Do you ever worry about ending up "a bag lady"? If so, you are not alone. And if current trends don't change, that fear is not entirely irrational. Last week Merrill Lynch hosted an online presentation about the state of women & retirement. In our CrazyBusy 24/7 world it's so easy to tune out when listening to any presentation - especially online. This webinar however, kept me glued to the screen for an hour... and I didn't even multi-task. Alas, since then I've been struggling to find the right words to describe why I found it so gripping. (You can watch it too by clicking here). Fast forward to today. As I write this, a friend's husband has just been rushed to the hospital. He's struggling with stage 4 cancer. They have a 5 year-old daughter. In the context of literal life and death, the point of this webinar suddenly became very clear to me. In a word: choice. What I took away from this talk was that in order to have flexibility and choices - especially during life's inevitable speed bumps - it sure helps to have your finances squared away. Money can't solve your problems, but it can be a very useful tool when navigating through them. Yet in order to have money during the rough patches, you've got to make some trade-offs ahead of time when things are good. And that goes against natural human nature. So to get your wheels spinning about what trade-offs you might want to make, here were my top three take-aways from the Merrill Lynch "Women & Retirement" webinar:
  • Women need to save more money than men. You've heard it before but it's worth saying again and again. Women live longer than men. Just look at the male/female ratio in nursing care facilities. Therefore to support ourselves in old age we need to save more than men. Panel moderator and former ABC World News Tonight anchor Charlie Gibson highlighted healthcare estimates for retirees of $170,000 for men versus $240,000 for women. Alas, women today are retiring with 2/3rd the assets of men according to the President of Merrill Lynch Global Wealth & Investment Management, Sallie Krawcheck.
  • Women have unique challenges to finding that money to save. Women are still doing two times the housework and three times the childcare of men - so simply finding the time to focus on finances is a challenge. As an added headwind, we're not asking for raises at nearly the same rate as men (Krawcheck guesstimated that men ask her for raises at a rate of 50-to-1 more frequently than women. Fellow panelist and USA Network founder Kay Koplovitz concurred). "Asking For It," financially speaking, is a topic I've discussed in the past and if reader emails are any measure - many, many of us women struggle with this (yep, me too). And when we step out of the workforce to care for kids or aging parents we see a nearly 15% drop in earnings after just 1 year. And that drop in earnings grows to nearly 50% if we stay out for 3 or more years. Ouch.
  • Women respond differently to the marketing messages and tactics of the financial services industry. Research shows that when people hear financial jargon, both men and women get confused. Men, however, tend not to let that confusion bother them whereas for women it really turns them off the subject. Additionally both Koplovitz and former Morgan Stanley financial advisor and best selling personal finance author David Bach commented on how the dynamic of money discussions shifts dramatically when the group is all women versus the introduction of even a few men (as a graduate of a women's college - I so get that). Alas, guess who is still doing most of the talking in financial services? Yep, men.
So what does this all mean for you? This money stuff is stressful for both genders. As our nation's economic foundation continues to shake, rattle, and roll - we all have to learn new skills. But listening to this webinar reminded me yet afresh how vital it is for women to master their money. If there is one piece of financial advice I'd highlight it would be Krawcheck's observation that women need to save: "first, harder, and faster." Or as I like to say, the three most powerful words in all of personal finance are "start saving now." What concerns or questions do you have about aging and retirement? [This post originally appeared at] Want more financial love? You can follow personal finance expert & author, Manisha Thakor, on Twitter at @ManishaThakor, sign up to get her email updates delivered right to your inbox here, and enroll in her innovative online basic personal finance course called “Money Rules.”

Commuter Spending Accounts Can Help!

