Men vs. Women on Finance
Saving does have some limits
While purchasing second-hand items from consignment shops and garage sales has become the frugal mother's friend, there are some items that should only be purchased new, mostly for safety reasons. This slideshow from Reader's Digest shows 21 items that you should avoid purchasing from garage sales or other resale means. Find them on sale, purchase them from a discount retailer, use a coupon, or try any other means to save, but do not try to save money by making a purchase of a used bicycle helmet or any of the other 20 items shown. This is one case where being frugal can actually do more harm than good.
Are you House Poor?
Are you struggling to make your monthly mortgage payments? Skimping on dinners out or kids' activities to save money just to pay the bills? You are not alone. Our society's obsession with all things bling has resulted in us overpaying for just about anything - and not even realizing it. Simply qualifying for a mortgage does not mean that you can afford to pay it for 20 or 30 years. For example, mortgage brokers do not routinely collect information on child care costs. If you are employed, establishing eligibility is based on your salary and credit history, but does not necessarily take into account the fact that you might be spending $15,000 per year on daycare. That large expense cuts significantly into your ability to comfortably afford your home and the upkeep that goes with it. Before making any real estate purchase, I suggest using a calculator to help determine how much home you can afford. Then use a payment calculator to see what your monthly payments will be. List all of your monthly household bills on a piece of paper, along with your monthly take-home pay, and see if this fits within your budget. You may find that the house you could afford is not the house that you should. Keeping housing costs down to an amount that is reasonable for your situation will help you to be more financially secure in the long run.
Our CEO numbers are low, but there are 5 workplaces where women rule
Fortune Magazine put out a great list of 5 professions that are dominated by women. Seeing photographers on the list was not surprising, given the number of stay-at-home moms who seem to be breaking into this industry due to its flexibility. I was fairly surprised to see accountants on the list. Several of my friends and family members are accountants and they work many long nights and weekends during certain parts of the year. This seems like it would be a difficult job for working mothers, so I imagine that women in this field must have great support systems at home. Seeking pharmacists on the list was also somewhat of a surprise given the length of schooling required to become a pharmacist, but with a hefty starting salary and high demand for pharmacists, it seems that many women have chosen to pursue careers in a hot field. If you are a working mother, or a stay-at-home parent who is interested in returning to the workforce, see if any of the professions on this list are suited to your talents. In an industry where women already hold a majority of the positions, there may be fewer barriers to moving up the chain in your career.
How to be more like the super savers
While shows such as Extreme Couponing perpetuate the idea that saving money requires extensive amounts of time and hyperfocus, there are actually many people who manage to amass large amounts of savings without resorting to extreme measures. This list shows common traits that have been shown by researchers to be shared among people who manage to save a large amount of money. While some of these ideas can't help you now (starting to save as a child, for example), they can help to inspire you to make some changes. Also, seeing this list may give you some ideas of characteristics that you might want to instill in your own children. In addition to clipping coupons, you may want to read up on these traits and think about ways to modify your own savings habits. One piece of advice that I strongly suggest that you follow is to make savings automatic. I have a set amount taken out of each paycheck and deposited directly into a savings account. Since I have never seen that money, I don't feel like I have it. Meanwhile, with every paycheck my savings keeps growing. It's like the "set it and forget it" plan!
No amount of Botox will keep you from getting old
Picture it: Retirement. 2043.
As much as we try to fight it, every day we are getting older. Some may try to use the aid of plastic surgery, facial creams, and personal trainers to keep up a more youthful appearance, but the fact remains that we can't prevent the aging process. There are staggering numbers of American women who are not saving for retirement. According to the U.S. Department of Labor, only approximately 45% of working women participate in retirement plans. This is a dismal number, considering that we live on average more than 3 years longer than men. Some studies suggest that seeing an age-progressed image of your future self will actually inspire you to save more for retirement. Allowing your brain to think about yourself growing old and facing retirement in some way may inspire you to begin to save or to increase your savings.
