BossWoman ENews |
Combining prosperous work lives and balanced personal lives
My goal is to bring you news, insights, and information about leading a balanced and prosperous life.
In this issue, you'll find:
- Smart About Money
- BossWoman coaching
- Up and coming workshops
1. Smart About Money
With the annual income tax filing deadline behind us, it
seems like a great time of the year to do an annual
Here are three questions that I ask my coaching clients
when we review their choices about their financial life:
- Do you know your personal worth?
- Do you live *under* your means?
- Do you ask for what you are worth?
Do you know your personal worth?
I asked Linda Tice a Certified Financial Planner® at the PSA
Financial Center in Lutherville, Maryland why a woman should
care about this figure. She suggested that a personal net
worth statement is a snapshot of an individual’s financial
health, a measure of financial well being. She said that
the key question for women to ask themselves is: “Am I worth
more now than I was a year ago?”
If you don’t have a clue how to answer this question, you
are not alone. According to a recent study done for the
Financial Planning Association and the Consumer Federation
of America, less than half (49%) of Americans polled know
how to define their net personal wealth. Even after being
told how to calculate net worth, more than half the
respondents (54%) had no idea as to their own number.
Calculating net worth is as simple as adding up all the
things we OWN (assets) and deducting everything we OWE
(liabilities). We shouldn’t count depreciable items, such
as automobiles, unless we feel there is a ready market for
Here is Linda’s check list for calculating your net worth:
- The fair market value of your home;
- Retirement savings;
- Checking accounts;
- Savings accounts;
- Investment accounts;
- Life insurance cash value;
- Business interests;
- Any other items that have a real value.
The subtractions include any debt you carry including:
- Home equity loans;
- Car loans;
- Debt deferments such as those where “Start using your
furniture now. You don’t start paying until January 2007.”
- Debt consolidation loans;
- Other loans such as student loans;
- Credit card debt.
One responsibility of adulthood is managing your wealth.
If you want to know if you had a good year financially,
calculate your net worth from December 31, 2005 to
December 31, 2006 and you will then be able to answer
these questions about your net worth:
- Have I moved closer to my goals?
- Is my net worth more or less than last year?
Do you live under your means?
One way to be smart about money is to live under your
means, in other words to spend less than you make and
save an amount regularly. According to the survey done
for the Financial Planning Association and the Consumer
Federation of America, there is a sense that among the
general public that acquiring any substantial wealth is
largely impossible. Recently I heard a quote from a
family friend (a couple in their mid 30’s) who said,
“We’ve resigned ourselves to the fact that we will
never be wealthy.” While they might never rival Bill
Gates for his personal net worth, they are already
accumulating wealth if they have savings, retirement
plans, and some equity in their townhouse.
However, only one quarter of those polled believed
they could save $200,000 or more in their lifetime.
One fifth (21%) of Americans now believe that winning
the lottery is the best way to accumulate several
hundred thousand dollars. In other words, twenty-one
percent of those polled are pinning their hopes for a
good financial future on a chance event in spite of
the fact that the most predictable way to build
personal wealth is to eliminate debt and accumulate
savings, retirement, and home equity.
Linda Tice says building wealth is a doable goal for
the dual career couples. If you deposit $250 at the
beginning of each month for twenty years in an account
earning 8% per year, compounded monthly, your account
will grow to $148,247. Save just $50 more ($300 a
month) for thirty years, and you will have $450,089!
Financial expert and author, David Bach, calls this
the “latte factor” because if you bring your coffee
to work instead of ordering two gourmet coffees every
a day you can save $10 a day. There is your monthly
$300 savings. Yes, this discipline does mean a
sacrifice of your gourmet coffee or maybe your
multiple cable options but you can’t have it all
an early, comfortable retirement and the short term
luxuries. Only you can decide how to balance your
long and short term luxuries.
However, it is difficult to save anything if you are
living beyond your means, spending more than you
earn. According to the Federal Reserve, over 40% of
US families spend more than they earn. The average
American household has 13 payment cards, including
credit cards, debt cards and store cards. There are
1.3 billion payment cards in circulation in the US.
The average credit card debt in the US is close to
$10,000 per household.
Thirty-five million people in the US are currently
making only minimum payments towards their credit
card balances. If you are a mom, grandmom, or
aunt, educate younger family members about the
difficulties of ever having a positive net worth
with the realtities of living beyond one’s means
in early adulthood. Show them this example. If
they accrue no more than $1,000 debt and make just
the minimum payments, it will take 22 years to pay
off the debt. With the average debt most households
carry, they will never get out of debt!
Do you ask for what you are worth?