Recently a friend emailed me a photo from a gas station. It showed a $100 price tag for filling up the tank on his 2004, fully-paid-for SUV. The message said:  "Holy Cow - I've never seen a bill like this before." Welcome to the new normal in transportation. Millions of consumers who are already reeling from job losses, stagnant wages, and declining home prices now have a new life challenge to add to the list: the specter of $4/gallon gasoline. According to an Associated Press poll, a whopping 4 out of 10 Americans are experiencing financial hardship due to rising gas prices. With the average family spending $110 or more a month on gas than they were just six months ago, it's no wonder many people are finding themselves “gas”-ping for relief. So what can you do to help ease the financial pain? Check with your employer to see if they offer a Commuter Account. This nifty employee benefit enables you to pay for commuting-related expenses, such as public transportation costs (think: bus, subway, train, ferry, bicycle and vanpool expenses), as well as parking (either near public transportation or at work)...with pre-tax dollars. Those last three words, "with pre-tax dollars," contain the hidden treasure. In plain English, that phrase means you could save up to 40 percent on these qualified commuter-related costs. The reason is that, when you sign up for a Commuter Account, the money used to pay for those expenses comes right out of your paycheck before Uncle Sam takes his share, so you are not taxed on those dollars. Another neat feature of Commuter Accounts is that they are quite flexible. You can sign-up (or sign-off) on a monthly basis throughout the year. This monthly enrollment feature is in contrast to the other types of pre-tax benefits, like health care flexible spending accounts, which limit your ability to sign-up to just once a year during open enrollment period or when you experience a qualifying life event, such as the birth of a child. As luck would have it, around the corner on June 16th is "Dump the Pump" day. This is a nationwide celebration of the myriad of ways in which we can each rethink our transportation strategies. So if you are driving yourself to work each day and getting sick of the prices at the pump, this is a great time to think about switching to public transportation, as well as taking advantage of Commuter Accounts to pay for your qualified commuting expenses. Shockingly, only 1 in 5 workers eligible for Commuter Accounts takes advantage of this money-saving benefit. That's why I've teamed up with WageWorks to help raise awareness around this cost savings opportunity. And given that signing up for this benefit is like getting a coupon for up to 40 percent off qualified expenses, you’ll want to run—not walk—to your benefits office to see if you are eligible. Last but not least—let's talk bottom line. How much could you realistically expect to save by taking advantage of these types of programs? Well, each month participants can contribute up to $230 for public transportation and $230 for parking costs - if the parking lot is near the workplace or used to get to the workplace. (To get a sense of the cost savings for your specific situation, check out this nifty online calculator). Assuming full use of these benefits is made by a participant who is in the maximum tax bracket, annual savings can be in the $1,800 to $2,200 range. Now that's something worth "gas"-ping about...but this time for joy. [This post originally appeared at] Want more financial love? You can follow financial literacy advocate for women, Manisha Thakor, on Twitter at @ManishaThakor, sign up to get her email updates delivered right to your inbox here, and enroll in her innovative new online personal finance course called "Money Rules."

What's Your Retirement Plan?

A recent study by Transamerica's Center for Retirement Studies concludes that for a large portion of folks, "never retiring" is their plan A. Alas, a significant percentage of the eager-to-keep-working population is unprepared with a plan B in case they find themselves involuntarily removed from the workforce. And as Catherine Collinson, President of Transamerica's Center for Retirement Studies points out, "Planning not to retire is simply not a viable retirement strategy." Here are the three stats from this extensive TCFRS survey that struck me smack in the gut. I'll follow them up with some action steps that you can take to make yourself a role-model for preparing for the new retirement realities.
  1. American workers estimate their median retirement savings needs at $600,000. Unfortunately, a mere 30% currently have over $100,000 saved in retirement accounts. With a $600,000 nest egg, you could withdrawal $24,000 a year (based on the 4% rule). Add to that Social Security which right now could run from say $13,000 - $23,000 a year depending upon your household composition and work history and you are looking at retirement income in the range of $37,000 to $47,000. That works.  But at a level of savings below $100,000 you are looking at something closer to $22,000 in annual retirement income (using midpoints). Ouch. Not nearly as pretty of a picture.
  2. Just 9% of workers frequently discus saving, investment, and planning for retirement with family and friends. This topic is the massive pink elephant in the room. If you are not talking about it, you are likely not taking action steps toward preparing yourself for it. Would you expect your kids to make wise career decisions if you never talked about the subject with them?
  3. Only 10% of workers have written out their retirement strategy. Would you attempt to build a house without plans and blueprints? Of course not. The same goes for you retirement planning. A little advance preparation can go a long way.
So yada, yada, yada - you might very well be thinking. What the heck, Manisha, can I actually do about this in MY LIFE TODAY?  Here are my top 3 tips for you, inspired by Catherine Collinson's extensive and excellent work on the topic.