Try this at home: think about yourself as an elderly person. What will you look like? What will you do with your time if you retire? If you aren't saving money, how do you plan to support yourself when you do retire? Or will you ever be able to afford to retire? Asking yourself these questions now will (hopefully) influence your savings habits for the future.
I am becoming a Book Fairy
From the time my oldest child entered preschool, the book fairs began. What I remember from a kid as being a once-a-year event has now turned into what seems like an almost ongoing process. The preschool offers book fairs twice a year. The public school offers them at least twice a year as well, including one run by the PTA, in addition to sporadic classroom-based book fairs that are designed to earn free books for individual classes. At this point, each one of my kids pretty much has a library in their bedroom. There are only so many Junie B. Jones and Dr. Seuss books one person can buy. But, it is for a good cause- who doesn't want to help their child's school?
At one of the most recent book fairs, I noticed that entire classes were taken to the school library and allowed to create a wish list that was sent home to parents. Parents could then opt to allow the purchase of specific books and send their children into school with money on the class purchasing day. While this is an incredibly organized idea, and one that helps parents to monitor their children's purchases, I also wondered what the experience is like for children with parents who are unable to afford to purchase a book for their child. How do those kids feel, knowing that they won't be able to receive anything they pick out?
I asked the school and was pleasantly surprised to hear that they offer a "book fairy fund". Parents can donate to this fund and kids from low-income families are able to use money from this fund to purchase a book at the book fair. This prevents the kids from being stigmatized and allows them to have their own books, which can help motivate them to read. Why am I sharing this information on a financial advice blog? Quite simply, there are many small ways that we trickle money out as parents. The book fairs add up, and they encourage overabundance in our children. Instead of spending $20 on books for my kids like I seem to do at every book fair, I can spend $10. My child still gets to pick out one book, and then the rest of the money goes into the book fairy fund. This way, I can still support the school, encourage a love of reading in my child, and help an underprivileged child. Not bad for $10!
At one of the most recent book fairs, I noticed that entire classes were taken to the school library and allowed to create a wish list that was sent home to parents. Parents could then opt to allow the purchase of specific books and send their children into school with money on the class purchasing day. While this is an incredibly organized idea, and one that helps parents to monitor their children's purchases, I also wondered what the experience is like for children with parents who are unable to afford to purchase a book for their child. How do those kids feel, knowing that they won't be able to receive anything they pick out?
I asked the school and was pleasantly surprised to hear that they offer a "book fairy fund". Parents can donate to this fund and kids from low-income families are able to use money from this fund to purchase a book at the book fair. This prevents the kids from being stigmatized and allows them to have their own books, which can help motivate them to read. Why am I sharing this information on a financial advice blog? Quite simply, there are many small ways that we trickle money out as parents. The book fairs add up, and they encourage overabundance in our children. Instead of spending $20 on books for my kids like I seem to do at every book fair, I can spend $10. My child still gets to pick out one book, and then the rest of the money goes into the book fairy fund. This way, I can still support the school, encourage a love of reading in my child, and help an underprivileged child. Not bad for $10!
Where there's a will...
No mother, I repeat, NO MOTHER wants to think about the need for a last will and testament. We can't even fathom the day when we are no longer able to support, love, and help our children. Though this is an uncomfortable topic, it is one that all families should face. One ABC News survey found that only 28% of people ages 37 and under have a will. What does this mean for the families of the other 72%? Many headaches, for starters. Just because you have a spouse or children, your assets do not automatically transfer directly to them if you die. Also, just being young and healthy does not mean you are at risk of death from accidents or sudden illness. What if you are in the situation of this poor woman and nobody will administer CPR to you when you suffer a life-threatening event? You need to prepare for the inevitable. We all love our children more than anything, and one of the most important things you can do for your children is to plan for the future. When the day comes that they are mourning their mother, do they really need to also be worried about paperwork and financial allocation?
