A close friend had been e-mailing me for several weeks about her concerns related to the declining ecomomy and, in turn, her financial portfolio.  I would get early morning e-mails saying she couldn’t sleep all night worrying about how she and her husband were going to be able to afford to continue living in what was aready a modest retirement.  She felt her husband was not showing enough concern and she was shouldering the full burden of the situation.  By e-mail I tried to allay some of her fears and assured her when we visited together over the Thanksgiving week-end that we could discuss it in more detail.  Privately I wondered whether her husband knew there was nothing to lose sleep over (at least any more than the rest of us already are) or if her concerns were grounded in reality.

The day after Thanksgiving, once we caught up on what was happening in our lives, I asked her to tell me more about her financial worries.  She reiterated what she’d said in her e-mails to me.  I explained that under normal circumstances they should be able to take out about about 4% of their portfolio annually without touching the principal.  When I point blank asked, “So, is this enough for you to live on when you factor in social security and other income?” I was absolutely shocked at her response.  She didn’t know the answer because she hadn’t asked her husband or financial advisor how much was in the portfolio! She admitted that at this point she wasn’t sure she even wanted to know. No wonder she can’t sleep at night.  If I didn’t know my financial situation I wouldn’t be able to sleep either. 

Listen up, ladies.  You HAVE to know what’s in your portfolio — whether you’re single, married, or partnered.  It’s a little like expecting to lose weight but you never step on a scale.  That’s not how it works.  You HAVE to watch our for your  financial future by minimally being a part of the planning if not a full partner in the process. 

If you’re not already doing the following things, start now!

• Review your monthly account statements to check for obvious discrepencies.  I’ve known very smart people who have been cleaned out by the financial advisors they trusted.  Don’t just toss them into a file or chuck them out all together.  Open them, review them and compare month end totals if nothing else. 
• Regularly discuss your financial situation with your husband or partner.  Don’t leave it for others to figure out.  Talk about how the market is impacting your current lifestyle or financial future. 
• Go with your husband or partner to meetings with the financial planner.  Again, you need to be part of this process for lots of good reasons.  If you’re told it’s not something you have to worry about — start worrying. 
• Participate in the bill paying process.  If someone other than you pays the monthly household bills it’s easy to be lulled into a sense of false security.  At least open the bills, see what things like heat, cable, and other utilities cost, what’s being charged to credit cards, and where you might be able to cut back to save more money.  Don’t be a financial ostrich – know the total household outflow. 

TAGS: financial literacy, financial planning, retirement planning

The rap on women as investors is that as a group, we tend to be too cautious.

Caution certainly seems warranted these days as the stock market swoons and the financial news all seems bad.

But as Jim Jubak explains in his recent column “When to start investing? Now,” those who dive in when others are fleeing tend to do very well over time.

If you’re in or near retirement, you’ll want to consult with a fee-only financial planner before making any big moves either into or out of this market. You can get referrals from the Garrett Planning Network. (You also might want to schedule a session even if all you need now is a little hand-holding.)

But if you’ve still got a few decades before you’re going to quit work, this could be a prime opportunity. You may have to strap in for a bumpy ride, but history has shown us that those who stay in the market prosper in the long run.

TAGS: financial crisis, financial planning, Investing, women and investing

As I write, the Dow is down about 500 points. Lehman Brothers is toast, Bank of America is buying Merrill Lynch and everyone’s worried about AIG, the insurance giant. The fallout from the mortgage mess and the credit crisis continues to spread; the pundits are in a frenzy of pontificating about what may happen next.

And you know what? Nobody really knows.

I have no idea if the worst is over or yet to be. Neither does anyone else. But that’s no reason to stuff our money in our mattresses and wait for the end of the world.

Unless you’re planning to retire in the next few years, all of this is just noise. What matters is what will happen in the decades to come, and historically stocks have performed better than any other investment.

So I’m staying the course. My own retirement accounts (and those of my husband) are well-diversified, so we’re continuing to invest just as we always have.

If you are planning to retire soon, or you really feel like you have to do something rather than wait it out, then get yourself to a fee-only financial planner for customized advice. You can get referrals from the National Association of Personal Financial Advisors or the Garrett Planning Network. You’re far better off getting objective, personalized advice than you are going off half-cocked and messing up your future.

TAGS: financial planning, Investing, stocks

I’ve often thought it odd that people seem to be more reluctant to talk about their income than their sex lives-but that may be changing.  The NY Times reported yesterday that young people are more likely to share information about salary information (see Not-So-Personal Finance).  This trend is good news for women; the more women know about what others are making, the more likely they are to ask for what they are worth.

As you may know, the gender gap in pay affects not only older women but younger women as well.  For example, starting salaries of men with MBAs are 7.6% higher than those for women. Only 7% of women, but 57% of men asked for more money; those who negotiated increased starting salaries by 7.4%.