  1. Teach yourself to financially fish. Just like you seek out an expert guide with your physical health or your spiritual development, commit to educating yourself about the basics.  You can take the inexpensive online financial literacy course I offer, Money Rules... For Women (meant literally & figuratively) for $39... or go to your library and read one of the many wonderful personal finance books and magazines available. One of my favorite's is Michael R. Piper's CAN I RETIRE? I also strongly recommend reading Mark Miller's wonderful blog, Retirement Revised. Two websites I love with great retirement calculators are EBRI's Ballpark Retirement Calculator and FIREcalc's.
  2. Participate! If your workplace offers a 401k, 403b, or 457 plan - contribute the max you can afford.  And if not offered, remember you can open up an IRA on your own at the financial institution of your choice. While participation rates are creeping up, 1 in 5 eligible employees still are not participating in the valuable employee benefit.
  3. If you are over 50, take advantage of catch up contributions & consider intergenerational or multi-inhabitant households. For many people over 50, the math of a the "traditional" retirement just doesn't work.  And if you have loved ones - and especially young working women in your lives - please share with them this recently released data from a Capital One survey which disturbingly shows recently graduated young men are kicking our female toushies when it comes to higher saving rates, increased use of mobile/email alerts, and regularly checking credit reports. These are key steps for 20, 30, and 40 somethings  - and especially women - to take to avoid much of the potential pain heading the way of baby boomers (see my last post on The 77/11 Effect and the implications for working women).
What about you - do you talk about retirement planning in your household?  Do you have any tips to share with fellow readers about what has worked well for you?  We'd love to here your thoughts! [This post originally appeared at] Want more financial love? You can follow Women's Financial Literacy Initiative founder, Manisha Thakor, on Twitter at @ManishaThakor, sign up to get her email updates delivered right to your inbox here, and enroll in her innovative new online personal finance course called “Money Rules.”
When you hear that women earn less than men... do your eyes glaze over? If you are like me, you've heard the statistics so often they almost don’t register:  Women earn $0.77 on the male dollar, spend an average of 11.5 fewer years than men in the paid workforce (raising children and tending to elderly parents), and live longer.  So we need larger nest eggs to fund our retirements. Yadda, Yadda, Yawn... right? But run a few calculations and you'll discover that "The 77/11 Effect," as I'll call it for short, can be devastating. To illustrate, let's compare the retirement saving experience of Joe vs. Jane. Joe starts saving $5,000 a year at age 25 (10% of a $50,000 salary). Joe saves this same amount annually until age 70 and earns an average compound annual return over that time of 6% by investing in a balanced mix of low-cost stock and bond mutual funds. At age 70, Joe has a retirement nest egg of $1,063,717. Now, let's look at Jane. Jane also starts saving 10% of her salary at age 25. Alas, Jane only makes 77% of what Joe does so her contribution is $3,850. Jane keeps this up until age 30.  Jane then takes 11 years (rounding here...) out of the paid workforce to raise her kids. At age 41 she re-enters the work world and once again begins saving $3,850 a year until age 70.  Both the retirement money she saved pre- and post- children grow at 6% a year on average. At age 70, Jane has a nest egg of $506,742.  Or said slightly differently... Jane has 1/2 of the nest egg that Joe does as a result of "The 77/11 Effect." Stunning, isn't it? Now a few caveats about the data - there are several ways to calculate the wage gap between men and women, with resulting figures ranging from $0.77 to $0.81. Likewise, I've seen different stats on how long women spend out of the paid workforce, ranging from 9 years to 11.5 years. But even using the "best case scenario" of $0.81 and 9 years - we still end up with Jane having a nest egg of $533,066 or a mere 53% of what Joe has. Given at birth Jane is statistically likely to live 5 years longer than Joe - a range that will grow over the years and get closer to 7 years more by the time she reaches retirement, you can see that we have a problem brewing. And it's not a small one, as revealed by some stunning survey results from and ING Direct in a hard-hitting piece aptly titled "Women Drop The Ball On Retirement." In future posts I'll talk more about this issue of women's earnings and pay disparity. But today, I just wanted to put some cold hard numbers to these oft quoted statistics that are so easy to gloss over. [For more on the impact of women's life / work choices, I highly recommend reading Leslie Bennett's wonderful book, THE FEMININE MISTAKE]. Do you have anyone in your life who will be affected by "The 77/11 Effect?"  If so, what advice would you give them? [This post originally appeared at] Want more financial love? You can follow Women's Financial Literacy Initiative founder, Manisha Thakor, on Twitter at @ManishaThakor, sign up to get her email updates delivered right to your inbox here, and enroll in her innovative new online personal finance course called “Money Rules.”
