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"Vivid, no-nonsense...I love this book." -Anne Fisher, "Workplace" columnist, Fortune magazine
"Good counsel...user-friendly worksheets...invigorating. This is one of the most important contributions to the personal finance literature since Suze Orman. You go, girl!" -Kirkus Reviews
"A fresh look at how women think about money...deals with the real reasons women have so much difficulty with their finances. I wish [I had] it before I made so many of the mistakes she discusses." -Barbara Stanny, author of Prince Charming Isn't Coming: How Women Get Smart About Money and Secrets of Six-Figure Women
Women and Wealth
Women have been so brainwashed by the destructive female culture that taught them to associate money with sin, evil and everything crude, that it would take an entire book to disentangle the subconscious fears and incredible fantasies that the simple noun "money" evokes in most women.
BETTY LEHAN HARRAGAN,
Games Mother Never Taught You
Women and money. What a complex relationship. We bemoan the fact that we don't have enough of it. We don't save as much as we know we should. And we too often rely on others to manage it for us. Despite the fact that in childhood most of us get all the right messages about the importance of being financially independent, we do all the wrong things when it comes to accumulating the amount of wealth we need to be truly financially independent. Why? Because throughout our lives we're given multiple, often conflicting, messages. On the one hand, we're taught about the value of money and the need to spend and save it wisely. On the other, we're implicitly or explicitly taught that it's equally important to be kind, nurturing, and collaborative; that our real roles revolve less around money and more around relationships.
This double bind causes little girls to limit their interest in acquiring wealth and ultimately their capacity to acquire it. They don't aspire to get rich, they can't see themselves as rich, or they reduce their opportunities to get rich. As a result, they frequently lack the skills needed to create wealth. Getting rich requires you to do two things: financial planning and financial thinking. If you're like most women, you don't "think" rich—and if you don't think rich, you certainly don't consciously engage in behaviors that will contribute to getting rich. The point at which you call yourself rich is determined by your values, your lifestyle, and your risk tolerance. It's not determined by someone else's definition, needs, or expectations of you. Being rich is about having the ability to live your life abundantly—however you define abundance.
Although I realize that life can be rich in many different ways, for the purposes of this book when I use the term rich, I refer to the acquisition of financial wealth. Most of us already know that one can be rich in love, work, family, and so on. You don't need another book to tell you that. Defining rich in financial terms is another thing. The actual number, the point at which you consider yourself rich, is something only you can decide. Most of us will never be as wealthy as the people on Forbes magazine's annual list of the richest people in the world. Yet you may aspire to more than you currently have. Therefore, throughout this book when I use the term rich, I am referring to the ability to live your life as you want to free from financial constraints.
Speaking with women around the world about getting rich, I got the distinct feeling they were uncomfortable talking about money. It was as if rich was a dirty four-letter word. Whereas a woman may be called a "rich bitch," there are no similarly pejorative terms to describe a man. And Lord knows we avoid the b-word even more than we avoid talking about money! It doesn't seem to matter if you're twenty-five or fifty-five. As a woman you are less likely to focus on methods for becoming rich and more likely to focus on "doing good."
Having been raised as a typical "girl," I spent the first half of my adult life believing that doing good and doing well were mutually exclusive. Whereas my two brothers were encouraged to pursue college degrees that would lead to high-paying professions, I was encouraged to go into a helping field—preferably teaching so that I could be home with my hypothetical children during summer vacations. While I was working as a clerk in the radiology department of the local hospital during high school, my mother (the director of nursing at this same hospital) was introducing my younger brother to doctors at the hospital and encouraging him to become a physician. Although I worked my way through master's and doctoral degree programs, I only recently discovered that my mother offered to pay for my younger brother's graduate education if he would consider becoming a lawyer. Is it any wonder that both my brothers became independently wealthy at a far earlier age than I did? While they were thinking about making money, I was thinking about "doing good."
"Nice girls" don't get rich in large part because of the social messages they receive when they are growing up:
* Money is power, and most little girls are not taught to be powerful—they're taught to be "nice."
* Girls are socialized to be caretakers, nurturers, and accommodators in society—not necessarily breadwinners.
* As child bearers and caretakers women often work jobs discontinuously and are penalized for it. Alternatively, they're put on something demeaningly referred to as "the mommy track."
* Women are more likely to spend their income on their children and the household, whereas men are more likely to be prudent about investing.
* Women are reluctant to ask for wages, perks, or raises reflective of the value they add to their organizations because they're not sure they "deserve" it.
Need I go on? It is abundantly clear that women don't get rich because (1) we don't envision ourselves getting rich, (2) we are more concerned with playing our social roles in a way that others consider appropriate, and (3) we don't develop the skills needed to make wise financial decisions. Does this mean we can't acquire wealth on our own? No! It means that what you focus on is what you get, and it's time to focus on getting rich. Just as in my previous book getting the "corner office" was simply a metaphor for achieving your professional goals, being rich is a metaphor for living the life you want to live free from concerns about money. It's not the amount of money you have that matters, it's the ability to act with independence that defines a rich life. And you will never have it if you don't start thinking and acting like a rich person.
