Whether or not you like it, money has always been an emotional subject. It affects the way we live and work, takes charge over how we spend time and even influences our relationships. It's no wonder a scary subject for many, and like many important topics, for example, conflict and self-image, both women and men usually manage their finances differently.
Here are the top 7 money fears experienced by women, and what they could do about them.
No.1: Bag Lady Syndrome
The most documented and popular female money fear is referred to as the ‘Bag Lady Syndrome’ or anxiety about suddenly becoming destitute and on skid row. Famous females like Lily Tomlin, Gloria Steinem, Shirley MacLaine and Katie Couric have all reportedly suffered from this kind of fear.
Solution: Susan Hirshman, author of ‘Does This Make My Assets Look Fat?’, urges women to take control by creating a financial plan that would cover their day-to-day spending, savings and even insurance coverage, and updating it every three to five years. “This way you can have a sense of worst-case scenarios and have a plan in place if the worst happens,” Hirshman says.
Deana Arnett, a financial planner based in Manassas, Virginia, asks women to “live below their means and that they shouldn’t create a lifestyle that’ll eat up all their income.”
The bottom line is ‘If you spend less than you earn and save the rest, you will be OK.’
No.2: Old Maid Syndrome
A lot of women worry that if they don’t get married, they won’t have the support system in place to protect themselves from any financial disaster, says Karen Lee, Atlanta-based financial planner and author of ‘It’s Only Money, So Why Does it Cause So Many Problems?’
Solution: “Create your own financial plan based on your own income, and work it,” Lee says.
According to Lee, you should create a financial plan as per your income. You should follow it diligently. “When you see the projections in print, they should help calm your fears, and give a proof that you can depend on yourself for life-long financial stability.”
No.3: Not smart enough
According to Kathleen Burns Kingsbury, money coach and author of Wealth from the Inside Out, has said that she often hears women complaining,“I’m too stupid to learn about personal finance.” She further adds that “It’s not that you as a woman aren’t smart enough, it’s just that you’ve not been trained to discuss financial matters with others, and being a woman, you’d learn through conversation quite easily.”
Solution: You need to start floating women and money clubs or female-only investing groups to start learning how to talk about finance. Such clubs would provide a window to the women to interact with their female counterparts regarding money and learn through direct participation about various nuances of personal finance and financial planning, as a whole.
No.4: Acting as a burden
Some women consider themselves as the financial burden on their families. A Genworth Financial research found that around 72% of women don’t discuss financial issues with their loved ones for fear of annoying them.
Solution: Women need to work out the amount of health, disability, and long-term care insurance they need and are affordable. Once decided, then start the conversation with your family, Hirshman says.
No.5: Swindle Syndrome
Just because women fear that they might fall prey to the financial scams, they don’t invest or plan for their retirement, says Susan Hirshman, author of ‘Does This Make My Assets Look Fat?’
Solution: Get your hands dirty to create a financial plan of your own that fits your needs and retirement goals. You’ll have to figure out where you are today and set goals for the future. Work with a financial advisor who can help you accomplish your retirement goals, Hirshman says. “If you don’t understand your advisor’s process, or your advisor gets annoyed at your questions, look for another one,” she says.
It is also good to vet for advisors at finra.org or sec.gov.
No.6: Good Girl Syndrome
Kingsbury said that a lot of women don’t ask for pay hikes out of fear of being fired. However, researchers at University of Illinois and Southern Methodist University found that women who consistently negotiated their salaries increased their lifetime compensation by $1 million.
Solution: “Negotiation is a skill and it can be acquired,” Kingsbury says. She states that women must always negotiate with their husbands, kids, and colleagues. To build-up the confidence to negotiate for a raise, they need to practice with a friend or a professional coach.
No.7: Taking a break for children
Women usually fear that if they take a break to raise children, their careers and finances will suffer. That’s a good reason to be scared. According to a study conducted by Women’s Institute For a Secure Retirement, over her lifetime, a typical college-educated 25-year-old woman would earn $500,000 or lower as compared to a man in a similar position due to sporadic employment associated with caring for children and aging parents.
Solution: Women should continue to keep a foot in the game. They’ll have to work at least quarter-time to stay up-to-date with their own field, and stay in touch with the key players of their industry. They’ll also have to invest more aggressively than men, who enjoy greater privilege on their employer-sponsored retirement plans. Moreover, women will have to contribute more to their social security because they are more likely to take time off from their careers.