As a financial advisor, I spend a lot of time talking to women about money. Recently, I had a unique opportunity to spend the day with 30 women who, in 15-minute intervals, divulged their deepest, darkest secrets about their finances.
Here’s what I learned—and what I advised them.
Look your fear dead in the eye
In my line of work, I talk about fear more often than I’d like. Many women tell me that they’re afraid of numbers or math or money and therefore they have generally ignored their finances. Some have confided that they are afraid to look under the hood at their own financial situation for fear of seeing how bad it actually is.
Let me put it to you straight: If I called you up and said that I was ignoring a huge growth on my neck because I didn’t understand medicine or biology or science, what would you say to me? You would tell me to seek out a professional immediately. I urge you to do the same. Most women find their financial journeys to be liberating and empowering. You just have to dive in.
Dig into the details on your debt
Most of the women I spoke with had very little understanding of their debt makeup. When I asked the simple questions like how much debt they have outstanding, what are the interest rates they pay, or about their plans to mitigate debt, most were either uninformed or overwhelmed. One woman shared that she heard from a co-worker that she should not pay off her credit card in full each month because it would help her credit score. That is patently false and, in my opinion, evidence that your co-workers should not be trusted when it comes to dispensing financial advice.
“Most of the women I spoke with had very little understanding of their debt makeup.”
But here is some actual financial advice: Understand your debt—how it works, how it compounds, how long it will take for you to pay it off. Debt management is a key factor in financial freedom. Here’s some steps to take to help you get there.
Track your money one Uber at a time
So many people struggle with saving. In fact, according to CNBC, 61 percent of Americans have less than $1000 saved and couldn’t afford to pay for an emergency without resorting to their credit cards. Almost all the women I meet with know that they need to save money in theory, but find it extremely difficult to do practice, which is why you actually just need to trick yourself. Start moving money away from yourself into a secret squirrel account that it difficult for you to access. You can start small ($100 per month) and if you don’t notice it, increase it each month. Over time this will accumulate, give you comfort and provide you with a cushion for emergencies.
The other main goal was to get on a budget. So many women spend too much and most don’t even know where it goes. I can shed some light on that—it goes towards beverages (juices, coffee, smoothies, tea, alcohol), take-out or food delivery, or cabs or Ubers. If you don’t believe me, go back and look at your statements for a month and add up all these numbers. Budgeting isn’t actually that hard once you uncover where your money goes.
Warm up to home ownership
One of the more interesting takeaways in talking with millennials is that most share a mutual goal—to buy property. This totally debunks all the nonsense I read about how millennials don’t want to be tied down and would rather rent. Every woman I met at my speed dating session cited “home ownership” as a primary goal, even if they were unemployed and broke.
“Budgeting isn’t actually that hard once you uncover where your money goes.”
The thing that strikes me as odd is that this goal often supersedes having a savings account, saving for retirement or paying off debt. In order to achieve such big goals, it is imperative to start small. I’ve seen many people rush into buying a home despite a lot of warning signs that they were not ready.
Trick yourself into getting hot for retirement
I field a lot of questions about retirement planning and savings. Younger people often struggle with the idea of saving for something that they won’t be able to access for decades. In addition, many of the women I work with are self-employed and often get overwhelmed by their retirement options. Here is the bottom line on retirement savings: do your best to contribute to some kind of retirement account.
If you have access to a 401(k), contribute something to it each month. If you are self-employed, look into options like a SEP IRA or a Simple 401(k). At the least, open a Roth IRA or a Traditional IRA so you can contribute up to $5,500 per year. If you are confused about your retirement options, talk to your accountant or your financial advisor. Both should be able to outline your options and explain the taxable differences in all of them.
Remember this simple little adage: “If you don’t save money for retirement, you won’t have money when you want to retire.” If you don’t want to think about the old-fashioned word “retirement,” I’ll re-brand it for you and call it “financial independence.” Financial independence is so hot right now.
Kristin O’Keeffe Merrick is a Financial Advisor at O’Keeffe Financial Partners LLC based in Fairfield, NJ, and aRaymond James Financial Services, Inc. Member FINRA/SIPC. Investment advisory services are offered through Raymond James Financial Services Advisors, Inc. Any opinions are those of the author and not necessarily those of Raymond James.
Always speak to a licensed financial services provider or specialist before making decisions that could affect your financial wellbeing.