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An interview with a person who is better with money than I am.

Posted in Uncategorized

So, you guys know that I rarely make sponsored or commercial posts. When I do, it’s usually because I think you can take something away from the post, even if you don’t necessarily purchase or utilize the product. Or, it’s because I can get free sunglasses and put them on my dog. In any case, when I do a sponsored post I’m always up front about whether or not I’ve been compensated for making the post. In this case, I have not. But when Marianne from Personal Capital contacted me about doing a post on female financial role models, I thought “this is something I probably need to address more in my own life, and I’m sure some of my readers are in the same boat.” So that’s why I’m bringing you this commercial-oriented post today.

After reading a CNBC article wherein she learned that only 53% of women have started planning for retirement (in comparison to 65% of men), Marianne was inspired to reach out to bloggers to ask them, “who is your female financial role model?” And when she reached out to me, I realized that I didn’t really have one. All the women I know are in the same boat I am. The boat is leaky, and full of holes through through which debt swamps us, and all our money gets washed overboard. And depending on your generation, socioeconomic status, level of education, and all kinds of other variables, some boats are More leaky than others.

Such is the case with the woman I decided to profile. Because even though she isn’t necessarily doing better than any of the other women I know, I thought she was a pretty good example. This wonderful friend of mine didn’t want to share her real name when talking about money, and I told her that I would refer to her as Cherie. But I lied. I’m going to refer to her as Professor McGonagall, due to the fact that she is a cat lady.

Professor McGonagall  is a single woman who has recently bought her first house with some help from family. She’s an office manager for a small local business, and she keeps a budget religiously. “I keep a little notebook where I track every transaction, so plus or minus. It’s just like keeping the check register that the bank sends you. I just know how much money I have left for groceries and gas and fun things, after all the bills, because all the bills get paid first,” she says.

Even though her budget structure is fairly simple (“I get paid every week. I have a master list of when everything is due every month. Like, my cable is always on a certain day, or my mortgages on a certain day. And every week, I budget out what’s due. Even though I don’t pay my mortgage every week, I deduct a certain amount from my checking account so it’s like I don’t have the money.”), Professor McGonagall stresses that keeping track of her finances is a priority: “If you live paycheck to paycheck, you know that you have to keep a strict weekly or biweekly budget, because otherwise you’re just going to run out of money.”

When I asked Professor McGonagall how she learned to do this, she answered, “By f–––ing up by not doing it in the first place. It just made sense to me.”

This highlights one of the major problems Gen Xers and Millenials are running into: no one bothered to teach us any of this. Even in economics class in high school, we learned precious little about keeping a household budget, balancing a checkbook, or navigating credit card interest. “I really wish I would have known how credit cards work,” McGonagall  says. “Even in college, I didn’t realize how debt worked. I didn’t realize how interest works. I just wish I could have known how credit worked when I was younger.”

Professor McGonagall isn’t a fan of credit cards. “I feel like they are the devil. But unfortunately, in this economy, you have to have a credit history to get anything. When I wanted to buy my house, I didn’t have any credit cards. The first thing the bank told me was, ‘you have to get a credit card.’ I had to spend  small amounts on it to boost my credit, because no credit is worse than bad credit. So basically, because I didn’t have a car payment or anything else I was doing that wasn’t just bills for utilities or cable or rent or something, I didn’t have that. If you are operating without credit cards or loans of any sort you don’t have a credit history.” She says she would absolutely live a debt-free lifestyle, “If that made sense in the world economy, I would do that.”

Even living on a budget for fifteen years isn’t a guarantee that things will always go smoothly. McGonagall reevaluates her budget every single month. “I feel like, and this just happened to me, I was trying to use a sliding budget instead of a budget every week, and it bit me in the a–– to the tune of I don’t have any money left in savings. So I have to reevaluate every month. Usually I plan on a set amount. I’ll budget a hundred dollars for my electric bill, even if it’s not going to be a hundred dollars. But I already planned on how to cover it if it was higher. And then all that money ends up going to something else that I need.”

I asked Professor McGonagall if she’d put away anything for retirement. “Frankly, I can’t afford to save for retirement. I’m basically, at this point, just making enough to cover my bills and my groceries and my gas. Certainly nothing is going to retirement.”

I feel like universally, women make less than men, and I think that the money they do make is expected to go back into the household. I think that a lot of times women saving for retirement takes a backseat.” Since her answer echoes the statistic that so alarmed Marianne, it seems like we may be seeing a bit of a crisis when Gen Xers reach retirement age. They may find themselves working well past the average age of retirement we expected in years past. More positions occupied by workers who should be moving on to retirement spells trouble for the generation entering the workforce.

So, what’s the solution? Saving money for retirement.

While it’s not possible for everyone, it doesn’t hurt to check into the possibilities. Personal Capital has come up with a retirement calculation app to help you do just that. I believe you have to sign up for a free account on the Personal Capital website to use it. I haven’t used the app myself, so I can’t endorse its services, but if you decide to use it, please share your experiences in the comments. And if you have a female financial role model story of your own, you can share it there, too!

