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Combining prosperous work lives and balanced personal lives
June 2004

My goal is to bring you news, insights, and information about leading a balanced and prosperous life.

    In this issue, you'll find:
  1. Women and the New Economy
  2. BossWoman coaching
  3. Up and coming workshops
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1. Women and the New Economy
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My grandmother Pearl and my great aunt May were Chicago working class women born in the last two decades of the 19th century. Because of the times and women’s roles, they never earned a living as paid employees but both were excellent money managers who passed on some good advice to me about women needing their own money. My grandmother told me to always have some “cookie jar money” and my aunt told me to always have some “pin money.” Both would be very surprised to see what is happening to women and money today. Today’s woman has money of her own and is a force to be reckoned with.

Management guru Tom Peters has observed how the women's market and women's leadership are a pre-requisite to success. In a recent Fast Company review of his latest book, “Re-imagine! Business Excellence in a Disruptive Age,” Mr. Peters exclaims that "women roar!" He also says: “Women are the most important group in the economy. They spend and make the most money. Women make the key financial decisions. And yet, they are talked down to, never designed for, not consulted and fundamentally ignored.” So much for Old Economy. In the New Economy, women’s ability to work with teams and collaborate will spell success.

Women’s earning power is a force to be reckoned with. Recent leadership studies reviewed by Catalyst have found that Fortune 500 companies with the highest representation of women on their top management teams had more financial advantages than companies with low representation. This finding holds for both Return on Equity (ROE) which is 35.1% higher and Total Return to Shareholders (TRS) which is 34.0% higher. While Catalyst warns against interpreting the data as causal, the non-profit which for 40 years has supported women getting executive positions, suggests that perhaps companies with the knowledge and forward thinking to be open to women’s leadership are also open to innovation in their industries.

Here are some current realities of women and money:

  • These days, 80-90% of women manage their own money at some point in their lives.
  • Women-owned businesses are the largest segment of new business growing (70%) in the US (9.2 million and growing).
  • Even though women are still underpaid, earning 60-75 cents for each dollar earned by men in comparable jobs, they earn a trillion dollars a year.
  • 42% of households with assets greater than 600k are headed by women.
  • Women outperformed male investors 9 out of 13 years.
  • In two income households, women earn 40% of the household income.
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Everyone Needs a Cookie Jar
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My grandparents were hard working people who lived in a modest frame bungalow on Chicago’s Northwest side in a neighborhood carved out of a swamp. While my grandfather was employed first as a bell hop and then as a bell captain at a prestigious downtown hotel hand carrying the luggage of the rich and famous, Grandmother Pearl raised vegetables, chickens, and two sons. The couple insisted their sons fulfill the American dream of living better than their parents by finished high school. The family ate the vegetables and some of the chickens and eggs and Grandma sold the rest and kept the money in the cookie jar.

Although my grandfather died when I was two, Grandma Pearl somehow managed to keep her home while raising vegetables (the chickens were outlawed by city ordinance) and taking in “borders” who rented the spare room and ate the hearty meals she made. She put the rent money into the cookie jar. That cookie jar was her survival. She lived simply, walked a daily 1-2 miles and enjoyed excellent health until she dropped dead from a sudden heart attack at age 88. Her biggest treat was walking four miles round trip to the Gateway Theater to see the latest Elvis Presley movie. She was still gardening, walking, and movie going in her last year of life.

Some lessons from Grandma Pearl:

  1. Most married women outlive their husbands. Plan on 7-8 years of widowhood if you are married to an age mate, more if he is older, less if younger. Those are averages. Grandpa was older than Pearl. She (a “health nut” who didn’t smoke and who exercised) outlived him by 23 years. More men than women die young. The average age of widowhood is 56; 25% of widows go through husbands’ death benefit in 72 months.
  2. You need your own retirement savings. While men can build a retirement plan on 10% savings a year, women should save 12% because of women on the average live longer. If you are single, you have no widow’s benefits to count on. If you are widowed, you will probably need your own retirement to make up the shortfall between widow’s benefits and your desired standard of living. If your husband outlives you he may receive benefits off of your retirement. Grandma had some pension and social security from her husband’s employment but it was her cookie jar money that let her maintain her standard of living.

    Certified Financial Planner, Linda Tice of PSA Financial says that 32% of women do not take advantage of their employer’s retirement plan? She says this mistake is on the top of her “Top ten stupid things women do with money,” because if you don’t maximize your retirement you may end up living on only 30% of your pre-retirement income. If you sign up for the retirement plan from the start of your employment you will live on your net pay and never notice the subtraction from your paycheck. If you are in the combined 35% bracket for federal and state taxes, that means you will only see sixty-five cents less in your take-home pay for every dollar you defer to your retirement plan.