If you could rewind your life to graduation from high school or college, what would you have done differently with your money? Confession: I'm a financial voyeur. For as long as I can remember I've been fascinated by the unique relationships people (and especially women) have with their money. So when I was recently asked by my Alma Mater, Wellesley College, to serve as a Financial Fellow in residence and create some unique personal finance programming for students and alums, I jumped at the chance. One of the most popular events we held was called "Powerful Women & Their Pocketbooks."  In this session, I asked three VERY successful Wellesley alums (C-suite level, corporate board member, business founder, etc.) what their best and worse financial moves were right out of college. By design, we did not compare notes before-hand. Alums were from the classes of  '68, '73, and '90 - so spanning various stages in businesses receptivity to women leaders.  What struck me the most was how incredibly similar our best tips (& worst trip ups) were despite very different ages, career choices, and life experiences. The top three pieces of advice every one of us gave were:
  1. Learn to live within your means right out of the gate - and understand that means your life likely won't look like mom & dad's right away.
  2. Bow down and respect the incredible power of compounding - start saving right out of school no matter how hard it hurts & how unpleasant the tradeoffs.
  3. Be an advocate for your own financial security - whether in the workplace or on the home front.
The biggest mistake all four of us ‘fessed up to, had to do primarily with points 2 & 3.  In my case, my dad had to drag me kicking and screaming in my early 20s to move my hard-earned long-term savings into equities (I'm incredibly risk adverse).  My other big mistake was thinking that if I just kept my head down, was a "nice girl," and worked my backside off... my work would speak for itself and there was no need to proactively negotiate my salary. So, if you have a young grad in your life - I'd like to ask you a favor.  Please share with them some of your best and worst financial moves.  The more intergenerational dialogue we have about the basics of personal finance the better off this country will be.  And if you are looking for a practical graduation gift, I highly recommend GENERATION EARN, written by Kimberly Palmer, Senior Editor of Money & Business for US News & World Report.  To get your mind marinating about possible topics you can talk about with the young grads in your life, Kimberly kindly shares below some very powerful tips. Note the common themes!  [For more of Kimberly you can follow her on Twitter at @AlphaConsumer, visit her book's website, and read her column in US News & World Report] 7 Money Mistakes Today's College Grads Make (and how to avoid them) by Kimberly Palmer of US News & World Report This year’s college graduates face a particularly daunting array of financial challenges: Hefty student loan debt. A tough job market. Complicated financial options, from Roth IRAs to consolidating student loans. It’s overwhelming, but not insurmountable. These seven mistakes and their solutions, adapted from my book Generation Earn: The Young Professional’s Guide to Spending, Investing, and Giving Back, are designed to help college grads bypass common hiccups and take control of their financial lives. 1. The Problem: Taking on too much debt – or not enough. Too much debt can weigh down recent grads, forcing them to spend more money on interest and fees than on fun and other goals. The new credit card regulations make it harder for anyone under the age of 21 without their own income to take out cards of their own, which could make post-graduation overspending even more tempting and as intoxicating as frat parties are to college freshmen. At the same time, the recent recession has led many young people take the debt-is-bad message too literally. Avoiding loans altogether, however, can hurt college grads. Sometimes, student loans for graduate school or a mortgage are good investments. Being responsible for credit accounts also allows 20-somethings to build their credit history, which is required if one day they want to take out a mortgage, auto loan, or other type of loan. The solution: Build your credit history slowly and steadily, by opening up accounts in your own name and then paying them off on time. 2. The Problem: Becoming victim to rapid lifestyle inflation. You’re a recent college grad, so that means you probably need a new car, new apartment, new sofa, and a new… Wait a minute. Not only do you not need all those things, but you probably won’t appreciate them much, either. A little theory called the “hedonic treadmill” explains why. We adapt all too quickly to improvements in our lifestyle. That 60-inch television that you drooled over at Best Buy will soon start blending in with the rest of your furniture, along with your top-of-the-line coffee maker and pillow-top mattress. The solution: Instead of using your first paycheck to make your