The average woman is seriously underpaid for her
work. According to the U.S. Department of Labor,
women make 76 cents for every dollar paid to men
with the same qualification for the same job.
While sexism in the workplace accounts for some of
this differential, part of the problem is that women
are afraid to ask for what their work is worth.
When I coach women business owners, they often
fail to price their services competitively in the
market. Women who are employees are often shocked
to find out when they leave a job that a male who
replaces them gets a higher salary because he asks
Financial guru and author, Ric Edelman says that
the implications of not earning what your work is
worth has implications beyond not making enough to
live comfortably now:
- You may not be able to save as you work because of
low earnings. Ric says that by the time women are
ready to retire, they only have half the amount of
personal savings as men their age. He says, "Women
are often stay-at-home mothers for a portion of
their career, and they still tend to earn less than
men in our society. They end up retiring with less
money in their accounts." Non-employed spouses at
home with children can still build personal wealth
by contributing to an IRA.
- You may live on the edge and not choose to take
advantage of your company’s 401K plans where your
savings are matched by a company contribution.
These plans are among the most painless ways of
saving because they are subtracted before you
receive your paycheck. Therefore, a maximum
contribution can build tax-free and faster than
the same savings after you have paid taxes on it.
- You may not build up enough pension and social
security to secure a future with options for early
and/or comfortable retirement. Although women live
longer than men, the majority of women receive
higher social security benefits as spouses of
workers than as workers themselves.
- You are only half as likely to qualify for a
pension as your male counterparts who tend to
commit to one place of employment for a long
- While many women hope that a man will come along
to take care of them financially, the life
expectancy statistics show that 85% of women die
alone. Ric says many women who are widowed,
divorced or have never married defer financial
matters to the men in their lives and have
little experience managing their personal
finances. “Women can not afford to be passive
about their finances.”
A Special Note
Sometimes women tell me they hesitate to imagine
building wealth because they feel guilty about all
the poor people in the country and world. I have an
answer that I learned from my Auntie May who married
a successful Chicago business man and managed his
business after his death. She was generous to a
number of worthwhile causes including Marshall
Fields. She said, “The best way to help the poor is
to not be among them. Make money and then help
others.” Managing your own wealth will allow you the
opportunity to contribute to the causes you care
Steps Towards Being Smart About Money
- Know where you spend it. Linda says that when
she works with clients on their financial planning,
understanding where they spend money is of primary
interest. “I have never met anyone who had all
the time or all the money they need. Making
conscious spending decisions is important because
it helps identify ways to reduce spending and
pay off debt.”
- Live under your means. Slow down your spending
so that you are spending less than your make. Put
the money you aren’t spending into debt
reductions and savings.
- Invest your savings. Ric Edelman says,
“When you're just beginning to build your financial
portfolio, invest in mutual funds. This is the
quickest, cheapest and most convenient choice of
investments.” Later on you can diversify your
investments. Make sure you have money in a lot
of places—loading-up in one or two sectors is too
risky and will not promise financial security.
- Continue to review your financial worth
preferably with a trusted financial professional.
Make it an annual ritual maybe around tax time
or the first of the year or your birthday. Watch
your success and your wealth build! Pass the
message to other women (and men): With awareness
and a bit of discipline you can be smart about
- Use your wealth to help out those less
fortunate than yourself.
You are already building wealth. Now get smart
about how you manage it!
To subscribe to Linda Tice’s newsletter, "Money
Matters for Women," contact her at
Linda@psafinancial.com To contact her:
410-821-7766, ext 419; fax 410-828-0242
Ric Edelman. “The Truth about Money.”
“Ordinary People, Extraordinary Wealth.”
“Financial Security in Troubled Times.”
Jean Chatzky. "Pay It Down: From Debt to Wealth
on $10 a Day."
David Bach. “The Automatic Millionaire Homeowner.”
“Smart Women Finish Rich.”
“Smart Couples Finish Rich.”
2. BossWoman coaching
About the publisher: Susan Robison, Ph.D. is a
professional coach, speaker, author and seminar
leader. She loves to coach women who want
- 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,
- work-life balance,
She offers her audiences a follow-up coaching
session because she knows that workshops don’t
Contact Susan for your coaching, speaking, or
seminar needs at Susan@BossWoman.org or at
3. Up and coming workshops
I have booked a number of work/life balance workshops
for the winter that are not open to the public.
Contact me if your group needs a speaker on any of the
topics listed above.
Title: “Staying Sane in Insane Places: Managing
Diverse Faculty Responsibilities with Clarity,
Balance and Ease.”
Date: May 31, 2006
Place: Faculty College, University of Wisconsin
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© Copyright 2006 Susan Robison. All rights reserved.
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