Making Change: A Woman's Guide to Designing Her Financial Future

Read an Excerpt

Chapter 1

Where Do I Come From?

A lot of our baggage comes to us from our childhood — the rules we grew up with, the examples we grew up with. Here are a couple of quizzes to help you identify where you came from. I've set up this first quiz in terms of a conventional nuclear family, because even though not all of us grew up that way — I know...I've experienced every kind of family life from nuclear to nuclear holocaust — most of us grew up with the kind of gender baggage that's exemplified by the role-playing that goes on in a two-parent family.

My Parents and Money

1. Finances in my home were managed by

a. Daddy.

b. There was no plan. Things were handled as they came up, and whoever got angriest won out.

c. My parents discussed everything and made up a budget together.

2. My mother

a. Had no money in her own name.

b. Had a joint checking account with my father.

c. Had her own bank account.

3. My parents

a. Never talked about money.

b. Argued a lot about money.

c. Discussed financial decisions.

4. My mother's response when I asked to buy something was

a. "Ask your father."

b. "We can't afford it."

c. "Let's see how it fits into our budget and what you're going to contribute to it."

5. Our household budget was made by

a. Daddy.

b. Mom, but she had to bargain and cajole for every expense.

c. The family — money was considered a shared resource.

6. Discussion of money in front of the kids

a. Was never done.

b. Was something Mom did behind Daddy's back.

c. Was done openly.

7. If the family next door got the first color TV on the block

a. Daddy would decide that we could or couldn't get one. There was no discussion.

b. Mom would bust Daddy's chops until we got one.

c. There'd be a family discussion of where it fit into our budget and how everyone would contribute.

8. When Daddy was offered a new job

a. We would move at Daddy's convenience.

b. If we did move, Mom never forgave Daddy; if we didn't, Daddy never forgave Mom.

c. We discussed and planned the move until we reached a mutual family decision.

9. The picture we had of our family's overall condition was

a. That we were well off and that Daddy would provide.

b. That we were in financial difficulties. Mom never seemed to have confidence in Daddy.

c. That Mom and Dad were open about what we could and could not afford; we knew they had a plan that would keep us clothed, housed, and educated.

10. When the subject of money came up, my father's response to my mother would most likely be

a. "Don't worry your pretty little head about it."

b. "Get off my back."

c. "Let's sit down and discuss it."

If many of your answers were a, you probably came from a rigidly traditional household where the father controlled the purse strings and money was absolutely not talked about. The baggage from this household contains the lace collars and high-button shoes that Grandma wore, alongside Grandpa's Victorian starched collars. To break free from this one, you're going to have to break free from the notion that there's safety and security in not knowing anything about money. You're going to have to find new patterns and design new outfits that will reflect your new independent self.

If most of your answers were b, you probably came from a household with a transitional but still basically rigid household, where money was not a comfortable subject. This is the dark side of Donna Reed's Peter Pan collars, crinolines, and white gloves. It's Donna when the TV cameras were turned off. This one can be even harder to shed, because you may be afraid that conflict, danger, and hurt will result if you start taking too much of an interest in the details of your own financial life.

If more of your answers were c, you probably came from a household with a more relaxed, open attitude toward money. This doesn't mean you won't have any problems with money, but you may find it easier to bring them to the surface and deal with them.

Now let's see how much you knew about family finances when you were growing up. Answer yes or no to each question.

When I was growing up:

1. I knew how much my parents earned.

2. I knew how much a new car cost.

3. I knew how much my family's monthly mortgage or rent payment was.

4. I knew whether my family owned or rented our home.

5. I knew what kind of insurance coverage my family had.

6. I knew how much it cost each year to outfit me for grade school.

7. If my family was in financial difficulty, I knew about it, and I was told how serious it was.

8. My parents discussed with us kids what provisions had been made for us in case anything happened to them.

9. By the time I was in junior high, I was involved in my family's monthly bill paying.

10. By the time I was in high school, I was involved in my family's monthly bill paying.

If you answered no more often than yes, you grew up in a household where you were basically kept away from the household's basic driving mechanism — family finances. This is actually, to one degree or another, the way most of us were brought up. As a result, most of us found ourselves at some point — when we went off to college, got our first job, married and set up our first household, got widowed or divorced — suddenly behind the wheel of an immense machine and out in traffic. We had never had a learner's permit. We'd never sat on a parent's lap in the family driveway or in an open field.

If You're Not Convinced You Need to Know This Stuff

Here are a few facts:

• Women live an average of seven years longer than men do.

• There are five times as many widows as there are widowers. The average age at which a woman becomes widowed is fifty-two.

• Divorce is at a record level today. Fifty percent of marriages end in divorce, and more men remarry than women. After a divorce, men are much more likely to maintain their former lifestyle than are women, and a woman who relies on the beneficence of her former spouse can be in real trouble. Only one out of every seven divorced women receives any spousal support whatever.

• According to the Brandeis University Policy Center on aging, the median income of divorced women, as of 1995, was $9,000, and growing at a rate of 1.5 percent a year — well under the rate of inflation.