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20 Comments

  1. Molly
    Molly

    It feels a bit weird to comment on a sponsored post, but I just want to add that starting early makes a huge impact. Not that people who didn’t should feel bad, just that if you’re 22 or 25 or 28 with your first job, putting even $50 a month into a nice safe market-tracking index fund and NEVER TAKING IT OUT UNTIL RETIREMENT–that part is key–adds up to a fuckton of money later*. Getting it pulled right out of your paycheque helps immensely, if that’s an option.

    *barring 1) the market crashes, you panic and sell–but that’s breaking the NEVER TAKE IT OUT rule–or 2) there’s such a completely catastrophic world change that the market never ever recovers, but in that case it’s not like you won’t be busy dealing with, like, access to water instead of worrying about retirement savings.

    (I try to be other people’s female financial role model, when I can!)

    November 11, 2015
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  2. Saki_Fiz
    Saki_Fiz

    My spouse and I use Personal Capital. My husband started just using the app, but when we decided we needed to shop around for new financial advisors last year, we ended going with Personal Capital for that as well. After about a year, we would definitely recommend the app for everyone. The service is good as well if you are looking for full service planners.

    One thing I want to say is that credit cards don’t have to be evil. If you are able to stick to a budget and pay off your credit card every month, they can actually be good things. 1) Get a card with cash back rewards. Free money right there. 2) Credit card fraud is less stressful to deal with than bank card fraud since you don’t have to wait for the bank to replace the money in your account.

    November 11, 2015
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  3. Laura
    Laura

    I definitely think budget creation and debt management is something that needs to be integrated into the standard school curriculum. I never had it in school except as a kind of aside to a lesson about copying formulas through Microsoft Excel spreadsheets in a computer class. We were supposed to set up a sheet saying we spent $1000 on a credit card, then with x interest applied and x minimum payment copy the formula they gave us to see how long it would take to pay off the balance. The point of the lesson wasn’t even to teach us about credit cards or managing that type of debt, but I have NEVER forgotten how far down that spreadsheet I had to copy that formula until the balance was zero. It made a huge impression on me and I remembered the lesson later when I started using my own credit card, applying for student loans, and making “big kid” purchases like my car.

    November 11, 2015
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  4. goddesstio
    goddesstio

    I always thought I was good with money – my mom’s an accountant and a big sale-shopper (as in always gets the best deals on things, borderline couponer) and for the longest time I was set. Then in the one-year gap between when I was too old to be covered by my parents’ insurance and when I got a job with insurance, I was sent to the hospital for 3 days. I immediately dug myself into a debt pool with those bills and only recently got out with my mother’s assistance. She took out a home equity line and let me put my credit card debt on it instead, for about a tenth of the interest.

    Credit card aren’t evil but no one seems to understand how to use them responsibly. And once you get yourself in, it’s hard to get out. If you pay the minimum on them, you’re paying probably about 75% of that towards your monthly interest, and 25% or less towards the actual card balance. Meanwhile you tend to just stack up more purchases on them. It’s tough.

    November 11, 2015
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  5. Jo-Ellen
    Jo-Ellen

    I can’t say enough good things about mint.com as far as budgeting goes. I just started it a few months ago, and it has helped SO MUCH as far as being able to see where ALL of our spending goes, and having all of our accounts and cards and debts in one place. To me it’s like a fun game of “how much less can I spend this month?!”

    November 11, 2015
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    • Rachel
      Rachel

      I second that! I love Mint for budgeting. It keeps track of everything (debit, credit, loans), and even does a pretty solid job of sorting it for you (you went to Taco Bell, it sorts it into your food budget; you went to Kohls, it sorts it into your clothes budget, etc). It helps you realize how much you make, how much you spend on certain things, and even recommends savings goals.

      I have never had a female financial role model. My parents are definitely an example of “do what I say, not what I do.” My brother is probably the best financial role model for me.

      November 11, 2015
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      • Jo-Ellen
        Jo-Ellen

        I recommend mint.com to anyone who will listen to me!!!

        I never thought of anyone as a financial role model either…my parents were definitely VERY good with money. I spent my whole childhood hearing “live below your means” so I try to do that as well. Which can be tough, but I think some of the best guidelines you can get!

        November 11, 2015
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  6. Alana
    Alana

    Hang on – so you don’t have compulsory employer contributions to superannuation in the US? That’s how it works in Australia: you work, ergo you are saving for retirement in a fund you can’t touch until that day. Your employer has to put 9.5% of your salary, minumum, in a fund of your choosing. The idea is that no one should need to live on welfare payments when they retire. Of course, with many people (particularly women) not working steadily and building up superannuation, many will still have to rely on the pension. But at least you don’t have to worry about putting money aside from your salary.

    November 11, 2015
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    • Alana
      Alana

      Isn’t that what ‘Social Security’ means in the US? Or have I misunderstood all those movies where they look for someone’s social security number?