new digs look like a sitcom set, spread out your purchases over time. Maybe you need a bed right away, but that embroidered duvet cover from Pottery Barn can wait. 3. The Problem: Falling into bad money habits. Bi-weekly $20 happy hours, daily $15 lunches, and nightly take-out are just a few of the bad habits that eat into new grads’ bank accounts. While the occasional lapse isn’t a problem, repeatedly wasting money on a weekly basis for years will cost you big-time. The solution: Learn to cook, by enlisting the help of friends, family members, or your favorite celebrity chef (via the Food Network). The habit can save you hundreds, if not thousands, of dollars a year, and turn your home into a popular destination for friends. It’s a skill that lasts a lifetime. 4. The Problem: Waiting to save and invest. Sure, you don’t feel like you have an “extra” money yet, and you’re still getting used to seeing your name on a paycheck. But that makes it the perfect time to start saving at least one-quarter of your income for your future goals, including retirement. The first priority is to establish an emergency savings account with at least three months of expenses that can get you through any unexpected bumps, from unemployment to a car accident. Then, start saving for retirement. If your employer offers any type of 401(k) matching program, take advantage of it – passing it up is like saying no to a pay increase. Then, open an after-tax savings account for your other goals, from traveling to homeownership. The solution: If saving any money seems daunting, then start by funneling a modest 2 percent of your income into a high-yield saving account or money market fund. Then, slowly raise that percentage. Once you have your three-month emergency fund stored away, then consider investing a portion of your longer-term savings in low-fee index funds and other more aggressive investment vehicles. 5.  The Problem: Failing to negotiate for a higher salary. Even in this economy, employers expect some haggling over salary and benefits. In fact, doing so is a sign of professionalism shows that you, a recent college grad, understand how the working world works. A simple request after expressing enthusiasm and appreciation for the job offer can eventually lead to hundreds of thousands of dollars more in lifetime earnings. (Linda Babcock of Carnegie Mellon University calculates that not negotiating your first job offer can result in a loss of up to $1.5 million in lifetime earnings.) The solution: Practice your job offer conversation in advance of receiving any potential offers so you’re ready to land a better deal and research your field ahead of time so you know what to expect. If the salary really is fixed, then consider focusing on other benefits, which can be worth as much as a third of the salary but job seekers often overlook. What are the health care benefits? Retirement account perks? Vacation days? Work-at-home flexibility? Decide what’s important to you and get ready for some professional haggling; it usually just takes one round of back-and-forth. 6. The Problem: Thinking you’re done studying. Sure, you have your degree, but unless you attended one of the few schools that teach personal finance, you probably know relatively little about how to build wealth. That makes the post-graduation period the ideal time to take matters into your own hands. The solution: Look for ways to learn more about smart personal finance strategies, and it doesn’t have to be boring. Dozens of blogs, websites, and books make learning about money fun, and many local community colleges and universities offer personal finance courses for local professionals. You might also want to consider forming a money club with friends, where you meet up once a month to talk about your money questions, goals, and research. 7. The Problem: Getting buried in paperwork. There’s no avoiding the fact that being an adult comes with some secretarial duties. Suddenly, you have pay stubs, health insurance forms, tax documents, and credit card statements to keep organized. It’s easy to let them build up until you just want to shred the pile and toss it in the trash. The solution: Take advantage of modern technology by going paperless whenever possible. Online accounts are easier to manage (and, bonus, better for the environment). New websites such as keep your receipts organized online, which is especially helpful at tax time. makes it easy to track your spending and establish a budget. A big thanks to Kimberly for sharing these seven tips. Is there anything you'd add to the list to help recent grads learn from your past experiences?  If so, please leave a comment and share your wisdom! [This post originally appeared at] Want more financial love? You can follow Women's Financial Literacy Initiative founder, Manisha Thakor, on Twitter at @ManishaThakor, sign up to get her email updates delivered right to your inbox here, and enroll in her innovative new online personal finance course called “Money Rules.”

What would happen if you pared your life down to the essentials?

