“The lion’s share of wealth, two-thirds of wealth in the United States, is going to end up in the hands of women by the year 2030, and we’re not ready for it,” warns Jean Chatzky, New York Times Bestselling Author and financial editor at the TODAY Show.
Chatzky and I sat down to talk about how to course-correct this impending problem.
“Because of educational trends, more women than men are graduating from college and certain graduate programs, therefore, women will earn more money than before. In addition, there is a huge transfer of wealth that’s coming through the generations in which women will inherit from our parents, as well as from the spouses whom we outlive.”
Here’s the real challenge: “The women whom I talk to share a lack of confidence. Whether we’ve got one hundred, one hundred thousand, or one million dollars, we don’t always feel equipped to manage it, even when we’re doing exactly the right things.”
In order to create a better world, Chatzky suggests we “…use this power that’s coming our way to improve not just our lives, but the lives of the people that we love and care about, and the causes that we believe in. We really do have an opportunity through giving and investing to create the world we want.”
Chatzky goes into detail on this in her latest book Women With Money: The Judgment-Free Guide To Creating The Joyful, Less Stressed, Purposeful (And Yes Rich) Life You Deserve.
Here, Chatzky and I overview her top 15 tips to get a handle on your money to create the future you want for yourself and the causes that matter to you.
Talk openly about money
Chatzky has a set of 40 questions designed to help women talk about money. She explains, “We gather groups of women who don’t make a habit of talking about money with the specific purpose of talking about money…and it’s really freeing.”
Some of the questions include, “Have you had a financial wake-up call, and when?”, “Is it okay to hide money from your spouse or your partner in your underwear drawer?”, and “What do you want your money to do for you?”.
Chatzky elaborates, “An open-ended question like that really has the ability to shine a lot of light on what’s going on in people’s lives.”
Track your spending to see what you really value
Want a clear picture of your spending? More so, do you want to uncover whether or not what you say are priorities are aligned with your expenditures? Chatzky says, “…it’s very possible to do if you take a little bit of time to get more conscious about it. I like the idea of tracking your spending — both for tactical purposes, but also because it can let you see in hindsight if you’re using money in a way that lines up with your values.”
Determine what your ideal life actually costs
“What do you want from your life?” This is a question both Chatzky and I believe you need to consider so that you can determine what your ideal life actually costs. Write down what you want and next to each item, list the price to do or have it. Then, extrapolate that out into monthly and annual costs so you know what you need to earn to live the life you truly want. You’ll likely be surprised that that the cost is less than you might have imagined.
Use money as a resource to buy you more time
Money is a tool which creates freedom of time and choice. Chatzy shares, “The most important thing to realize is the opportunity that you’re wasting. Money we can get more of. Time, you absolutely can’t get more of. And if we think consciously about how we’re using our time, and whether we’re actually with the people we love, doing the things that we love, engaged in work that we find fulfillling. Often, the answer is no. But by moving around some of our money, we can restructure our time in a way that feels much better, much more fulfilling, and much less stressful. We are so stressed, and using our money to swap for a little bit of extra time is one great way to reduce some of that stress.”
Identify your money scripts
We all have stories around money which became ingrained as children. In some cases we mimic them, in others we rebel against them. In order to know where you’re going with your financial future, it’s helpful to identify the scripts that are overtly or subliminally impacting your views and habits around money.
“It’s not that we replicate what happened in our house of origin all the time, sometimes we take it in and we decide we are going the opposite direction and do a complete one-eighty. But, we need to understand it before we can force ourselves into a more rational point of view,” advises Chatzky.
Find financial harmony in your primary relationship
It’s one thing to understand your own money scripts, but what happens when you add another person into the mix? How do you effectively learn theirs and balance the two?
Chatzy suggests, “Listening is the key to success within a relationship. You have to understand why your partner needs what they need as much as they need to understand what you need. And I’m using need as a real word. When you grow up and just the sight of a credit card bill that is four digits rather than three sends you into panic mode, that is an uncomfortable, unsustainable, untenable emotional situation. You may need, or your partner may need, some space, some security, some explanation, just to level what’s going on in that interaction. And listening is really the only way that you’re going to get it. Ask questions without any judgment in them.”
Don’t let money injure your friendships
“Listen and read between the lines. We know an awful lot about our friends’ financial situations, even if they tell us not one thing. We see how they spend. We see how they manage. We know if they’re stressed financially. We know if their spouse is having a tough time at work, or if they’re having a tough time at work. We just have to be a little bit empathetic and open-minded about the fact that they may not have the same choices or priorities that we have. And that doesn’t mean that we can’t be great friends. It just means that we may have to choose the things that we do together in a way that will allow both of us to respect what’s going on in our financial situation,” shares Chatzky.
