How To Get A Handle On Your Money (Part 2)
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Welcome back to How To Get A Handle On Your Money - Part 2! If you missed Part 1 last week (you can find it here), I asked Victoria Sechrist, a personal finance coach based in New England, to lend us her financial expertise and give us her best tips. In Part 2, she talks about common money mistakes, setting money goals, and more!
If you read Part 1 of this series, hopefully you’ve collected all of your financial data and have started tracking your spending. You’re one step closer to living in financial truth! Which means you don’t have any illusions about your financial situation; you know exactly where you stand.
Are there any specific financial goals that women in their 50s and 60s should be focusing on?
I encourage women to set their own goals and not choose goals based on what other people think they should do. This is a question each woman will have to answer for herself. Most commonly, women in their 50s and 60s are thinking about what they want retirement to look like (when and where), how they plan to pay for healthcare, and how their role within their families as their children become more independent and/or grandchildren enter the family.
One goal that I think should be universal, regardless of age, is an emergency fund. This is cash equivalent to about six months of living expenses. Some people are more comfortable with 12 months. I recommend an online free savings account.
I also want to mention estate planning. I’m not an attorney, so I can’t advise on this other than to say I suggest getting your affairs in order. Nowadays, you don’t have to necessarily work with an attorney one-on-one because there are a lot of online services, including https://trustandwill.com/.
How can a woman who is feeling anxious about her retirement coming not let that fear drive her financial decisions?
Any type of financial decision made in a rush is usually one that is made out of fear. If your brain is telling you that a certain financial decision is “now or never” then you’re making a choice out of a stress response.
The goal isn’t to avoid being anxious; the goal is to notice when you’re anxious and say, “I’m not going to make a decision from this place.”
Start by noticing when you feel anxious. Is it when you hear other people talk about retirement? Is it when you check your account balance?
How can women over 50 create a budget that works for their unique needs?
Anyone creating a budget needs to be honest with themselves about their spending. In my work with hundreds of people, most people grossly underestimate how much they’re spending outside of bills. This would be on things like groceries, dining, shopping, gifts, and things that pop up. Once you’ve tracked your expenses for two months in an app like Rocket Money, I would build your budget. Use a spreadsheet or use the app to designate things that are bills (the same cost every month, like your rent or mortgage) and things that vary in cost but still occur every month (like groceries and gas).
Then, at the start of each month, revisit the budget to see how close you were to what you planned and then budget in one-off expenses for the upcoming month. An example would be if you were going to a wedding and needed to buy a gift. Think of a budget as a living document.
How can a woman living alone due to divorce or the death of a spouse plan for and embrace the idea of single life with financial confidence?
This can be a very tough time, and I encourage women not to put pressure on themselves to “figure things out” right away. Yes, it’s scary to think about providing for yourself now or managing the finances when you used to rely on your spouse to be on top of investments, banking, etc.
Like I recommend in Part 1, getting all of your financial data in one place so you know your situation. Countless people assume their finances are in disarray, only to discover they’re actually doing better than they realized!
You may need support during this, and I encourage you to seek it out. No one expects you to know everything about finances!
Consider meeting with a Certified Financial Planner professional to discuss your situation. This could be a one-time session or part of an ongoing-relationship. You can find a list of local CFPs on https://www.letsmakeaplan.org/.
Your local library may have free financial workshops. Check your local senior center for events, as well. If you’re active on social media, you can find a lot of supportive Facebook groups, where women swap financial tips. Renata Joy’s Pure Joy Squad is an example of a community of like-minded women seeking wellness! The point is, you don’t have to do this alone. If you don’t get “good vibes” from someone, you don’t have to move forward with them. You should feel comfortable with a financial professional, just like you do with your medical doctor.
What are some common mistakes that women over 50 should avoid when it comes to their finances?
The most common mistake is not living financially intentionally, both in behavior and in mindset. Let’s start with mindset because our mindset is the soil for our behavior. If you hold any of these beliefs, then it’s most likely affecting your finances in an unproductive way:
“I’m already behind, and I’ll never catch up, so why even try?” (My response: You’re behind in what way? How do you define that?)
“Everyone else has money figured out, so there must be something wrong with me.” (My response: Trust me, most of the financial security you think you see around you is actually precarious. I’ve worked with dozens of clients who look wealthy and financially secure on the outside but are actually dealing with intense financial anxiety and mountains of debt. Projecting an image of financial prosperity is a coping mechanism for them.)
“Everyone in my family is bad with money, so I’m doomed to be that way, too.” (My response: Being “good” or “bad” with money is not a gene!)
“The only way to afford the life I want is to go into credit card debt.” (My response: As long as you keep believing this, you will continue to go into credit card debt.)
If you have these thoughts, you’re not alone at all! Most likely, they’ve become auto-pilot for you and you don’t even question them. But all of them come down to a lack of hope, when there is abundant hope!
For common financial behaviors, here’s what I see:
Waiting to save money until all your debt is paid off. I know it’s tempting, but I suggest saving and paying off debt at the same time, even if it takes you longer to pay off your debt. That’s because you may be humming along paying down credit card debt and then all of a sudden, your car breaks down and you have to pay a couple grand out of pocket. If you haven’t been saving, there’s no money to pay for it, so you’ll just go right back into credit card debt.
Avoiding looking at statements. Yes, it can be uncomfortable at first to face the truth of your finances, but think of all the stress you’re bringing upon yourself by not looking and living in uncertainty.
Jumping into a “too good to be true” financial product. Again, it’s tempting to throw your money into a product that promises guaranteed income for life or a fix to all of your financial problems, but no product is going to be a panacea. Get a second opinion and consult trusted family and friends about a product you’re considering, like an annuity. Do some of your own research online. Ask the person selling the product how they make money.
Subsidizing your child(ren)’s life when you’re struggling financially. Some women feel obliged to help their kids, but they do it to their own detriment. If you’ve determined you can’t financially swing it, be honest with your kids about it. Your kids will be OK. They have so many more resources at their fingertips to level up their finances than you did growing up! That being said, if you’re able to pay your own bills and save and you want to help your kids, there’s no shame in that, either! But if you put yourself into financial trouble helping them now, they may be the ones who have to help you later.
I hope you found this financial advice helpful!! Shoutout to Victoria for her expertise - so grateful to have her as a featured Pure Joy Wellness expert! For more expert advice on finances, health, longevity, and aging well, make sure to join the Pure Joy Wellness Squad on Patreon!
Xo,
Renata