MoneyWiseWomen

Invest in Yourself & Live Financially Independent

 

One of the most important things you can do to create a healthy financial life is invest regularly and automatically. If you’re not already investing, don’t wait another day. Don’t wait because time is not in your favor. Unfortunately women think we have to be perfect and know everything before we start to do anything. Simply investing $50 per month will help you create financial independence.

It’s important to understand the difference between savings and investing. Saving money won’t make you rich, but it will be there when you need it. Savings are when you put your money in checking accounts, savings accounts, certificate of deposits, money market accounts, U.S. Savings Bonds, etc. Investing involves more risk, but if you make good investment decisions, your investments will yield higher returns over time than savings. Investing is when you put your money in stocks, mutual funds, bonds, etc.

How Crayons Create Financial Peace

My biggest revelation about how to help others with their financial issues came when I began working on my own financial issues. In Telling the Truth, I point out the rather obvious fact why so many Americans with money problems can’t seem to get beyond them: we don’t talk about money so we have no opportunity to tell the truth about it.

We are a financially illiterate society. There are few places that you can go to work on your money, talk about your money, make your money better. I lay awake at night sometimes dreaming up solutions to this societal problem. And bit by bit, I create answers. That’s how we came to start Financial Boot Camps, and that’s how I tripped upon creating this exercise for a Boot Camp: draw your financial life with crayons.

The accountant in me questioned the exercise that the right side of my brain had created. “Um, that’s silly.” But the right side of my brain, the creative side that has been fed and nurtured by studying a lot of research into the psychological and emotional aspects of our relationship with our money said: “Forge on!”

Growing Pains: Money Lessons We Should Have Learned

If only our earliest encounters with money, like getting a quarter for cleaning our room or a whole dollar from the Tooth Fairy, taught us what we would need to know about personal finance. Instead, we learned the hard way by growing up.

A lightbulb flickered in my head in fifth grade when I realized my $10 weekly lunch allowance didn’t need to be spent on cafeteria pizza. By saving $2 a week for two months, I could buy my first Backstreet Boys CD. It was a moment I’d never forget, for it finally dawned on me exactly what money was worth—anything I wanted.

Over the years, I traded school lunch for CDs, birthday money for movie tickets, and even college textbook money for new boots. The exchange value of money, as I like to call it, grew larger and grander as I moved into my early 20’s. I likely “exchanged” thousands of dollars before I graduated college, yet still hadn’t learned how to manage my finances. By the time I got my first job, I spent more on food and happy hour than on rent and found myself in serious credit card debt. Obviously, I still didn’t have a clue about money management.

As children we learn to spend and as adults we learn to save. Along the way, did we ever learn how to manage our day-to-day personal finances? Unfortunately, for most of us the answer is no.

Luckily, I’m older, wiser, and in less debt, and in the spirit of good karma, I’m sharing the five money lessons I wish I knew—and we all should’ve learned—growing up:

Tax Day: Our Collective Moment of Financial Clarity

Some people think April 15th is an icky day. I see it as our collective moment of financial clarity. Tax day is the one day that we all know exactly how much our businesses earned, or didn’t earn, last year.

I hear a lot of people focus on their refund amount. From my perspective, that’s NOT the number you need to focus on. Leave that to your tax accountant. The number that an entrepreneur should focus on is the one that gives you absolute clarity about what your business truly earned.

Employees have financial clarity about their earnings. They know exactly what their hourly wage is. If your value in the workplace is $25/hour, you work for $25/hour. If, due to economic or other circumstances, you take a job at a lower wage, you are usually VERY clear that you are working for less than your value.

Entrepreneurs don’t often have the same clarity. We don’t get paystubs. We often pay ourselves inconsistently. We pay taxes from our business account, so we never get to see the equivalent of ‘gross wages.’ When our businesses need money, we funnel into them from our personal funds. And when our businesses are flush, we sometimes plunder them.

Riding the Wave: Problem Solving, Coping and Staying Resilient

There are many factors beyond a bad economy that are contributing to some people’s continued unemployment. The limited number of jobs may only be a fraction of what the problem is. Let me qualify this by stating I am not a therapist or a psychologist and don’t pretend to be. As I review my clients’ circumstances, I look at some basic and obvious issues, the same way employers will: are you able to go to work and do what you are paid to do without becoming a liability? Do you appear to be a good investment? If not, then something else may be requiring more attention before someone can successfully return to work. Some people would benefit from counseling of a different nature or therapy, and others simply need to improve their problem solving skills.

Although finding work is expected to vastly improve much of what is wrong in many people’s lives today, it has been my experience that often too much weight is placed on finding the “job” as the answer. Often people fail to change their behavior, lifestyle or outlook to ensure they can get on track (and stay on track), and mistakenly believe the job will “fix” all that is wrong. The false comfort of finding work as the cure to all of life’s ailments is seductive, and can be very tricky to overcome or repair. Unfortunately, many problems don’t go away, and actually become of greater concern once someone re-enters the workplace.

There is no mystery as to why employers conduct behavioral interviews to interpret or measure candidates’ thinking processes and abilities to problem solve. If there isn’t evidence of coping effectively outside of work, why would a risk be taken by the employer in assuming they will do a better job at work?

People are prone to “glossing over” issues and not resolving root problems. Taking the easy way, looking for a quick fix, and finding fault are all coping mechanisms, but unfortunately, they are behaviors that don’t solve the real problem. People make bad choices, procrastinate, and can develop bad eating/drinking/sleeping habits while they are unemployed. All of these behaviors can continue after they are employed. Finding a job may seem like the answer to all that is wrong, but reactions to life’s events that show up as the inability to make good choices, get things done, or cope may be what are really behind prolonged unemployment. Is it the chicken and the egg dilemma? Perhaps. Is there more to it than this? Of course.

A simplistic remedy for many could simply be to take a hard look at the issues in their lives that would not be allowed to consume their time if they were working each day. Or, identifying how many more issues are allowed to become bigger and highly visible when unemployed, and not while working. If parenting, family commitments, health issues, or running into car problems becomes paralyzing now, then what would happen if that person is working? How would these problems get resolved? Aside from potential financial issues, would a different course of action be considered if the person were working?

The next part of this simplistic fix is learning how to problem solve more effectively now, before work begins and takes up another 10 hours each day. The reasons I hear for why people are unable to get to their job search commitments often baffle me. I wonder what the case would be if they were working. If solutions to life events take up hours that would ordinarily be dedicated to work, then is it possible alternative solutions need to be examined? Is having limited resources always the case, or could it also be a case of limited resourcefulness?

In addition to effectively resolving problems, let’s address the other key point to moving on. Growing thicker skins and developing flexibility are key ingredients to succeeding in the workplace. Change continues to occur at a faster clip than ever before, and it is unlikely to let up. It is the name of the game. How we respond to change, adversity, and life’s challenges is going to continue be a test we all must pass to stay in the game.

As I previously stated, there are typically other issues contributing to a person’s unemployment, but hopefully these are some areas that a job seeker can take a hard look at on their own. If too much is getting in the way of dedicating the amount of hours required to conduct an effective job search (in the same way it would be dedicated to work), then it might be necessary to enlist the help of a professional to assist.