Dear Girlfriends,

I can tell you right now that you're not going to like this topic. Why? Because it's about saving money, not spending it. And that's hard for many of us (me included) when there are so many cute shoes and handbags calling our name! But if we want to be women who live a life of balance and are secure about our future, we have to dive into this icky topic. Please don't turn the page. This is really important.

I hosted a Think Tank of twenty-something women last summer to learn more about the things that challenge and concern young women most when it comes to balance. The number-one question from this college-educated, articulate, already successful group of women was: How do we get smarter about money? How do we save more? They intuitively knew their finances were tightly coupled with their sense of balance, but they also knew that something was amiss.

After their exchange of financial frustrations, they came to the unanimous conclusion that they felt peer pressure to spend too much money on things like evenings out, and nine out of ten admitted they hadn't a firm grasp of the concept of delayed gratification. How could they? They were raised by parents like me who wanted our children to never go without; in addition, they live in a society where there is so much stuff competing for their hard-earned dollar. When I was their age - we didn't have a Starbucks or Ann Taylor Loft on every corner!

After the evening ended it dawned on me that what these gals really need is a goal. A tangible financial destination so they can measure their success along the way - or improve their disciplines in order to achieve their desired result.

So let's see how this might work.

Let's say that you're 30 years old, earning $55k per year, and your goal is to amass $1 million by the time you're 65. In order to do this, you'll need to save about $467 per month. Wow! That seems like a lot of money when you're probably not at the top of your earning game. But we all know there are probably a few things we really can do without:

Eliminate 2 fuzzy-icy-coffee drinks $7.00
Pass on 1 salty-icy-tequlia drink $7.00
Skip that new blouse $32.00
Cook Sat. night dinner rather
than dine out $45.00
Wear last year's necklace $16.77
Total weekly savings $107.77 per week X 52 weeks per year = $5,604.04

$5,604.04 saved each year (about 10% of your salary) and invested over 35 years, with a compounding interest of 8% will net you a smidge over a million bucks. Is this too aggressive for you? Start with saving $53.54 per week; at the same compounded interest and term, you'll net $500,000 . . . that's 50 times more than 58% of female baby boomers have saved today.

I often hear women say that they deserve that new blouse. Really? I think what you deserve is something that will last long after that blouse has gone out of style. What you deserve is peace of mind. Consider the greater sacrifice: not going shopping on Saturday or living large for the last 30 years of your life.

"When we detach emotions and money, we can take the steps we need to in order to avoid feeling helpless. According to the National Center for Women and Retirement, of those women who say they feel in control of their lives, 56 percent of them saved and invested monthly. Of the 42 percent who said they felt out of control, only 17 percent made savings and investing for retirement a priority. There's a direct correlation between how well a woman takes care of herself financially and how good she feels about herself." Liz Perle, Money, A Memoir: Women, Emotions and Cash

Divide your portion to seven, or even eight, for you do not know what misfortune may occur on the earth. Proverbs 11:2

Step three in securing your freedom to choose: develop a goal and a savings plan; then stick to it. You deserve it (and the smaller jean size that accompanies kicking the high-cal drinks is a bonus).

Spending purposefully,
Ellen

Posted by Ellen on February 20, 2007 11:41 AM  |  Category: Work/Life Balance and the Debit Card