One of the things that makes the difference for women is good information.  So, keep up the sharing!

TAGS: differences between women and men, Fairness at work, financial planning, gaining confidence, negotiating pay, negotiation skills, Pay Disparity, Women at Work, women's equality

The Simple Dollar had a nice post about taking the training wheels off money management. Basically, after creating a plan to recover from a financial meltdown and after obsessively tracking every penny for awhile, the blogger realized he’d been spending less and less time managing his money–and that this was a good thing:

 In short, I began to trust myself. I had seen the results time and time again of my good financial behaviors – my account balances went up and my debts went down. Eventually, I began to trust these principles, and that trust led directly to a reduced need to keep running the numbers and micromanaging everything.

That’s the groove we want to be in when it comes to money–neither obsessive nor unconscious. If we’ve been unconscious and let things get into a mess, then a little obsession may be in order until we’re back on track. Once we’re on track, though, a good system should keep us there without excessive monitoring or worry.

TAGS: budgeting, financial planning, personal finance, simplifying

Earlier this week I had a conversation with a woman who asked me to review her resume.  I made the assumption she was looking to get an in-house job and gave her suggestions for how to make the resume appealing to employers.  She had a strong background as a writer and editor and I could see her working in the communications department of a large company or advertising firm.  About mid-way through the conversation she stopped me and said, “What I really want to do is be a screenwriter.”  I should have known — half the people in the Los Angeles want to be screenwriters.  But I took a risk and said, “As best I can figure from your resume you’re around 45 years old.  Unless you’re telling me you have several hundred thousand dollars in the bank for retirement you need a job.”  As it turns out, she was living on the edge financially — and she’s not unlike so many other women. 

Listen up, girlfriends (and I don’t care if you’re 25 or 65) — if you’re lucky, you’re going to live be an old lady.  If you don’t want to be living on the financial edge for the rest of your life you need to be thinking about how you’re going to get rich.  It’s not a four-letter word, you know.  In my book Nice Girls Don’t Get Rich I define rich as having all the money you need to live your life the way you want free from concerns about money.  Doing well and doing good are not mutually exclusive.  No one is ever going to take as good care of you as you are going to take care of yourself.  I can tell you horror stories about women who thought they would be married to the same man for the rest of their lives only to find themselves divorced and with no or few financial resources of their own.  So here are some tips:

1. Have a financial goal.  There’s not a woman on the face of the earth who doesn’t know what she wants to scale to read when she steps on it.  But ask a woman how much money she needs to be rich or what she needs for retirement and she’s like a deer in the headlights.  A financial goal helps you prioritize your spending — and saving. 
2. Pay yourself first.  When you get your paycheck and you’ve paid your rent or mortgage, utilities, car payment, etc. you’re not finished.  One other “must pay” is your retirement account.  It’s not optional.  It’s required just like all of your other bills.  Then, after you’ve paid yourself, what’s left over you can spend on “nice to have” items. 
3. Stay involved in your finances.  If you’re married or partnered, don’t turn the finances over to your mate to worry about or handle. Be involved with where that money is going.  If something were to happen to your partner (either through death, divorce, or incapacitation) you need to know where the money is and how to handle it.  If you doubt me, read Barbara Stanny’s book, Prince Charming Isn’t Coming.
4. Learn about finance and investing.  Our own Liz Weston (www.asklizweston.com) and our friend Barbara Stanny (www.barbarastanny.com) have websites with plenty of tips to help you become more financially savvy.
5. Buy a home.  I know, the market right now is in a slump, but this is the perfect time to get into your first home.  Real estate has traditionally been a great way to create equity over time and I have no reason to think that will change for the long-haul.  Just beware of shady financing deals.  If it seems too good to be true, it probably is.  Too many women wait to get married to get into their first home — don’t be one of them.  Your first home doesn’t have to be your last.

TAGS: financial planning, Investing, retirement planning

Watching our portfolios slide in value is never fun, and this time around we have the double whammy of knowing our home prices are down as well. I’ve offered some suggestions on my Web site about how to keep from panicking, including turning off the doom-and-gloom commentary and tucking away a bit more cash as a safety net.

Most of the surveys I’ve seen on the topic suggest that women, when they invest, are better investors than men because we trade less often, are less likely to be “overconfident” and more likely to learn from our mistakes. But too many women shun the risk of the stock market because of times like these and deprive themselves of the superior long-term returns only stocks can give.

We shouldn’t let the day-to-day noise of the markets scare us out. If you have an investing plan, stick to it; if you don’t, get one. FinancialEngines.com can help do-it-yourselfers create a retirement portfolio, or you can hire a fee-only planner from NAPFA.org or GarrettPlanningNetwork.com.

TAGS: financial planning, investments, market turmoil, stocks, women and investing