1. If you're saving without investing, you may actually be losing money.
On average, women live longer than men and get paid less, so when it comes to saving for our futures, we're kind of starting from behind. he average interest you can earn on a savings account in the US right now is a measly 0.06% — compare that to inflation rates (generally around 2% a year), and it's a recipe for a very big yikes. It's not like you're going to open your statement and see negative $10 for inflation, but you can bet your dollar won’t hold quite as much buying power as it did yesterday. Though investing does come with risk…when done strategically, it can help you beat inflation. Something your savings account will never do.
2. On average, women who invest get better results than men. Its our superpower.
You might think of investing as a man's game, because historically it has been. Research however, has found that when women get into the market, we actually tend to get better results. There are a lot of reasons for this, I believe it’s because our tendency to hold investments for the long term as opposed to making more frequent trades like men often do. I think for a lot of women, we’re not looking to turn a profit tomorrow. Instead, we think, “how can I use investing as a long-term strategy in my life.”
So, what’s the first step? Find ways to build your confidence. Consider taking an online investing course (Watch for my “Stock Market Simplified” Masterclass coming soon), download a podcast or read an investing book.
3. The skills that you're already using at work and home are the same skills you'll rely on as an investor.
When I work with women, I urge them not to discount our abilities as investors. The organization, planning, and research skills we use for everything from nailing work projects to packing for a day at the beach are exactly what’s needed to be a solid investor. Your skills can definitely transfer to investing, but first you have to have confidence in your ability to learn the basics.
4. Setting regular money dates with a friend or partner can be a great way to stay on track with your goals.
Instead of trying to marathon your way through figuring out all your finances, plan short, but frequent, money dates to “check-in” on your progress. Take just half an hour, once a week, to look at your finances. Or next time you are out with a friend, simply TALK about money. My husband and I have a “money talk” once a month. We review both our budget and investments, but the fun part is talking about our dreams. We set attainable goals with attached dollar amounts that allow us to get excited about our financial future. Instead of fearing our finances, we look at our money as a tool for building the life we want. If you ask me, that's a huge step in the right direction.
5. Understand your relationship with money.
Your relationship with money is how you think about it, acquire it, spend, and manage it. I feel a huge obstacle to female participation in investing and finance relates directly to the values, attitudes, and direct observations instilled within us as young girls. Traditionally, Dad provided for the family and therefore handled the finances, while Mom tended to the children and home, operating within the budget set forth by her husband. Little girls were often guided to budget, be careful with money, and ultimately “marry a rich boy.” While boys on the other hand, were encouraged to make money, climb the corporate ladder, and be the ultimate provider to a beautiful wife and their children.
It’s never too late to transform your relationship with money, but it is imperative to first assess your relationship with money and then identify what a healthy relationship with money looks like. I recommend everyone start with a self-inventory. Review your spending for the month…analyze your spending habits and how spending makes you feel. Incrementally employ your newfound awareness to make conscious decisions in building a healthy relationship with money. If self-discovery and processing isn’t for you, ask for help from a trusted friend or financial professional.
6. The Power of Compound Interest shows how you can really put your money to work and watch it grow.
Albert Einstein famously said, “Compound interest is the eighth wonder of the world.” At its very foundation, compounding interest means you earn interest on both the initial principle and accumulated interest from previous periods. Let’s say you invest $1 and earn $.05 on that dollar investment. The next iteration you’re earning a return on the $1.05. You’re earning money on money you earned on money, you earned on money you earned…., Einstein called it “the Rule of 72.” The rule is simple, divide the number 72 by the interest rate (let’s say 10%) you are receiving (72/10=7.2), and you will find the number of years it will take to double your money.
The lesson…START YOUNG! That dollar you invest in your 20s will be worth so much more than if you waited to invest it until your 30s. Compound your way to being the silent millionaire next door.
7. Choose a financial advisor you trust and feel comfortable with.
I have met with so many women that feel stupid trying to speak to their advisor or don’t ask questions because they think, “I should know that already.” Let me tell you this, being honest and vulnerable with your advisor is key. If you don’t feel comfortable enough with your advisor or he/she cannot effectively communicate and reinforce the strategy with you, find a new advisor!
I fully believe our money and our lives are reciprocally intertwined. Every life goal you have is a financial goal. Dreams are powered by a financial plan! I want every woman to be empowered with financial literacy. Start now by familiarizing yourself with your own financial situation. It is often said smart successful women know their self-worth…I challenge every woman to actualize that worth by investing in a functional plan for true financial freedom.