It's been a while since my last blog post. Truth be told, I've been frozen like a deer in headlights. It felt like everything there was to say about personal finance had already been covered in the national media thanks to CNN, CNBC, The New York Times, etc. I wasn't sure I had anything left in me that could help you. And then I royally screwed up. I was supposed to do a half hour LIVE radio interview one Friday night at 9pm EST. The morning of the interview I emailed the show host to confirm the dial-in. Some time in the afternoon we exchanged emails to further clarify the topics we'd be discussing on the show. That night I came home and.... completely forgot to dial in to the LIVE radio show. We'd been planning the interview for over a month. It was for a show whose audience I felt passionate about helping. I adored the show host. And I just completely forgot. It was as if a circuit breaker just flipped in my head. While mortified by my behavior, in retrospect it was a huge wake up call. I had been packing my days so tightly with work, my brain was literally overloaded and had shut down. I was burned out. That got me thinking about whether the overwhelm so many people feel about their personal finances could be caused by packing their lives too tightly. So I turned to my friend, Francine Jay, author of the critically-acclaimed book, THE JOY OF LESS. In this must read book, Francine details how she - and you - can "live lightly" on this earth.  Today Francine shares with us her thoughts on how minimal living can help combat financial overwhelm. Here's hoping this Q&A with Francine will help keep you from missing any important events in your life. [For more Francine, sign up for her Miss Minimalist blog, follow Francine on Twitter, or read her other insightful book, FRUGILLIIONAIRE]. (1) Francine, what is minimal living & what triggered your journey into it? Minimalist living is stripping away all the excess, to make room for what’s truly important to us. It’s about eliminating the clutter and distractions that keep us from fully appreciating life. My minimalist journey began when I started traveling lightly. I realized how wonderful it was to travel with a small carry-on bag, with only the essentials, instead of lugging around a heavy suitcase. When I was on vacation, I found it absolutely exhilarating that I could get by with so little – I felt like I could go anywhere, and do anything, because I wasn’t loaded down with stuff. And I thought, wow, how amazing would it be to live this way, and have the freedom and flexibility to pursue whatever opportunities arise! (2) How has living a minimalist lifestyle affected your finances? Becoming a minimalist was the best thing I ever did for my bottom line. When I decided I didn’t want to own a lot of stuff, my spending plummeted; it’s amazing how much money you save, simply by staying out of the stores. Furthermore, selling my castoffs on eBay and Craigslist was an eye-opening lesson—I learned just how quickly material goods depreciate. Henceforth, I resolved to “waste” as little money as possible on frivolous consumer items. (3) What is your top tip for streamlining the day-to-day financial tasks associated with running a household? Pay with cash or a debit card whenever possible—it eliminates a world of worry (like interest rates, minimum payments, and late fees) from your financial life. Accordingly, reduce your credit cards to the absolute minimum. Learn to say no to all those credit offers and store-branded cards; the fewer bills you have to deal with, and the less temptation to swipe the plastic, the better. Also, put some transactions on auto-pilot. Set up automatic payments for recurring bills like your car loan, mortgage, or insurance premiums—it not only frees up your time, it guarantees you won’t miss a payment and incur late fees or higher rates. I’m a big proponent of automating investments as well... it’s a wonderful, no-fuss way to grow your nest egg. (4) Francine, as someone who has written a personal finance book and a book about minimal living - what is the most common mistake you see people making with their money? ... valuing consumer goods over financial freedom. Chasing trends, status symbols, and the “latest and greatest” technology is a losing proposition; the satisfaction we derive from most such items is short-lived at best. When a newer model comes out, or a “must-have” goes out of style, we’re right back where we started—and with less money (or more debt) to boot.... Financial security creates more long-term happiness and well-being than any consumer item. (5) What are the greatest benefits of living a minimalist lifestyle? Less stress. The fewer possessions you have, the fewer chores and worries you have (in other words, you have less to clean, maintain, repair, insure, protect, and pay for). More freedom. Possessions can be like anchors, tying us down and keeping us in place. When you’re not weighed down with stuff (or the debt used to pay for it), you’re more flexible, mobile, and able to take advantage of opportunities as they arise. More joy. I believe that true happiness comes from what we do, not what we have. And the less stuff we have to fuss over, the more time we have for friends, family, community, and the wonderful experiences in life. Thank you, Francine! Here's to all readers avoiding financial, and all other, overwhelm thanks to Francine's excellent tips.

Do you have any additional tactics you'd like to share about avoiding financial overwhelm?  I'd sure love to hear them!

[This post originally appeared at] Want more financial love? You can follow Women's Financial Literacy Initiative founder, Manisha Thakor, on Twitter at @ManishaThakor, sign up to get her email updates delivered right to your inbox here, and enroll in her innovative new online personal finance course called “Money Rules.”

How Are American Women Doing?

