Tips in Ten - Financial Control and the Bag Lady

Host – Teresa Mitchell, CFP
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In my 20 years in the industry, I have had over a thousand conversations with women who have not felt they have reached their financial potential – usually in the areas of investing and subsequent financial security. I have found the key to moving forward from the image of bag lady to empowered lady is having a different kind of conversation with women than they usually experience with a financial advisor. It is about focusing more deeply on what matters in terms of family, community and life purpose. Approaching the conversation with compassion and a goal of honest, authentic connection creates a sense of trust that makes financial education and taking investment action not only possible but desirable.

To that end I left my longtime wealth management firm and am launching a personal financial coaching platform -- LADY MONEY, LLC. It is intended to help women achieve a sense of financial wellbeing around investing for retirement that imparts peace of mind and ultimately leads to financial security.

In the Lady Money program, I use my prior experience in consumer education as a media chef for the food & wine industry to create exercises that are simple and fun yet effective. There are many similarities between food and money. We tend to view both with outsize emotions and limiting beliefs. But in their simplest form, food is fuel & money is a tool. Are they more? Not in and of themselves. It is up to you to use them as your own personal palette.  At the heart of it – they don’t have the power – you do.

Episode Summary:

The fear of ending up a bag lady is real. Women often fail to adequately prepare for retirement due to lack of confidence and a more self-less focus on others. Taking financial control is an important key to feeling financially secure. And that sense of security alleviates stress leading to on-going happiness and wellbeing. 

Episode Transcript:
Teresa Mitchell, CFP:Values and money don't mix, or do they? Join me, financial coach, Teresa Mitchell to find out. Let's explore how women can make money while making a difference. This is Lady Money!

Are you afraid of outliving your money?

Almost half of all women fear becoming a bag lady. This is according to a recent study by the life insurance company, Allianz. Half! The term “bag lady” was coined in the 1970s and quickly became a symbol of women's concern of running out of money, regardless of how much they have.

As a financial planner I heard this all the time. I never liked to rush an initial conversation, so after a while, when we were speaking comfortably and candidly, the bag lady nightmare would just bubble up. Whether the woman was alone, had a partner or children and had a reasonable amount of money -- it just didn't seem to matter. Even the rich and famous have confessed to sleepless nights. 

What counts is that the fears seem very real, and this scarcity mindset can affect important financial decisions in an adverse way.

Why is financial insecurity such a big deal to many women?

“Many women have been programmed that they won't be good at this money stuff” says Olivia Mellon, a prominent Washington DC psychotherapist, specializing in resolving money conflicts. As recently as 1974, a bank could insist women have a man co-sign on a loan.

Women barely have their feet under them so it's easy to see why even women think a man can do a better job. In reality, this is fiction not fact. Current neuroscience is showing no gender difference in young children when it comes to math. 

So, chalk it up to a socially learned lack of confidence, and the resulting lack of preparation, and a higher aversion to risk. The usual scenario with this script is a strong tendency for women to opt out of the financial responsibility needed to create the financial security they crave.

What other factors prevent women from taking financial control? 

There is an interesting book by financial educator, Ruth Hayden called “For Richer, not Poorer - the Money Book for Couples”. One idea she expresses particularly well is that because women are instinctively nurturers, they've view spending and saving very differently than men.

Women tend to relate to money for what it can do now. They are focused on using their energy and their assets to create a good lifestyle for their families. This creates a problem. Retiring well requires long-term planning. If a woman has not paid attention and saved for her own future she could be left desperately wondering if that future was going to be still alive and penniless.

Is the bag lady fear just about money?

For women, the fear of ending up broke might be magnified by the anxiety of being alone and unvalued late in life. One of the reasons some women neglect their financial situation is because they place more importance on family and community than on themselves. I think many of us also have concerns about being a burden in our elder years.

Unfortunately, this compounds the problem because fear can erode a woman's ability to take action now causing her fears to be reality in the future. 

So, it is important to learn the basics about money and investing. You don't need to reach a high level of proficiency, but you do at least need a general understanding of the key concepts so you can make good financial decisions throughout your life. “When women confront their money fears and do something about them, and they become knowledgeable and in control” says therapist, Olivia Mellon “they experience the most profound sense of serenity, confidence and security.”

Why are financial security and wellbeing so intertwined? 

Money is the number one stressor for Americans, according to a Northwestern mutual study. But it wasn't always that way. Thousands of years ago, man, just like the animal world, lived in an immediate return environment. Your actions delivered clear and immediate outcomes. 

Today modern society is forcing us to live in a delayed return environment - meaning rewards don't happen until some point in the future. Bottom line, we have an old brain designed for quick solutions. The tiger didn't eat me so I can relax. In today's world, the delay of a resolution creates a sense of constant uncertainty. That leads to the chronic stress and anxiety we often feel about our future. One thing you can do to help is to focus on what you can control. You may not know exactly what you will need for retirement, but you can estimate and make sure you save enough each month to reach your target. And it works – 87 percent of the study participants who took control of their finances, said “nothing made them happier” than knowing they were in a good place, money-wise.

Wrapping it up. 

Confidence and control are the best defense if you are struggling with a bag lady mindset. Follow the money. Be clear on the difference in what you are earning versus spending. Make sure there is enough left over to save for short-term emergencies as well as your long-term future. Being on top of your financial situation leads to a sense of wellbeing. And wellbeing makes it possible to be happy in the present and confident you will have enough during your golden years.

Thanks so much for listening! I hope you found Lady Money -- Tips in Ten, helpful. If you have any questions, you would like me to address, or if you want more information on the Lady Money financial coaching program, or blog, check out the Show Notes. Until next time, this has been Lady Money -- where money and values do mix.

Resources...

Bag Lady Fear https://www.bizjournals.com/bizwomen/news/latest-news/2019/11/half-of-women-fear-outliving-their-money.html?page=all

Lance Drucker  https://www.amazon.com/How-Avoid-Lady-Syndrome-B-L-S/dp/0692296573

Money & Stress: https://www.cnbc.com/2018/06/26/money-is-more-stressful-than-work-or-relationships.html

Evolution of Anxiety: https://jamesclear.com/evolution-of-anxiety