Teach your kids early
It can feel scary to talk to your kids about money, especially if you feel tentative about your own financial skills. Fortunately, it doesn’t have to be challenging: “Kids have to have money in order to learn to manage money. For me, an allowance is a great teaching tool. We put money into kids’ hands, but then we need to give our kids a list of things that we are no longer willing to pay for to force them into the position of having to make choices about how to allocate their limited resources. Because what we don’t want is for them never to have had this experience and then go off to college and you put a semester’s worth of money in their bank account and it’s gone in three weeks. That’s the risk at the other end of the spectrum. We want them to have a growing amount of financial responsibility as they age. And in my book, they have to work. They have to work as teenagers, preferably for a company that takes taxes out of their paychecks so that they start to understand how it works.”
Get paid what you deserve
To charge or get paid what you deserve, “First, you must know what you deserve. There are so many places to get a sense of what that is. The Internet is full of resources that will tell you what the person with your resume should be earning in a company in your area like Glassdoor, PayScale, or Salary.com. You can also look at want ads if you’re working for a particular company and you’ve been there for a long time and think you’re being punished earnings-wise because you’ve just hung out for way too long. If you look at what they’re paying new people, that gives you a decent idea.”
Once you know what that number is, you have to ask for it: “The way to ask is by showing what you’ve done, the value that you’ve brought to the company or client, in terms of the bottom line, added business, or whatever results you’ve produced. It’s not, ‘I deserve it, I’ve been here so long.’ It’s ‘If you take a look at what I’ve done for you, you will see that I more than deserve this number that I’m about to ask you for.’ Then you have to ask for it. It’s not easy. But it gets easier. That’s sort of the dirty little secret about talking about money and asking for money. Do it enough and it gets easier. ”
Negotiating won’t hurt your outcomes
In case that wasn’t enough to convince you, Chatzky continues, “My husband was a recruiter for many years. He hired people, mostly women, for a major magazine company, and he always held a little back. And, he was always really disappointed when women didn’t ask for it. The person on the other side of the table, they are waiting for you to negotiate. They’re not going to punish you for negotiating. There is this myth that the offer is going to be rescinded because you asked for more money. Absolutely not. You may not get the money. But asking is not going to hurt you. In fact, I think it’s going to earn you a level of respect with the person on the other side of the table.”
To be or not to be (an entrepreneur)
30% of US businesses are women-owned, and that number is rising steadily. How do you know whether this path is for you? Chatzky shares, “There are two types of entrepreneurs: 1. Those who hang out a shingle because they want to continue to have a stream of income for them, which is a very nice way to have a livelihood. And 2. People who want to grow a company. The two are very different people. If you are the latter type, you eat, sleep, and breathe this business. Not doing it is not an option. You are willing to put in the time, hours, energy, and creativity to put your team together and make it work. And if you’re not that kind of a person, then I would argue that trying to grow a business like that is going to be really, really hard.”
Spend on others
Studies show that when we do for others, we’re guaranteed to feel happier. This includes when we spend on others. “There’s no sense in feeling guilty for spending money that’s not sabotaging our financial life. You want to do something with it? Spend it. If you want to feel really good about it, spend some of it on someone else. It brings a level of joy to get outside of yourself. And that’s particularly true for women. We are still nurturers at our core. We are still the caretakers and we get a lot of innate pleasure from that.”
Talk with aging parents
“If you haven’t had a conversation with your parents before you’ve hit age forty or they hit age seventy, it’s time. Often it’s that first way in that is so difficult. So, use your own life and say, ‘Hey mom, I just bought a new life insurance policy’, ‘I just did my will’, or ‘I recently had a friend who was diagnosed with something terrible. It made me think about what’s going on with you. I realized I have no idea if something were to happen to you, what you want. And that’s terrible because I’m going to be the one who needs to take care of you. As it should be! I want to do this. But I also want to be able to respect your wishes, so can you talk to me?’”
Have fun with your money
Chatzky comes from a judgment-free zone when it comes to how you spend your money. She shares, “My guilty pleasure is a good blowout. And I go once a week, sometimes twice if I have a special event. I refuse to feel guilty about this because I feel better going through the day if I don’t have to worry about my hair. As egotistical as that may sound, I don’t really care. I’ve added it up. I know how much it costs: I’m spending $1,000 a year getting my hair blown out. I earned that money and it’s mine to do with as I want.”
Consider your legacy
“You have to think about what’s important to you. That’s where a lot of us fall down when it comes to charitable giving. For me, it’s the heart-related causes — I lost my father to heart disease, my son was born with a congenital heart defect — this means something to me. And if that means that I have to say no to other things, I’m okay with that. Because I’ve thought about the fact that that matters to me. For my children, what is important to me? It was important to me to put them through school with no debt. It is important to me to set them off into careers where they can be successful. Those are the sort of questions that we don’t ask ourselves often enough.”
How will you begin to integrate just one of these fifteen strategies to better your financial well-being, and thus, your life?
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