March 8th is International Women's Day. Celebrated around the globe, each year there is a different focus. For 2011, "Equal access to education, Training and science and technology, Pathway to decent work for women" are highlighted themes. Given that the White House Council on Women and Girls recently released a comprehensive inter-agency report entitled, "Women In America: Indicators of Social and Economic Well-Being," this seemed like a great time to delve into the financial rise of women and wives here in America. So how are we faring? Three data points from the White House report jumped out at me:
  1. Wives generate 29% of total household incomes. Dig a little deeper in the report and you'll find that 27% of women earn more than their husbands, and 57% of couples are dual income households. With women bringing home more of the bacon, when women are underpaid... entire families are hurt. The so-called "he-session," where the majority of jobs lost were lost by men, has resulted in the issue of pay inequality moving from a "women's issue" to everyone's issue.
  2. Working women spend roughly one hour less a day on the job than working men and 40 minutes more a day on housework than men. When it comes to education, women have not only caught up with men, in many instances we've surpassed men. Among the 24-35 year old set, women have earned more college degrees and received more graduate education than men. Yet this has not translated into income equality. Why? Competing demands on time. My unscientific observation is that women are getting the same work done in less time... but that we often miss out on the kinds of "water cooler chats" that help establish relationships that move careers forward. And it's not like we women love this arrangement. The White House report shows women in their peak earnings years have significantly higher depression rates in the report than men.
  3. One out of every five women work as nurses, nurses aides, teachers, secretaries, and cashiers. Did you know that the median income for a working woman in America is $35,000? The propensity of women to work in vital but lower paying fields combined with increased volunteer rates and part-time work relative to men hurts our earnings power. Another data point that really hit me was that women are 40% more likely than men to report having trouble walking - especially after age 55. That puts a serious damper on the notion that one way out of financial distress for women is working longer (Read "Working Longer As A Retirement Solution Has Its Flaws" from for more on his topic).
What's the take away? While the state of women is improving, we're not roaring with financial strength. Women are still more likely than men to live in poverty and the financial inequalities are even worse for women of color. There is no immediate magic bullet - but increased awareness of the current state of women is a key first step toward change. And Kudos to firms like Bank of America, Discovery Communications, IBM, General Mills, and PriceWaterhouse Coopers for their working women friendly policies. Financially healthy women are good for families, children, and society. How do you think American women are faring financially? [This post originally appeared at] Want more financial love? You can follow Women's Financial Literacy Initiative founder, Manisha Thakor, on Twitter at @ManishaThakor, sign up to get her email updates delivered right to your inbox here, and enroll in her innovative new online personal finance course called “Money Rules.”

Have you ever wondered what it's like being a woman working on Wall Street?

In 2009, New York Times Op-Ed Columnist Nicholas Kristof eloquently pointed out that our economy might be in a very different place had it been Lehman Sisters and Brothers rather than merely Lehman Brothers. In his piece Mistresses of The Universe, Kristof highlights how Wall Street is a place "where senior staff meetings resemble the waiting room at a urologist's office." As someone who spent a brief (and not entirely happy) period of time in NYC working for a global investment bank in the early 1990s, I concur with Kristof's analysis. So when I first heard about Nina Godiwalla's new book, SUITS: A Woman On Wall Street, I couldn't wait to see what, if anything, had changed since my days in the hood. Billed as The Devil Wears Prada meets Liar's Poker, Godiwalla's Suits provides a lively, heartfelt insider's perspective on investment banking delivered from an outsider's point of view. It also presents a poignant and insightful snapshot of an immigrant family with big dreams. Suits is a gripping read, especially if you're of multi-cultural heritage or interested in why there are so few women in the upper echelons of high finance. Quite literally, I could not put this book down. It hit on all the issues I personally struggled with -- wanting (unsuccessfully) to fit into a culture that is profoundly male in every way, shape, and form -- while also wanting to earn the same financial fruits from my intellect that the men were. Nina is no ordinary young woman. She's an academic superstar. Nina has an MBA from Wharton School of Business, an MA focused in Creative Writing from Dartmouth, and a BBA from University of Texas. After spending a decade working for blue chip Fortune 500 firms like Morgan Stanley and Johnson & Johnson, she currently lives in Austin, TX where she runs MindWorks, a consultancy providing stress management and meditation training to corporations and other professional organizations. Nina speaks nationally on leadership and diversity in the workplace and has been featured in several major publications, including USA Today, ABC News, and Bloomberg BusinessWeek. Reading Suits brought many questions to mind - and here Nina is kind enough to answer them: Early on in the book you describe a group outing with peers from work where you ate little and consumed no alcohol - and your surprise at being told your portion of the "shared" bill would be $130.  Did your peers ever talk about their personal finances and if so, in what way?
