell yourself that you can become empowered, and that you will not let outdated notions of gender hinder your success. Keep “EMPOWER” in your mind as an acronym representing these concepts:

Education is critical
Motivation inspired by your values
Protection against risk
Ownership of your future
Work — claiming what is yours requires effort
Emotions should be kept out of decisions
Responsibility to yourself

Do you use any acronyms to motivate you with your finances? I’d love to learn about yours! Please let us know what you think by posting your comments on our Financially Savvy Women Fanpage.

Gibbons, EmpowHer! Why more women are taking the financial lead

Boomer Couple on Motorcycle

Why are Women More Risk Averse?

Women avoid risk more than men; this can come back to bite them

Perhaps it comes down to both genes and social upbringing – women feel greater pain when they lose money than men. The result is that women tend to shy away from stocks more than men do. This makes intuitive sense because stocks are more volatile and unpredictable — on average – than bonds or cash. Perversely, it’s the wrong direction for women; they need higher exposure to stocks than men do. Women live longer than men; stocks broadly should continue to outpace inflation over long stretches of time vs. bonds and cash. Inflation is the enemy of all retirees and is especially corrosive to women due to their relative longevity.

Financially Savvy Women have the wealth they deserve

5 Myths about Women and Wealth

There are several myths about women and wealth that you might not be aware of. Below are the top five myths about women and money:

  1. Women are not good at math: Nature, not nurture, accounts for the gap in math skills. However, there is a growing movement to expose more women to learning and mentoring opportunities in the fields of math, engineering, finance, and science.
  2. Women are impulsive spenders: Money is an equal-opportunity, all purpose mood changer. Just as many men impulsively spend and overshop as women. One major difference is how society labels it. Women overshop; men collect, a term that gives the activity an intellectual cast. However the underlying impulse behavior is the same.
  3. Women are too emotional to invest wisely: Female investors outperform men in the long run. Men try to compete with the market and chase returns, leading to more frequent trading and high transaction costs. Women take a long time to make an initial investment decision; they are committed to the decision in the long run. Women are less reactive to short term changes in the market, trade less frequently than men, and realize better long-term investment performance as a result.
  4. Women would rather let men manage the family finances: Women are the chief financial officers of their households in 66 out of 100 homes (2010 Women and Affluence Study by Women & Co.). Women in the ultra high net worth market reported they play a high to moderate role in the management of the family’s assets. When it comes to retirement, 90 percent of women participate in decisions that affect their household’s retirement and investment accounts.
  5. Women are not interested in wealth management: The gender gap in finance is diminishing as women enter the field. Advising clients lends itself to a woman’s strengths in relationship building and communication, allowing female advisors to have the opportunity to outperform men. Organizations like Directions for Women and The Female Affect offer forums and networking opportunities to facilitate the advancement of women in financial services.

Kingsbury, How to Give Financial Advice to Women

Understanding these myths will help you overcome and fears that you may have had when it comes to managing your finances. Do you know of any other myths about women and their wealth? Please let us know what you think by posting your comments on our Financially Savvy Women Fanpage.

 

Why women worry more

Women worry more about the effect of money on relationships:
A survey by Camden Wealth and Morgan Stanley Private Wealth Management shows that a staggering 79% of younger (“next-generation”) ultra wealthy women are concerned their wealth will complicate relationships with spouses, partners, friends and colleagues. Only 22% of wealthy men shared these concerns. I believe the same conclusions can be drawn for women and men in all income and net worth brackets.

Types of Relationships; Which One are You?

The Big Spender
The Big Spender has no problem spending money if the purchase seems right. They view money as a vehicle for bringing themselves and others happiness. Big spenders view life as endless possibilities; they enjoy life and what it has to offer. The downside is that they overspend when they are upset or bored.

The Saver
The Saver is the polar opposite of the big spender. The saver believes in saving money at all costs. They keep track of all monies earned and spent and are extremely cautious with their finances. Many positive aspects come from pinching pennies. The positive aspect of being a saver is that they tend to have a nice emergency savings cushion, good credit and very little debt. On the negative side, extreme saving tends to come from a fear of never having enough, which means that the saver probably denies themselves things that they want and even need.

The Entrepreneur
The Entrepreneur gets a thrill from overextending and stretching financially. They make investments in a business or a beach house even if it means eating canned soup every night for dinner. Thrill-seekers tend to be free-thinking entrepreneurs; they view life as a game and money as the playing pieces.
When you’re a thrill-seeker with your money, your financial journey is exciting. Living with this thrill-seeking mindset means that each day is a new adventure. However, this mindset can be risky. If anything goes wrong, this spender could potentially lose a lot of money.

The Security-Craver
If you’re a saver and find yourself constantly checking your balances to make sure you have enough, you crave the security that you feel money offers. You aren’t afraid of spending money like The Saver; you take your time making a commitment to purchases, especially large ones. While this type of spending has its definite advantages, like the fact that you probably won’t find yourself in financial trouble, the urge to check and recheck your safety net can become overwhelming.

The Idealist
The Idealist views money and consumerism as unsavory and the root of many of the world’s problems. They prefer to dedicate themselves to innovative pursuits that don’t focus on money. The Idealist most likely ignores their finances and pays for necessary items quickly; afterwards, they jump back into their own agenda.

The Idealist spender tends to notice simple pleasures. However, this mindset is often impractical. They enjoy life, but forget that they need money to enjoy some aspects of it.
Source: Payoff, 5 Different Types of Money Spenders

Building Your Divorce Community

A divorce can be one of the most challenging experiences in life. How you approach the divorce and manage the divorce both emotionally, legally and financially can have a huge impact on your ability to recover and rebuild a better life for yourself. They key is don’t try to go it alone.

Women work best in a community but when experiencing divorce you must build your community that can provide both objective advice while supporting and encouraging you to make the best decisions for your future so that you can heal and shine again.

It’s important that you formally ask for their help and to be available to you and a part of this community.

Your divorce community must incorporate one of each of the following.

  1. A family member who understands your situation and challenges but can also be objective with their advice and support.
  2. A friend who can commit to supporting you and provides sound and objective advice but who can listen and empathize when needed.
  3. An attorney that is recommended and that you LIKE with whom you feel will provide the best council.
  4. A Financial Advisor who respects women and provides not just investment advice but the education you need to understand your money and what it means to your future.
  5. A Life Coach who will not just be a sounding board but provide action steps to help you move forward and improve your life.

Think of a beautiful diamond ring, that diamond is held firmly in place by prongs that do not hold that diamond down but together supports that diamond so everyone can see its beauty and brilliance.

You too can become that diamond again, but it starts with building your community.