Given these parameters, a woman who owns her own home free and clear, does work that she loves, and knows she has enough money to live comfortably for the rest of her life could be considered rich. She would be no less (or more) rich than a woman who lives in a home with a $500,000 mortgage, has $3 million in the bank, works so she can afford to travel, and wouldn't be worried if she were to be laid off tomorrow. What point would that be for you? Envision yourself living that lifestyle. If it's not where you are now, then this book was written for you.
WHY AREN'T YOU RICH?
I've been asking women around the world about why they don't have the amount of money they require to feel comfortable making the decisions needed to live their lives free from concerns about money. More specifically, I asked them to finish this sentence: "I would be rich today if I had . . ." I phrased it that way so they would share the behaviors they ignored early in their lives. Here are just a few of the responses I heard:
* "If I had taken risks and not procrastinated." A sixty-three-year-old executive from Paramount Pictures.
* "If I had a better understanding and appreciation for the value of creating a savings account from the start of my career thirty-six years ago." A fifty-year-old administrative assistant.
* "If I had not stepped aside, walked away, or ignored being taken financial advantage of. Not worried so much about being seen as too aggressive or unprofessional." A fifty-three-year-old professional services manager.
* "If I had been more assertive." A forty-eight-year-old artist.
* "If I had dared to take high-risk chances, which I didn't take because I had to juggle between raising a family and my career." A forty-three-year-old accountant.
* "If I had kept my life simple—not moved to a big house with a big overhead and a lot of maintenance." A forty-nine-year-old executive with Prudential Securities.
* "If I had not been afraid of the stock market and invested ten years ago." A fifty-five-year-old independent graphics consultant.
* "If I had utilized my potential to the fullest and been more proactive in planning my future and not depended on someone else to actualize my hopes and dreams." A sixty-year-old real estate agent.
* "If I had not listened so closely to the advice that my father told me when I was young that I would inherit all that I would ever eventually need." A sixty-year-old diversity consultant.
* "If I had someone who told me that I could aspire to being rich." A forty-three-year-old dental assistant.
* "If I had done things that I really love to do." A forty-three-year-old business consultant.
If you can relate to any one of these messages, you're not alone. The reasons why women aren't as rich as they'd like to be are as varied as the women themselves. Sometimes it's the messages they received in childhood about money. Other times it's because of social pressure related to "nice girls not worrying their pretty little heads about money." And nearly always it's because they don't engage in the behaviors that will ultimately lead to wealth. Before you can become rich—and you can become rich—you have to know what holds you back. Let's begin with a self-assessment inventory.
NICE GIRLS DON'T GET RICH SELF-ASSESSMENT
Consider each of the following statements and answer True if it describes you or your behavior all or most of the time and False if it rarely or never describes you or your behavior.
____ 1. I have a concrete financial goal (an actual number) toward which I am working.
____ 2. In the past year I have attended at least one seminar or workshop related to financial planning or investing.
____ 3. I carry no credit card debt from month to month.
____ 4. I balance my checkbook each month.
____ 5. I have investments in my own name (whether you are married or partnered).
____ 6. I take advantage of my company's perks. (If you don't know what they are, answer False.)
____ 7. I turn down personal loan requests to people I think aren't likely to repay them.
____ 8. I know my (or my family's) net worth.
____ 9. I have a plan in place for how to survive financially if something catastrophic were to happen (sudden loss of a job, loss of a spouse or partner, etc.).
____ 10. I shop on the Internet only when I have a specific purchase in mind.
____ 11. Even if I don't prepare them, I review tax returns before signing them.
____ 12. In addition to any retirement accounts held by my employer, I have a retirement savings account. (Answer True if you and your partner hold one in joint names.)
____ 13. I'm comfortable asking for the salary or fee I deserve.
____ 14. I advocate loud and clear for myself when I feel I'm not getting my fair share.
____ 15. I'm executing a plan to live a rich life.
____ 16. I regularly read newspapers, magazines, or articles that help me stay abreast of financial planning developments.
____ 17. I don't feel as if I have to match the monetary value of a gift to me by giving one of similar value.
____ 18. I know what my monthly discretionary spending budget is, and I stick to it.
____ 19. I have taken calculated or advised risks to maximize my financial portfolio. (If you are not involved with helping to manage your family's portfolio, answer False.)
____ 20. I make a profit on the products or services I provide to friends.
____ 21. At the beginning of each year I plan my charitable giving.
____ 22. I play the financial game to win.
____ 23. I would have no problem requesting a prenuptial agreement that would protect my assets (or I have already done so).