• At some point in their lives, 80 to 90 percent of all women will have to take charge of their own finances. This isn't a question of "Maybe I won't have to deal with these issues." You will have to deal with these issues, and you do have to be prepared to do so. The time to learn the Heimlich maneuver is not when you're choking at the dinner table; it's before you sit down to eat.

Your Financial Fashion Profile

The primary factor that governs how you treat money is the way you feel about money. This is what makes our financial habits so hard to break. You'd think that nothing in the world would be more rational than money. It can be counted; it can be measured; everything about it is an exact science. Right?

Wrong. There's nothing more emotion-driven, nothing more deeply personal, than our attitude toward money. That's why it's become the last taboo. We're not surprised at all these days when we turn on the TV and see people making the most amazing revelations about their sex lives. But talking about money — that's still a no-no. It's what nice girls don't do. It's what real babes can't be bothered to think about.

But it's what women have to think about and have to talk about. We have to go through our own closets. We have to stand in front of that mirror and try on all our outfits. We have to understand what we look like now and, if that look is inappropriate, why we're attracted to it.

Why is that inappropriate outfit so comfortable? Hey, the known is always more comfortable than the unknown. That's why men go on wearing that awful sweater with the holes in it and those shoes with the heels worn off. But when change occurs and we're not prepared for it, that comfortable outfit can turn into a straitjacket if we're not careful.

Our financial wardrobe is all too much like our real wardrobe. Fashion flings become styles, styles become fashion statements, and suddenly we are what we wear. So let's take this quiz, and then play Name That Outfit with the results.

1. The best thing about having a lot of money is that

a. You can buy anything you want.

b. You can be generous with family and friends.

c. You can invest it to ensure your financial independence.

2. The best thing to do with extra money is to

a. Spend it.

b. Save it.

c. Invest it.

3. People who spend money as fast as they make it are

a. Fun.

b. Immature.

c. Shortsighted.

4. Investing money means

a. Nothing to me.

b. You could lose it. You're better off leaving these decisions to a man who understands those things.

c. You could make more.

5. Lending money is

a. Okay, I guess.

b. Something that could lead to trouble, but I guess it would be okay to lend to family.

c. Okay if there's an arrangement for repayment.

6. I'm happiest spending

a. Yep, that's it.

b. On someone else.

c. When I buy something I really want and know I can afford.

7. People who have more money than I do

a. Are smarter than I am, but who cares?

b. Are more selfish than I am.

c. Are neither of the above.

8. If I buy something for myself

a. I feel great. Why not?

b. I feel guilty. I should have been buying something for someone else.

c. I feel fine. I've planned and budgeted for it.

9. I would go into debt

a. Any time someone wants to make me a loan.

b. Never for myself, only to buy a house or send the kids to college.

c. If the downside wasn't disastrous and the upside was worth the risk.

10. When it comes to investments, I say,

a. Why invest? Live for today!

b. It's better to be safe than sorry.

c. Nothing ventured, nothing gained...within reason.

11. My chief financial goal is

a. To have enough money to live as well as possible right now.

b. To be well provided for.

c. To be financially independent.

12. If I buy something for myself and then see it was on sale somewhere else,

a. I'm really ticked off.

b. I feel guilty.

c. If I've done my homework and gotten a good price, I don't care.

13. Five years from now I expect to be

a. Five years older.

b. Living in a nice house.

c. Well established in my career.

14. To me, "the best" means

a. The coolest.

b. The best bargain.

c. The best suited to my needs.

15. I feel best about myself when I

a. Buy myself something really neat.

b. Buy something for the home.

c. Resist the temptation to buy something I want but don't need.

16. My first thought in considering a new job would be

a. How much time off can I get?

b. l have to make sure I don't embarrass him by earning more than he does.

c. Will it lead in a career direction that interests me?

When it comes to our financial profile, we women essentially have two possibilities: we can be independent, or we can be dependent. The second possibility generally means dependent on a man, although it can just as easily be on another woman or on Mom and Dad. Dependence is dependence, but it does come in different styles. In this quiz, I've offered two different profiles of dependence and one profile of independence.

If most of your answers to the Financial Fashion Profile quiz were a, you're living for the moment. I call this the Clueless fashion type, although twenty years ago she certainly would have been the Flower Child, or the Hippie. Her native habitat is the mall. She may not think of herself as dependent. In fact, she probably thinks of herself as totally independent, free as a bird. But that's because she's not thinking at all — at least in terms of finances. She may be bright in many ways — she probably is — but when it comes to money, she's just not clued in.

We're all clueless about some things. Lord knows I am. I'm clueless about anything with a plug. If it doesn't go on when I plug it in and turn it on, my ability to diagnose the problem goes exactly this far: I shake it; I kick it. After that I'm lost.

I'm also clueless about anything with an engine, and I'm clueless about directions.

Well, you can't set your mind to everything, so you establish priorities. Mechanical objects and directions aren't mine. But money — your financial security and self-sufficiency — has to be a priority. You can't afford to be clueless here.