A household budget is a great idea - in theory
Is there a place for budgeting? Absolutely, if it is done in a less rigid way that better conforms to the way we live our lives as parents. Instead of a strict rule on monthly clothing expenses, for example, try setting aside a certain amount of money per season for each member of the house. You may need to look at old receipts or think about past purchases to help you figure out what to allocate for each member of the house per season. A baby girl, for example, can probably get through the summer with $75-100 worth of clothing if you make smart purchases. However, if you are like me, not setting an upper limit can result in you spending hundreds of dollars on clothing that your baby only wears once and quickly outgrows. For adults, setting a clothing budget can also be helpful, especially if you are a working parent that needs business type clothing or uniforms for work. Thinking in terms of seasonal purchases may also help you to make purchases that can last through multiple seasons, such as pants that can be worn in Spring and Fall or suits made of lighter materials.
When it comes to budgeting, think about how certain categories can be divided up based on your family's needs. A set monthly amount for all categories is bound to cause problems for parents. If we need to be flexible in every other part of our lives, why should we be rigid when it comes to budgeting?
Women and planning for the future: fear the unknown
I am increasingly frustrated by women who pay little attention to the family finances. Time after time, women tell me "my husband handles all of that". Every time I hear that phrase, it takes me back to a conversation that I had years ago with a family member. She and I both got married in our 20's and began having children around the same time a few years later. In one of our regular phone conversations about nothing important, she remarked that I seemed to know a lot about money for a woman. "Why don't you?" was my response. "My husband takes care of all of that," she replied. At this point I began asking questions, with every response making me cringe more and more. She didn't know anything about her family finances. She didn't know what they were saving for retirement, what her husband's actual salary was, or whether they even had life insurance. "God forbid, what if something ever happens to him?", I implored. "What would you do if your husband was not around to manage the money? How would you even get by when you can't even figure out which bank your savings account is in?"
Fast forward several years. I wish I had been more convincing during that conversation. Suddenly, without any warning, that same woman's passed away. He was only in his 30's. She was left with 3 young children, a mortgage, cars, and bills. This woman, who had until this point never even had to balance a checkbook for the duration of her marriage, was now in the position of family CEO. The first months were a complete disaster for her. Not only was she dealing with her grief over the loss of her husband and trying to comfort her children, who were now without a father, but she also had to try to figure out how to keep the lights turned on, learn how to access funds so the kids could have lunch money, and attempt to get her own credit card. (Yes, because her husband was the primary card holder on their joint cards, the cards were immediately canceled by the card companies when he passed away and she was left without a credit card temporarily.) In short, a terrible situation was made even worse due to the lack of financial understanding and involvement of this woman. You never know what can happen in the future, and she is living proof. Wake up and pay attention, ladies.
Fast forward several years. I wish I had been more convincing during that conversation. Suddenly, without any warning, that same woman's passed away. He was only in his 30's. She was left with 3 young children, a mortgage, cars, and bills. This woman, who had until this point never even had to balance a checkbook for the duration of her marriage, was now in the position of family CEO. The first months were a complete disaster for her. Not only was she dealing with her grief over the loss of her husband and trying to comfort her children, who were now without a father, but she also had to try to figure out how to keep the lights turned on, learn how to access funds so the kids could have lunch money, and attempt to get her own credit card. (Yes, because her husband was the primary card holder on their joint cards, the cards were immediately canceled by the card companies when he passed away and she was left without a credit card temporarily.) In short, a terrible situation was made even worse due to the lack of financial understanding and involvement of this woman. You never know what can happen in the future, and she is living proof. Wake up and pay attention, ladies.
Why me?
What makes Ella Spender uniquely qualified to give financial advice to other working moms? Am I a professional financial adviser? No. Am I the child of Warren Buffett or another prominent financial genius? No. I am a hard working mother who, like many women around the world, manages the family finances. I have an excellent understanding of financial concepts, graduate education, and an interest in helping other women learn about the basics of saving, spending, and planning while managing to raise children. I hope that my advice is helpful and, if it is not, I hope that you will tell me. Happy reading!
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