____ 24. I avoid shopping when I'm feeling down or blue.
____ 25. I regularly analyze my spending habits.
____ 26. When it comes to my money and investments, if something doesn't make sense to me, I ask probing questions.
____ 27. I work in a traditionally high-paying field.
____ 28. When I loan money to family or friends, I clearly state when it is due back and follow up if it's not back by that time.
____ 29. I consciously explore ways to get rich other than from my current income.
____ 30. Before getting married or living with someone, I had (or would have) open discussions about how we would manage money and finances.
____ 31. I don't buy things priced higher than what they're worth just because it's convenient or saves me time.
____ 32. I read the investment statements I receive each month. (If you don't get any, answer False.)
____ 33. I make the maximum allowable contributions to my retirement plan each year.
____ 34. I typically use all the vacation days to which I am entitled each year.
____ 35. I'm a good negotiator.
____ 36. I don't let people dissuade me from pursuing moneymaking plans.
____ 37. My financial well-being is among my top three priorities.
____ 38. I'm good at controlling the urge to buy something I want but don't need.
____ 39. I meet regularly with an investment adviser (alone or with a partner) to keep a check on my financial health.
____ 40. I own my own home (either alone or in joint names).
____ 41. I ask my company to pay for training programs that will enhance my earning capacity.
____ 42. I take full advantage of all lawful deductions on my income tax return.
Women and Wealth 1
Getting in the Money Game 23
Striving for Survival, Not Wealth 25
Not Creating a Financial Goal 27
Not Knowing Your Net Worth 30
Not Playing to Win 34
Listening to Naysayers 36
Setting Artificial Boundaries 39
Not Balancing the Strategic with the Tactical 43
Staying in Your Safety Zone 45
Taking Charge of Your Financial Life 49
Not Making Your Financial Well-Being a Priority 51
Choosing to Remain Financially Illiterate 54
Being a Financial Ostrich 59
Managing Egos, Not Your Wealth 62
Not Trusting Your Intuition 65
Trusting the Wrong People 68
Living Together Before Discussing Finances 72
Letting a Deadbeat Dad Shirk His Responsibility 74
Not Attending to Your Existing Material Assets 77
Not Taking Care of Your Most Important Asset: You 80
Spending Your Money Wisely 83
Getting into Deep Debt 86
Spending as an Emotional Crutch 89
Making Emotionally Driven Purchases 91
24/7 Shopping 95
Impulse Buying 97
Guilt Shopping Trips 100
Making Up for Lost Time 102
Not Distinguishing between Wants and Needs 104
Giving In to Social Pressure 107
First-Job Syndrome 110
Spending Money to Save Money 112
Not Taking Time to Research 115
Ignoring Rebates, Cash Back, and Mileage Options 118
Not Selecting the Right Automobile Financing Option 120
Learning Money Basics 125
Not Budgeting 127
Paying Bills, Not Managing Money 130
Not Balancing Your Checkbook 133
Ignoring Monthly Statements 136
Signing Tax Returns without Reviewing Them 139
Ignoring What You Don't Spend 141
Saving and Investing for Future Wealth 143
Not Having Investments in Your Name 145
Mismanaging Acquired Wealth 148
Being Risk-Averse 150
Thinking You Don't Have Enough to Invest to Make a Difference 153
Confusing Sentiment with Investment 156
Delaying the Purchase of a Home 159
Saving Instead of Investing 163
Analysis Paralysis 166
Relying on Social Security to Take You through Retirement 168
Not Taking Advantage of Compound Interest for Retirement 171
Not Leveraging Company Contributions 173
Paying Off "Good Loans" Early 176
Not Seeking Financial Advice 178
Not Planning for Unexpected Disability 182
Maximizing Your Financial Potential at Work 185
Working in a Female Ghetto 187
Working at a Salary Less Than What You Deserve 191
Neglecting the Perks 196
Not Getting Reimbursed for Out-of-Pocket Expenses 199
Giving Away Your Time 202
Reducing Your Fees or Prices 205
Not Charging for Your Services 208
Overlooking Travel Opportunities 210
Not Using Up Your Vacation Time 212
Ignoring Tuition Reimbursement and Training Opportunities 215
Not Reading Nice Girls Don't Get the Corner Office: 101 Unconscious Mistakes Women Make That Sabotage Their Careers 218
Playing It Smart with Your Money 219
Failure to Negotiate 221
Loaning Money to Family and Friends 224
Giving Away Money 227
Not Advocating for Yourself During a Divorce or Separation from a Life or Business Partner 230
Being Insurance-Poor 234
Not Maximizing Legitimate Tax Deductions 237
Enabling Adult Children to Lead Unrealistic Lifestyles 239
Underestimating or Ignoring the Value of Your Assets 241
Succumbing to Sales Pressure 243
Not Giving Smartly 245
Starting a Nonprofit Venture without Doing Your Homework 248
Starting a Foundation (All My Friends Have One) without the Facts 250