In my last article, I identified the first 5 of 10 fears that I wrote about in my book, 10 Smart Money Moves for Women. They were the Fear of Being Poor, the Fear of Losing Money, the Fear of Looking Stupid, the Fear of Talking About Money, and the Fear of Making Mistakes and Failing. In this article, I’ll complete the list, starting with one of the most important fears to overcome for financial health and security:
The Fear of Creating and Sticking to a Plan
How many lucky people do you know that win money–lots of it? Very few, right? None of my friends, acquaintances, colleagues, or the more than 30,000 women I speak to on an annual basis have ever told me that they have won big money. In fact, I can count on one hand the number of people I know who have won more than a few hundred dollars playing black jack or the slots in Las Vegas.So, unless you are going to write me and tell me that you are the exception–that you have hit it BIG, I’m going to assume that you are going to have to make your money the old-fashioned way–through earning and investing. It all starts with a plan, and your success depends on your sticking to it.
Creating a plan means making a commitment–to yourself. And that’s where the fear factor enters. If you put the plan in writing, you’ll feel more compelled to do it as opposed to just talking about it.
Financial plans are roadmaps that launch you on a path toward your stated money goals–if they’re followed. These plans, however, are not set in granite. Times and circumstances change, as do investments and investment opportunities. All of which means that you shouldn’t create a plan and bury it in a drawer. Instead, you ought to review your financial plan regularly–whenever your circumstances and/or goals change and certainly once a year.
The Fear of Borrowing Money
Ideally, you should pay cash for everything, but ideally and what’s practical are rarely the same. There are times when it makes sense to borrow money. For instance, unless you have a big savings account, borrowing money to buy a home is usually necessary. But avoid taking advantage of a good thing–over-borrowing and excess credit are too common, and it’s easy to lose control of your credit.
Every week, your mailbox probably spills forth with new credit card offerings. Should you sign on? It depends, but be sure to ask:
- Do I need the credit? (It makes sense to have at least one credit card.)
- If I carry a balance, is the interest rate offered lower than the card(s) I presently have?
- If I don’t carry a balance, what’s my incentive to switch?
In determining whether you should borrow or not, ask yourself if you need the item or merely want it. If you want it and can pay the debt off by borrowing over the designated time, don’t purchase it. If you need the item and can pay it off over the determined payoff period, purchase it. Most people get in trouble when they allow wants to dictate how money is used.
The Fear of Investing
As the year 2000 approached, it was impossible to ignore what was happening in the stock markets–it seemed like everyone was making huge fortunes. For the passive investor, it was difficult to know how to jump into the game–should you invest in stocks, bonds, mutual funds, real estate, or other business opportunities? The list of possibilities is long and can be overwhelming.
Investing can be frightening because it offers no guarantees. Any money that you invest could increase in value, maintain its original value, or decline in value. Because women have traditionally earned less than men in the work force, they fear that if their investment doesn’t pan out, the lost money will never be replaced or it will take them longer to recoup the loss than it would for a man.
Should you throw in the towel and give up? Absolutely not. Over time–which means start investing now–investments, and especially the stock market, have outperformed other investments. Unless you have a short-term goal, your best approach is to concentrate on the long haul–what are your investments’ prospects for 5 or 10 years from now?
The Fear of Not Trusting Yourself and Keeping the Wrong Advisors
For many, it is not uncommon for investors to be more loyal to money advisors–bankers, lawyers, accountants, realtors, insurance agents, stockbrokers and financial planners–than to their own money. For women, especially, it’s common to rely on perceived experts to make recommendations and take action with respect to their money.
There are 2 key differences between men and women when it comes to money advisors:
- Women tend to form a type of friendship with their advisors and be reluctant to terminate the relationship even if there are signs of poor advice or management.
- Some women too willingly abdicate financial decisions to someone else. They rarely follow up on what is suggested or done to their accounts.
In the 15 years I advised women and men about their money, my goal was to get them proactively involved so they would not be tempted to delegate their investment and money strategy decisions to me or any other advisor. The world of investments, insurance, and credit is not impossibly complicated. It simply takes time to work through the maze of options. Advisors can help, but so can you.
Think of all the times you have said, “I knew it was the right thing to do” or “I had a feeling that was going to happen.” Trust yourself.
The Fear of Being Too Successful
Many people–women, in particular–actually fear becoming too successful. Many women believe that the man is supposed to make the money decisions–whether that man is a spouse, father, rich uncle, or banker. Women might even be afraid that their relationship with a man will be jeopardized by their own financial success. According to therapists who treat couples, even when the woman is the dominant breadwinner in the relationship, she is less comfortable taking the lead in the financial arena.
Male and female styles of decision-making may be at the crux here. Men are more inclined to make decisions on their own. Women are the opposite–they prefer to consult their partner and may feel hurt or angry if decisions aren’t made consensually. These gender differences are ingrained, making change difficult. The better route for couples is to understand that these differences exist, to be sensitive to them, and to set aside time to talk about the role of money in their relationship so that the subject can be constructive rather than destructive.
Look at it this way: people rarely die from being too successful. In the money arena, being successful means that you can afford to take care of yourself and the people you love. You want to be successful.
What Are Your Fears?
Everyone confronts fear. The trick is to face your deepest financial fears and get them out in the open where they can be looked at clearly and unemotionally and cut down to size.
A cartoon character named Pogo summed it up best: “I have seen the enemy and the enemy is us.” By raising your awareness level and identifying which fears influence and inhibit your money decisions, you will be making the first of many smart money moves.