Many women are uncomfortable with money.
Even women business owners and those with amazing ideas. Who focus on the work or the service they provide. And ignore (or don’t pay enough attention) to the finances.
Women who are now divorced or widowed, and whose spouses previously took care of the money, may not want to deal with it. And sometimes may even be afraid of finance.
I recently met a woman at a writing retreat. As a single mom, she’d raised four strong independent daughters. After one of the writing exercises, she told me that she’d always been afraid of money, because she’d never really had any.
Noli timere. (Be not afraid.)
Here are some ways to reframe your money attitude, no matter what your “money script” might be.
“Ultimately we know deeply that the other side of every fear is a freedom.” — Marilyn Ferguson
We’re a society of consumers. The US used to be a country of manufacturing, of doing, of making; but not any longer.
A consumerist culture requires money. (I highly recommend the movie “Generation Wealth” by Lauren Greenfield if you’re interested in this topic.)
Obviously you need to be able to feed, clothe, and house yourself and your family. Those are the basics. We also need Internet, phones, and utilities, and money for when we’re old.
Beyond that, money is for wants: entertainment, fancy food, pets and their needs. Though I think you could probably make an argument for pets being necessities and not wants. I certainly could!
People use money in a consumerist and tribal culture to signal their tribe and affirm who they belong to.
Many women need some sort of bag to carry their stuff in. Especially if you have kids! Finding clothes with pockets, a chore in and of itself, isn’t sufficient when you’ve got the kids with you.
But what kind of bag do you choose? A plain black bag that’s big enough to carry daily essentials is all you need, since that likely goes with most of your outfits.
Look around. How many women carry such a bag? Very few. (Honestly? I don’t, either.) The wealthy — or more often, those who aspire to wealth — carry high-end labels. No, I’m not going to give them free advertising here. You know what brands I’m talking about!
Artsy women, or those who aspire to be, or those who wish to be in that tribe, might have a patchwork bag or slouch style bag. Certain groups, like suburban moms, tend to carry certain preferred designers.
Same with cars. The only thing anyone really needs is a reasonably reliable sedan, maybe something a bit bigger if you have three or more children. Or a bit smaller if it’s just you. You will see these cars on the road, because not everyone uses their vehicle as a way to signal their tribe.
Look at all the deviations. Enormous, environment-destroying pickup trucks, for people who neither haul nor tow anything, and drive only on paved roads. SUVs to carry your huge … purse, plus your purse dog. Sports cars.
I personally drive a Prius, and whatever you’re thinking about that is… probably right.
If we were all infinitely wealthy, this wouldn’t be a problem. Billionaires like Oprah and Jeff Bezos can buy all the designer handbags and vehicles they want. Without being concerned about their standard of living in retirement.
Are you Oprah or Bezos? I’m going to go with no. Please let me know if I’m wrong!
You and I don’t have infinite stores of money. Spending too much money on wants means you have less money to spend on needs.
You may have noticed I included retirement in my list of necessities!
Clothing is a need. We get arrested if we’re wandering around in public naked. For the most part. But designer clothing is a want. You can get reasonable clothing at low-end stores, that wear about as well as some designer clothing.
Food is a need. But you don’t have to go to the gourmet store. The basics are easy enough to get at the cheaper stores. I admit that I go to the farmer’s market, where some stuff is more pricey. Let’s just say mine is not the only Prius in the lot.
By spending on wants, in other words, that money can’t go to needs. Not all our needs are in the present.
We all read or hear about the people who hoard their money. And then use it to buy expensive things, or launch expensive ventures that don’t quite get off the ground.
But for the rest of us, money is just a tool, and we need to think of it in that way. It’s not a magical substance. (For the purposes of personal finance, we’ll ignore currency pegging and gold standards and all that.) It is a special tool in a way, though.
Every use of money means that by definition it cannot be used in some other way.