      November 11, 2015
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      • Bridget Craig
        Bridget Craig

        The employee gets 6.2% taken out for social security and the the employer pays 6.2%. But what you get back as a monthly social security check when you retire is (as far as I can tell from my calculations) is only about 70% of my net monthly salary. So I guess if you can live on 70% of what you are making that’s fine, otherwise you end up having to work longer or take a part-time job after retirement.

        November 11, 2015
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      • kayenjee
        kayenjee

        No. Social Security is not guaranteed. It is not so much a savings plan as a future IOU. The money is paid into the Social Security system but that money is used to cover the people currently receiving Social Security. There is no guarantee that in 25+ years that the system will 1) still exist or 2) have enough money to pay out what I paid into it. Long story short, Social Security is not a retirement plan.

        November 14, 2015
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    • Outside of Social Security, many businesses offer a 401k plan , where you pick your level of contribution. There is an annual cap to how much you can contribute and not every business place matches that contribution. It’s all pre-taxed money.

      November 12, 2015
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  7. M
    M

    My female financial role model is my mom. I was taught how to save with my 25 cent/week allowance as soon as I was old enough to not eat coins. I was directly taught how to make long-term financial goals, and my mom did all her budgeting and check balancing out in the open, explaining as she went. Our money situation was pretty dire, and my parents got into debt because it was that or starvation. That taught me to avoid frivolous debt (I’ve always paid off my credit card statements, But I have taken out conservative home, car, and student loans at various times in my life).

    I did get directly taught in school how to save for retirement, how to make a budget, etc. It’s sad those programs are gone now.

    November 11, 2015
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  8. Megi
    Megi

    My love and I have been using You Need a Budget (YNAB) for a good few months now and it works the way the note book Mrs McGonagall uses.

    You get “buckets” you allocate money to each month and use the program to track out-goings and incomings. They also give free tutorials on how to use the it and general financial advice.

    It costs money to buy but it has really helped us realise where all our money goes.

    November 12, 2015
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    • Toffeemama
      Toffeemama

      I want to give a whole-hearted second for YNAB. That program helped me and my husband get out from way too much debt!

      My favorite feature is the phone app; you can keep track of your purchases as you make them, so there’s no selective memory loss when you buy something! We used to make our budgets on paper, but that didn’t work so well for keeping track of our actual spending, especially since we do everything in a joint checking account. Now, it’s super easy to keep track of every penny, without having to feel “miserly” about it.

      November 16, 2015
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  9. Carol
    Carol

    Millennial here, and I have never really had a problem with budgeting, but then perhaps the secret is growing up so broke and in a household so money obsessed that you feel automatically guilty about spending anything more than you have to.
    Also never understood why some people don’t understand debt? You spend more than actually have, that’s debt. Surely not a difficult concept?

    November 12, 2015
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    • monkyvirus
      monkyvirus

      It’s more that debt isn’t just spending what you don’t have but also the fact that most of your debt will gain interest or fines. Like I have a student overdraft which is great but 2 years after I graduate it has interest start. Not everyone finds it easy to keep on top of that.

      I’m an easygoing mellenial budgeter: don’t spend what you don’t have but treat yourself when you can. But then we have universal healthcare and small student loans so I don’t feel like I’ll fall in to the massive debt I feel happens in the US (usually through no fault of their own).

      November 12, 2015
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  10. My husband and I are not so great at budgeting, but we do save for retirement thanks to my sister. She’s a HUGE advocate of retirement savings, so when we got married she handed us a check and said, “My present is your future. Go open an IRA for each of you.”

    It wasn’t a huge check, but it was enough to get started, and we put $50 in each one every month, no matter what. And when we have extra money, that generally goes into the IRAs also. We calculated it out what we need to save by the time we’re 70, and a few months ago I got all excited because “We’ve saved enough for almost four months of retirement!” Whomp whomp. But it has many years to grow, thank goodness.

    November 12, 2015
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  11. kayenjee
    kayenjee

    My mom taught me A LOT about finances, saving, credit, etc. I had a savings account before I was 1 and my first job the summer before third grade. When I got money for my birthday, I saved it. We had honest conversations about credit, and I learned at a young age how to manage a bank account. We did not focus on budgeting, but I suppose it was implicit. Some things I had to figure out on my own were: how credit scores are calculated, how to build my credit score, and navigating a home mortgage. My mom did give me a much better start than many of my peers. (I’m 30)

    November 14, 2015
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  12. Phoenix
    Phoenix

    I’ve always been thouroughly confused by the claim that we weren’t taught how to manage personal finances. I was born in 1989 and I first learned to balance a budget and trade stocks in 5th grade. And believe me, we had to do this repeatedly throughout the years with increasing levels of complexity. Obviously not everyone’s education is equal, but I find it hard to believe that no one outside my school district was ever taught this. Like not even once?

    Of course I am still shit at struggling to survive off of my paycheck, so what do I know?

    December 14, 2015
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