If most of your answers were b, you've inherited a wardrobe that was handed down to you by those well-meaning folks who told you that a woman needs a man to take care of her financially. This fashion type is the Traditionalist. She dresses smartly, and she probably is smart, but her styIe shows the role that she's chosen for herself: the Peter Pan collars, the white gloves, the crinolines, and the panty girdle. She devotes her managerial skills to getting the roast out of the oven on time, getting the station wagon cleaned and waxed, and getting to the station in time to put hubby on the 6:48 and pick him up at the 7:13. She's been told that the way to keep a man is by being good.

And don't forget: a working woman — even a successful one — can be a Traditionalist too. It doesn't make her bad or stupid; it's her choice. And there may come a time when she'll have to rethink that choice...when the time comes for making change.

The woman who answers c to most of the questions on the Financial Fashion Profile quiz is the Contemporary Classic. She's acquired the self-confidence to trust herself financially, the motivation to go out and get what she wants, and the ability to plan for her own future.

This woman doesn't have to turn her wardrobe into a massive yard sale to achieve this. There's nothing wrong with dressing silly and going to concerts every now and again, or dressing conservatively and helping others. The problem occurs when that outfit becomes your trademark. The problem arises when you've been told that's all you can wear. You've been told it's the only outfit they make in your size. And gradually you come to believe that.

The Contemporary Classic can wear those outfits for fun or for an occasion, but she knows how to wear a business suit to apply for a job, or jeans and a sweatshirt if she has to get under the sink and fix the plumbing, or sneakers and a T-shirt if she's playing volleyball.

All of these types are women who — like you, like me — are the result of what we've been taught. But none of us have to stay that way. When I need a role model for this sort of change, I immediately think of my mother, who lived the life of Donna Reed — until her husband suddenly left her with three young girls to take care of and a shocking and unexpected mountain of debts. She wasted no time in doing what she had to do — getting a job, turning it into a career, and raising her own daughters to be independent, self-reliant women.

How will you handle your financial future? Will it be based on hand-me-downs, time-worn money models that feel comfortable because you're used to them, but have become as outmoded as that coat you'd give to the church rummage sale if only you could part with it?

There are countless decisions to be made when arranging your financial wardrobe to ultimately present yourself in your own self-chosen, self-purchased personal financial style, and this book can be your guide to understanding what those decisions are and the pitfalls you may encounter in making them. It's never too soon to start sorting through the closet, discarding the things that just don't work, holding on to those that do, making some judicious purchases, and developing that sense of who you are and where you're going.

Whether your financial self is dressed in metaphorical outfits from L.L. Bean or K mart, or a little of both, you're bound to carry with you preconceptions and paradigms that have been passed down through generations like the penny loafer, or like the roast with the ends cut off.

And it doesn't hurt to remember where those notions come from. Women may be the ultimate audience for fashion, but most of the designs come from men, from a fashion establishment made up of the same good old boys who dressed the generations before you. And the same holds true for finance.

There's another outfit I haven't mentioned. It's a scary one, and it's one that almost every woman I've ever talked to has, at some point, visualized herself wearing.

That is the bag lady outfit.

You know the feeling I mean. That you're never quite secure. That somewhere out there, where you least expect it, there is a door, and on the other side of that door is an elevator shaft.

It's the fear of free fall, with no one to catch you, nothing to grab on to, until you hit bottom.

But it doesn't have to happen. Knowledge is power. Every bit of new financial awareness you gain is a hand reaching out to catch you. Every old stereotype you smash is a ladder you can grab hold of to stop your fall and start climbing back up.

Throughout the rest of this book, I'll be taking you through those rites of passage where you're called upon to almost become a different person. You have to start using a new set of life skills. That means that you have to learn a lot of coping skills, and you have to know yourself, so that you can apply those coping skills in a mature and self-affirming way — so that you can make change in the ways that count most.

I'll take you through the following steps:

Starting out on your own. Your first job, your first apartment, and a whole barrage of new decisions and new life skills that come from being on your own. These same issues can come up when you're starting over after divorce or widowhood.

Coupling. Learning how to mesh your personality and needs with another — discovering where to make compromises and where to draw the line.

Kids. Making sure you're the role model you want to be, teaching your kids to be responsible, financially independent individuals, while at the same time making sure not to lose track of yourself.

Uncoupling. If this happens, it can be particularly hard on a woman. How to protect yourself, survive, and flourish.

Recoupling. If financial disputes were at the heart of your marital problems the first time around, you'll want to avoid making the same mistakes twice.

Elderly parents. What are your responsibilities? How can you prepare for them, and how can you handle the ones you haven't prepared for?

Widowhood. Dealing with the immediate situation of the death of a mate, and managing the future, whether you're young or older.

Through each step, we'll look at who we are, what our options are, the consequences of those options, and how to make change — to be who we want to be and where we want to be...to design the financial life we want.

Copyright © 1997 by Neale S. Godfrey