Phoenix Woman

Early Winter 2007

HOW DO YOU FEEL ABOUT MONEY? SPENDER OR SAVER?

Author: Michelle Evard

When it comes to money, emotions can run pretty high. However, in a world of mixed social messages, it seems that women harbor undue stress and concern when it comes to bread winning. A recent survey conducted by Redbook and Smart Money magazines showed that one out of every three women worry about money, compared to only one out of every five men.

Knowing this, women need to make sure that their emotions about money are positive and healthy — not rooted in fear, guilt, or unworthiness. As women, we can use our emotions to our advantage and have excellent relationships with our income, savings and investments. Consider your beliefs about money, about people who have money, and about what money can bring you. Women, in particular, receive mixed signals about money that can cause confusion about how to approach and handle the green stuff. We’re taught that it’s okay to work and make money, or stay at home and raise the kids, or stay at home and do nothing, or raise the kids and make money at the same time, or make money for a few years and then stay home and raise the kids, and just about everything else in between. No wonder we’re confused! How can all of these things be okay? How are we supposed to make the right choices for ourselves?

As a result of the mixed messages we receive, women can become equally afraid of making it in the world and of failing in the world. We’re afraid of having money for many reasons: because we weren’t taught how to manage it; because we think making money is greedy; because we think our husbands should be making money and giving it to us; because we don’t want to be like someone we know (and don’t particularly like) who’s well off, and so on. It can get pretty complicated. Women are also concerned about the possibility of losing money — and ending up broke, alone, and otherwise vulnerable. Whether it is a layoff, a divorce, or a terrible accident, women have a lot of choices when it comes to things to worry about. When asked how they feel when they hear the word "money," no matter their background or financial status, fear and stress are the most prevalent responses among women.

The Fear of Saving Too Little

Take my friend Kimber from Scottsdale, for example. She’s gainfully self-employed with a great roster of clients, has amassed substantial savings, is on track for retirement, owns a good life insurance policy, and derives extra income from a rental property. She’s got it all going on, but she still has worries and fears about money. “I freak out if I look at my savings account and it’s under $50,000,” she says. “Why am I hoarding all this cash?”

Kimber is a classic example of someone who feels that she could be doing more, or, more importantly, that she isn’t doing enough. Because she doesn’t rely on a steady paycheck, she insists on having money set aside to cover herself for a while, “just in case.”

She knows that keeping $50,000 in a savings account isn’t the best financial move, but her emotional need for safety and peace of mind prevents her from putting that money to better use. Kimber hasn’t had to dip into this savings account for five years, and yet she still feels unsure of her abilities to manage in an emergency.

On the positive side, it’s a good thing to keep some liquid assets for emergencies. But $50,000 is excessive for someone in Kimber’s situation, who would really be fine with $15,000 to $25,000.

Someone like Kimber would benefit from analyzing her need for security while gradually lowering the amount of money she keeps in her savings account. She could live with $45,000 for a few months, then $40,000, and so on, all the while putting those chunks of $5,000 into better-performing investments. This way, she’d be able to stay in her emotional comfort zone while making her assets work harder for her.

The Fear of Getting Fired

Alicia, also from Scottsdale and also a saver, fears that she may be laid off one day, even though she’s been at her job for six years. She protects herself from that occurring with a large stash of cash. “I often calculate how long I could make my savings last if I ever lost my job,” she admits.

Alicia’s goal is to save more money so she can sustain longer in the event of an unlikely layoff. To achieve this goal, she ends up giving up some enjoyment in life. Where Kimber can spend money freely knowing she has $50,000 in the bank, Alicia sacrifices in order to save more.

She’s very careful about how she spends her money. She does extensive research to find the best deals, on even small items. She doesn’t enjoy shopping. And she only pays cash for what she buys. For Alicia, things like manicures and pedicures are once- or twice-a-year luxuries.

As with Kimber’s example, the emotional need for protection can be a good thing. For someone in Alicia’s situation, I’d recommend a couple things:

1.   Keep no more than six months worth of expenses in reserve, and

2.   Realize that you can extend your savings by living leaner if and when an actual layoff occurs.

The Fear of Having Extra Money

Meghan from Mesa and her family never seem to have enough cash on hand. Whatever they make, they spend. Meghan gets stressed out when she sees the money leave their bank account as quickly as it comes in. She’s become somewhat obsessive about paying her bills as soon as she gets them, for fear that “the money won’t be there later.”

Meghan finds it interesting that she worries so much, especially since she came from a family where there was always plenty of money. Saving for retirement and college for her kids is on track, but Meghan says she worries “about bigger items we’ll need a few years from now, as well as private school for my kids.” She also feels a lot of pressure to give expensive gifts to friends and family members, but trying to please these people is costing a small fortune.

Understanding her emotional needs and setting a budget will help Meghan and her family. An easy way to monitor expenses is to establish a weekly budget that includes predictable costs like the mortgage and utility bills, plus a lump sum of cash set aside for groceries, gas, coffee, lunches out, etc. The small incidentals are where budgets usually get thrown off track, and choosing a set amount of cash for shopping in general will help.

It’s also important for Meghan to think about why she’s afraid of having money. Will it change who she is? Will she become a different person in the eyes of her friends? Will she turn into someone she knows? These are all reasons many people share for getting rid of their money as soon as it’s deposited. Once a person is aware of her particular reasons, they’re much easier to overcome.

Balance Your Emotions for Financial Strength

Most of us can see reflections of ourselves in the stories of Kimber, Alicia and Meghan. We can relate to the fear of not having enough savings, of spending too much, or of getting laid off. We can also relate, in a positive way, to protecting ourselves and using our money to benefit our friends and family members, like Meghan does with her gifts.

As long as fear doesn’t become your oppressor, then your emotions aren’t getting the best of you. But if you find yourself making poor financial decisions because of your emotions, you may need to confront your feelings and seek help from a professional.

Michelle Evard is Manager/Financial Planner at Michelle Evard Advisory Services, PLLC. She can be reached at 480.203.3880 or through mefinancial.net. Vickie Champion, Life and Money Coach, also contributed to this article. She can be reached at 602.249.1912 or through vickiechampion.com.

Copyright (c) Phoenix Woman. All rights reserved.

Download the original article in Adobe PDF format (1.24 MB)