A sad financial reality is that single Baby Boomer women often have more paltry savings and investment accounts than single men from that generation. In my financial planning practice, I see plenty of people who are divorced, widowed or never married. Sure, it’s a generalization, but unmarried men often do a better job of salting away money for their non-working years.
All too frequently, I come across single Baby Boomer women in their 50s and 60s who have woefully underfunded retirement accounts. Fortunately, it’s possible to avoid that fate, if you can avoid these seven common mistakes:
Making excuses for being broke: I don’t know about you, but I don’t want to hear one more time about how women are paid less than men for the same work. I don’t want to hear about “the economy.” I don’t want to hear about ageism or that you don’t have the right education.
I’ve got two words for you: Barbara Corcoran. This Baby Boomer millionaire and shark, born in 1949, got out there and made it happen for herself, first as a real estate salesperson and later as an entrepreneur. Sure, she had some special talents that she leveraged, but everybody is a salesperson today. If you don’t believe that, read Daniel Pink’s “To Sell Is Human,” and then get out there and hustle.
Squandering an inheritance: Sad, but true. I hear this one a lot. Sometimes it’s a small inheritance, other times it’s the start of a nice little nest egg. As someone who’s made her share of money mistakes over the years, I get how this could happen. Most people don’t understand the concepts of compounding, or the time value of money, so they miss out on the power of having a dollar today vs. having a dollar tomorrow.
Dave Ramsey has a good saying about this: “You can’t out-earn your stupidity.” In other words, we can’t expect to spend like there’s no tomorrow, and then at a later time earn enough money to make up for it. Unfortunately, it usually doesn’t work that way.
The Baby Boom generation will be on the receiving end of the greatest wealth transfer in history. Don’t blow it.
That leads me to mistake No. 3.
Spending Too Much: Forget “Sex And The City.” The Baby Boomer overspender of 2014 isn’t buying Manolo Blahniks or Jimmy Choos or Christian Louboutins. No, it’s just crap. And more crap. I don’t even know what it is, and you probably don’t either.
(Although “home repairs” is a big spending category that seems to pop up frequently. The numerous money pit budget items that go under home ownership are depressing. I’m with James Altucher on this one. Home ownership isn’t a necessity by any means, but we’ve become brainwashed to believe it is. A good deal of the time, home ownership sucks people in and traps them.)
Here are some stats from the blog ZeroHedge that might make all that stuff – whatever it is – less appealing:
- According to one recent poll, 25 percent of all Americans in the 46 to 64-year-old age bracket have no retirement savings at all.
- 26 percent of all Americans in the 46 to 64-year-old age bracket have no personal savings whatsoever.
- One survey that covered all American workers found that 46 percent of them have less than $10,000 saved for retirement.
- According to a survey conducted by the Employee Benefit Research Institute, “60 percent of American workers said the total value of their savings and investments is less than $25,000″.
I know it’s hard to stop spending – and it’s easy to circle back to Item No. 1 – making excuses because you don’t have enough money, so you spend it all, and the circle goes round and round.
As Susan Powter used to say in the 90s, “Stop the insanity!”
Settling for low-paying jobs: This is related to mistake No. 1.
It’s nobody else’s fault that you decided to become the 3,457th Shamanic healer in Santa Fe. Did you really – really? – think that would work out?
Look, I’ve screwed up, too. I’ve started seven or eight businesses and never followed through. Here’s evidence of one such abandoned venture that will live forever on Amazon.
So it’s not about trying and failing. I know plenty of Baby Boomer women and Gen X women who take low-paying retail jobs to help them get their feet off the ground after a financial crisis. That’s fine. But don’t stop there! We live in one of the best eras in human history for creating your own opportunities, so don’t be limited by your past, or what you think you can do. We are all capable of so much more than we know.
And that leads me to mistake No. 5.
Thinking of yourself as a victim: OK, this one is rampant, and the media and the political infrastructure give you plenty of support and validation for feeling downtrodden and discouraged and oppressed.
Here are three examples that took me approximately 63 seconds to come up with:
US economy may be stuck in slow lane for long run
Women’s Pay Better — But Still Trails Men’s
Women losing retail, government jobs as men get back to work in construction
Remember: What you read and see and hear in the mainstream media is not necessarily the truth. Sensationalism sells. I’ve written about media scare tactics before. It’s a pretty serious problem, because everywhere I go, people believe that end times are nigh, that there has never, ever in the history of humanity been a worse time to be alive.
Just turn off the news. Stop listening to your friends’ paranoid opinions. They’re just wrong.
The entire U.S. economy is not on the verge of melting down. Recessions, when they happen, are typical occurrences in economic cycles. The truth is, it’s a great time to be alive, because we have so many entrepreneurial opportunities open to us. We don’t have to be at the mercy of 30-year-old retail chain managers who may or may not choose to hire us. But a lot of Baby Boomer women don’t seem to realize this.
One of my heroes, Dan Miller, has a great quote that applies here: “Thankfully, your chances for success are not determined by what happens in the White House, but by what happens in YOUR house.” You can read the entire post here.
Waiting for something to happen: “When I make more money, I’ll start saving.” “When I get my inheritance, I’ll have a retirement fund.” “When my big expenses taper off, I’ll be able to start saving.”
My bullshit detector just went off. Did yours? To quote Credence Clearwater Revival, someday never comes. Or, if you prefer, to quote John Mellencamp, your life is now.
There is no shortage of excuses. I do it, too. I’ve been particular partial to the “when I make more money” version of excuse.
Sorry, it doesn’t work that way. First, as noted above, you can’t always outearn your stupidity. Second, there’s the well-known phenomenon of “lifestyle creep:” As people earn more money, they spend it, rather than save.
Avoiding any decisions about money: Go ahead and Google the phrase “I don’t understand investing.” There are 160 million results. So that’s pretty good social proof that you can’t take any responsibility, right?
(You knew I was going to say that.)
Women, in particular, kid themselves that some kind of “education” necessary before they can begin saving and investing. There’s no shortage of books, Web sites, cable TV channels and radio shows that have feature money and investing content. So that’s clearly not the issue. There’s financial advice everywhere you turn. Much of it is flat-out wrong, but that’s another story.
Maybe you find discussions of money over your head. If that’s the case, change the channel – literally and figuratively. There are plenty of white men in expensive suits who like to impress each other with their technical jargon. I personally know a lot of these guys; some are really great people and actually know stuff, but they just talk like dorks. They can’t help it.
But sadly, most are full of hot air and give advice that could be harmful, if followed.
The excuse that “I need more education,” or “I don’t understand investing” is related to fear and laziness. I know, that sounds harsh. But as adults, we often avoid taking on new challenges because we don’t like not knowing.
Nobody’s expecting you to have the knowledge of a Certified Financial Planner or Chartered Financial Analyst. And for the record, I’m never shocked or surprised when people don’t understand what’s in their own investment portfolio, or why it’s there. A lot of financial salespeople put clients into products they don’t understand. For do-it-yourselfers, it’s just as bad. Somebody reads an article in Barron’s and develops some pet theory that destroys his or her wealth. Remember, the mainstream financial media is not here to educate you. It’s here to scare you and make you addicted to the bad news.
It’s not necessarily easy to build wealth or financial stability. We live in a consumer culture that encourages us to reward ourselves with stuff when we feel stressed out or situationally depressed. On top of that, there’s conflicting financial advice swirling all around us.
But if you can avoid making these basic financial mistakes, you’ll be on the road to shoring up your personal net worth and making some better money decisions.
What financial mistakes do you find yourself making?
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