  3. Everyone needs a cookie jar – that is, some discretionary money that can be spent on small things without taking money away from essentials or without having to ask anyone’s permission. It doesn’t have to be a large amount but should be enough for little extravagances, like lunches with friends, clothes, sporting goods and other things that might not be of joint benefit or interest to your spouse if you are married. Think of this money as an allowance. It should not be secret from your spouse – just separate and under your control. Both married spouses, not just women, need an allowance.

    One coaching client of mine, a high powered engineer, felt she had to ask her husband for the money to buy a tube of lipstick even though she made more money than he. Interestingly, he also felt restricted that he couldn’t buy tickets to an occasional ball game without asking her.

    Grandma Pearl was a ballroom dancer whose husband didn’t dance so she used her cookie money to take the streetcar with a girlfriend to attend ballroom dances at the Argonne Ballroom. Grandpa was glad that the egg money in the cookie jar money let Grandma pursue her hobby with her friend.

  4. For good money management, cash is still king. Grandma Pearl didn’t have credit cards so she had to save up for her purchases. She lived within her means. These days women are wasting interest payments (up to 19%) that they could be spending on fun times in order to gratify impulses. Keep some cash on hand for impulses. Charge only what you wish to keep records of and pay those charges completely each month.
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Everyone Needs Pin Money
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Aunt May was my maternal grandfather’s sister. My great grandparents were minor European royalty who fled some country in some war. It is hard to imagine that immigrants so embraced their new homeland that they destroyed their immigration papers and Anglicized their names to get work. They also never talked about the old country or passed down the stories. Hence I know very little about the origin of this branch of the family but I know that Aunt May married well.

Uncle Tom was an entrepreneur who at one time owned about half of the street corner taverns in Chicago and the lake liners that took elegant couples out to sail on Lake Michigan to dine and dance under the stars. By the time he died in my early childhood, he had long retired from business and political life except for several taverns he kept as his retirement plan. While Uncle Tom was a brilliant business man, he was a terrible money manager so Aunt May handled the family finances. During her married years she would go to market with cash, buy what she needed and keep the change in a special fabric wallet pinned into her undergarments. If she caught a sale or bought day-old bread, she had more pin money.

When Uncle Tom died, Aunt May sold all but one tavern which she decided to keep and manage herself. I have fond memories of spending summers with her, taking the “El” from her apartment down to “The Place” just off Michigan Avenue in the newspaper neighborhood. The reporters (always in suits and fedora hats) and the print men (in formerly white uniforms with folded newspaper caps to protect their heads from ink flying off the printing presses) downed corned beef sandwiches that were free with a beer, while Aunt May and I sat in a back walnut wood booth balancing the books. Income tax was a fairly new invention, credit was a term for what the bartender gave the men until pay day, and bookkeeping was done by hand. She paid her employees and vendors in cash. She taught me six important lessons of financial management:

  1. It’s not what you make that matters, it’s what you keep – the pin money. Your annual salary is not a measure of your financial success; your current wealth is.
  2. Pay yourself first. Aunt May pocketed the first hunk of cash, paid the employees and vendors out of what was left, and banked the rest to pay taxes and to make investments.
  3. Invest some of your money for the future. May invested in what she knew, the tavern business, so she bought stock in the major bottling and canning businesses.
  4. If your financial plan is to get rescued by Prince Charming you had better have Plan B. There aren’t many Prince Charmings these days and even if you find one who rescues you from having to work, you still have to know how to handle money. Aunt May was married to a good income producer who couldn’t manage his personal finances and she outlived him by 8 years. Her sister, Blanche, was married briefly to a man who could not hold a job. After their divorce, Blanche became dependent on May and Tom. Blanche outlived her older sister and also outlived May’s estate because she never learned how to invest and use the pin money.
  5. Earning money is not the point; it’s whether it serves your needs. When we finished with our business morning at The Place, Aunt May would treat us to lunch at Bergoff’s and to a movie at the opulent Oriental Theatre. Sometimes we would walk through Marshall Field’s to check out the fall fashions before taking the “El” back to the neighborhood, stopping at the local butcher, baker, and grocer to buy enough for dinner and the next day. Abundant living is possible even within a budget if you include some small extravagances that make you feel elegant.
  6. Be generous. While Aunt May was not among the elite, she gave generously to causes and people. I learned this lesson indirectly. One day when I was a preteen and May’s health was failing we went on our lunch date to Bergoff’s. While I was waiting at the table and she was in the lady’s room, her waiter came by to bring the check. Other than that his name was Bill and that May always asked to be seated at one of his tables, I just knew him as the nice man who gave us elegant service. That day I found out from Bill, who wanted me to know before it was too late, that the tips from Aunt May financed his four children’s education through parochial schools and into college. I’m glad he told me that because May never mentioned it. That was our last lunch before her health declined rapidly. She died a few months later. From May I learned that you don’t have to wait until you are old, wealthy, or dead to be generous. Give to whatever causes ignite your passion. Small contributions over time can make big differences for the charities that matter to you.
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Smart Women Finish Rich
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David Bach’s practical easy-to-read book, “Smart Women Finish Rich” has seven principles for women to acquire personal wealth.
  1. Learn to earn. I try to read a popular book on money about once a year. This is one area where knowledge is power. You won’t feel so intimidated by money matters if you have some vocabulary. Try one specifically geared toward women and money or read “Learn to Earn” written for high schoolers by Peter Lynch.
  2. Put your money where your values are. Instead of spending recklessly, set goals for your spending. Instead of a budget which is restrictive, have a spending plan which is expansive. Aunt May liked to eat well and always bought the best cut of meat or the freshest fish at the market. However, she didn't mind day-old bread from a good bakery.
  3. Figure out where you stand financially. Do you know how much you earn, how much you keep, and what you have in retirement and savings? Do you have your files organized so that your heirs can easily resolve your estate?
  4. Build your retirement basket. Bach presents two cash histories. One is about Susan who contributes $2000 per year from age 19 until she is 26 and then stops. What would her net worth be on that investment by age 65? Through the miracle of compound interest she will be a millionaire. Her friend Kim got inspired and starts contributing the same amount starting at age 27 until age 65. Probably she will be even wealthier than Susan, right? Nope, that’s the miracle of compound interest again. Kim will have invested $80,000 of her own money while Susan only invested $16,000 but Kim will have less (only $883,000) than Susan at age 65. So what if you didn’t start at age 19, this year’s money will compound for you for 20 years out. Kim will turn the millionaire corner at 66.5.
  5. Use the power of the “latte factor.” If you save $4 a day from the latte you don’t buy from age 20 on, you will have a million dollars by age 65 (assuming 10% annual interest with no withdrawals).
  6. Build your security basket. Attend to the following:
    • 6-8 months of income saved in cash in case you change jobs.
    • The right kind and amount of insurance. Hire a good financial planner to help you decide. Get a second opinion before you commit.
    • Have a will or living trust. Get an attorney help you with these decisions. In my state, if you die without a will, the state has a formula for distributing your money and it’s not the way you would want.
  7. Build your dream basket. Set short and long term goals and use investments that can best help you achieve those goals.
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Conclusion
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Be a money smart woman.
Read.
Save.
Think.

Susan Robison

References:
David Bach. (2002). “Smart Women Finish Rich.”
Linda Tice. “Top ten stupid things women do with money” (Short article available from: Linda@psafinancial.com)

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2. BossWoman Coaching
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About the publisher: Susan Robison, Ph.D. is a professional coach, speaker, author and seminar leader. She loves to coach women who want improvement in:

  • work-life balance,
  • career transitions,
  • building your business or practice,
  • time management,
  • increasing productivity.
If you are feeling stuck on the way to your ideal life, give Susan a call for a complementary half-hour coaching session.

She provides keynotes and seminars to business and organizations on the topics of:

  • leadership strategies for women,
  • relationships,
  • work-life balance,
  • change.
She offers her audiences a follow-up coaching session because she knows that workshops don't work.

Contact Susan for your coaching, speaking, or seminar needs at Susan@BossWoman.org or at 410-465-5892.

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3. Up and coming workshops
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“Extraordinary Marriages – a review course for marriage sponsor couples”
Sponsor: to be announced
Date: July 30, August 6, 2004. 7-8:30
Contact: to be announced
Place: to be announced but somewhere in Anne Arundel county
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Susan will present two continuing education workshops for coaches on a Caribbean cruise this August. Open to coaches for credit. Contact Susan for more information.
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“Setting Hearts on Fire for Love”
Date: October, 9, 2004
Sponsor: Archdiocese of Baltimore, Department of Catholic Education Ministries
Place: Seton Keough High School
Presenters: Drs. Susan and Phil Robison
Contact: Carol Augustine at 410-547-5403
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“Secrets of Couples Working Successfully Together”
Date: November 15, 2004
Sponsor: Kampgrounds of America
Place: Orlando, FL
Presenters: Drs. Susan and Phil Robison
To register for Kampground Owners Annual Convention:
KOA.com
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© Copyright 2004 Susan Robison. All rights reserved. The above material is copyrighted but you may retransmit or distribute it to whomever you wish as long as not a single word is changed, added or deleted, including the contact information. However, you may not copy it to a web site without the publisher’s permission.
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