The money spent on a designer handbag is money that isn’t there when an emergency happens. The money spent on organic eggs is money that can’t be spent later in old age. Yes, you WILL be spending money when you’re old, even if only on health care.
These may be tradeoffs you’re willing to make, but you need to recognize what you’re trading.
I’ve worked with many women who have negative attitudes toward money, handling money, or even thinking about money. I frequently get the sense that they feel like money and finances is something out of their control. They can’t help but spend. Or they can’t help but let the debt pile up.
None of those things is true. No one is a victim of money.
You have control. If you haven’t had it up until now, or you feel like you haven’t, fine: now you TAKE control.
Money is not a wild horse that can’t be tamed. Money is not an addiction that needs treatment, in and of itself, Though out-of-control spending might be. Money is not something that only men know how to deal with, thank you very much. Money is not just for people who like math.
Money is for everyone. Your personal finances are under your control. The sooner you realize this, the better!
There are basically two steps to master (or mistress, if you prefer) your money. There are a few steps underneath each. They are assessing where you are and then, giving each dollar a job going forward. Simple!
1. Assess where you are
I’ve written about this before. You need to know where you stand on four finance fundamentals: How much is coming in (income), how much is going out (expenses), how much you own, and how much you owe. Details are in the linked article.
Once you know what you’ve got, you can figure out where you might need or want to make changes. Not enough coming in? Get another job, create a side hustle, ask for a raise. Too much going out? Adjust what you’re spending money on.
Owe too much? Work on reducing your debt. Make sure after they’re paid off that you have an emergency fund of three to six months’ expenses in cash. You won’t have to hit the credit cards again if something springs a leak.
How much are you spending on necessities, and how much on things you “just” want? Have you been leaving out necessities such as emergency fund or retirement? You’ll need to remedy that. Which means less money on wants.
2. Give each buck coming in a job
The money is in your control, yes? So you get to tell it what to do. (W00t!)
Some of the dollars coming in are going for your necessities. If you have credit card debt, you need to pay that off as fast as you can. Some of your dollars must be assigned to paying it off.
If you don’t already have that emergency fund, some dollars will have the job of waiting for emergencies in a savings account.
And some dollars have to be assigned to helping you when you’re old: retirement fund. Click here to learn more about retirement.
Once the necessities have been assigned, if there’s money left over, it can go to wants. You probably have fewer dollars available to go to the “want” jobs.
Prioritize. What’s important to you?
If eating cruelty-free is important, then you might assign dollars to the farmer’s market, and fewer to handbags or clothes. If you need to look sharp at work, you might assign more dollars to your wardrobe and fewer to going to the movies.
Value spending time with friends? You might employ more dollars for happy hour or camping trips or sports bars than for clothing or cars. Etc.
Your dollars are your little employees, and you deploy them where they do the most good.
Does this seem … familiar? Yes, giving each dollar a job is basically creating a spending plan/budget. (Sneaky!)
A basic starting guideline is the 50/30/20 plan.
Half your dollars go to necessities (excluding emergency fund and retirement). Savings, which includes emergency fund and retirement, is 20% of your budget. One out of five of your dollars. This category might also include savings for traveling or other financial goals you have.
Then the remaining 30% is on non-necessities. Here’s where you assign entertainment, “luxury” and want dollars.
If you want to get out of debt fast, or build retirement savings fast (or both), your savings dollars need to be about half your available dollars, not 30%.
That means necessities and extras take up the other half. Normally it means that extra spending is as close to zero as you can get it. You’ll have to reduce the necessities as much as possible too.
Share housing, find a cheap place close enough to work you don’t need a car, find economical ways to eat, etc. This is more advanced. Do you truly understand your own priorities? Can you be ruthless about assigning dollars with no slippage? It can be done, if you’re up for it.
Money doesn’t own or control rich people. They control their dollars. Control yours, and find out how freeing it actually is.
In transition? Learning to work through your fear of money? Join us and take back your cash!