Several of my peers came from very wealthy backgrounds.  Some even had their parents pay most of their bills and used their sizeable investment banking paycheck as spending money.  Since they didn’t have to worry much about money, there was little conversation around it.  At the time, I envied them.
You describe arriving on Wall Street for your first internship with 4 suits and 2 pairs of shoes. Of the clothes you had brought from Texas you said, "My 100% polyester hounds tooth TJ Maxx suit stood out like sweatpants at a wedding." In the world of Wall Street do you feel your external appearance was judged more harshly because you are a woman or because you are Persian-Indian?
Being a minority or woman in investment banking, where there are few, is similar to walking into a cocktail party where you don’t know anyone.  It’s not impossible to navigate; however it takes more effort.  As a woman or minority, you often have to prove yourself rather than getting the benefit of the doubt.  Since the industry is so focused on perception, the way you dress and carry yourself plays just as important a role as your work.
At one point in the book you reflect back upon the benefits of working part-time at the mall while you were in high school, saying "Money bought me the ability to make more of my own choices." After your experience on Wall Street how do you feel about the role of money in your life today?
Money can buy you a certain level of independence, and I’m grateful I have the education and means to provide for my family.  Not everyone has that.  But money has its limits. In New York it often felt like no amount of money is enough.  There’s typically a ladder you’re climbing and someone’s always ahead of you.  I remember some colleagues getting depressed during bonus time because their bonuses (even when they were in the millions) were lower than their counterparts.  Money is important to me, but I don’t want to get mixed up in allowing it to define me.
After months of grueling 80 plus hour work weeks you pondered, "I was beginning to wonder how to redefine success. Until now, I’d just assumed that people who had money, prestige, and power lived perfect happy lives. If they didn’t, why would so many people, including my parents and many from my Parsi community, spend a lifetime inching closer and closer to these things?" How do you define success now?
Now, my definition of success is more balanced.  Unlike before, happiness now plays a major factor.  There’s a certain threshold of money needed to keep me content and after that, there is a diminishing return.
Towards the end of the book you say, "In college, I would’ve laughed at the idea that being in business could be different for women than for men, but only a few weeks into my Morgan Stanley experience, I completely understood." What advice would you give a woman leaving college and starting a career in business today and would that advice differ if she was of recent immigrant heritage?
I’d heard the banking experience would be “challenging,” but I didn’t expect it’d be so hard to break into a conversation of men in their late 40’s sharing their rowing memories from their East Coast summer camps.  My advice to anyone who’s not part of the majority (women or minority) is to make an extra effort to build a strong, strategic network of people who support you.  Now, when I start a new job, I set-up one-on-one meetings with people all over the company.  Doing a good job will be expected of you, but it’s the relationships that help you succeed.
For more on Suits and on Nina, visit her website and her Facebook page. Have you worked in financial services?  If so, what has your experience been? [This post originally appeared at] Want more financial love? You can follow Women's Financial Literacy Initiative founder, Manisha Thakor, on Twitter at @ManishaThakor, sign up to get her email updates delivered right to your inbox here, and enroll in her innovative new online personal finance course called “Money Rules.”

"Last year I invested in a bond fund and now I've lost money. What happened? I thought bonds were supposed to be safe investments!"

Recently several people have asked me this same question. Given the turbulent economic times we're (hopefully!) coming out of, it's understandable that folks want to find a "safe investment" to hunker down in. Alas, the phrase "safe investment" is an oxymoron. The whole point of investing is taking on some risk with the hope, but not the guarantee, of earning a higher return than you'd get from doing something risk free. So how did bonds get the reputation of being "safe?" Well, at their core, bonds are loans. You lend money for a pre-determined period of time. In return you receive interest at specified intervals. When your loan (a.k.a. bond) matures you get back the money you originally loaned - if the entity hasn't gone bankrupt. It is the return of that original investment that has caused people to view bonds as "safe" investments. Alas, there are always risks with any investments. The two classic ones for individual bonds are:
  1. Credit Risk: This is the risk that the entity you lend to goes belly up and can't pay you back.
  2. Interest Rate Risk: Bonds are like seesaws. When interest rates go up, the price of bonds go down. If you hold your bond until it matures, the impact is all on paper. But if you are forced to sell your bond before its maturity date and interest rates are higher than when you bought that bond, the price you'll receive will be less than you originally invested.
Another problem with individual bonds is you often need a pretty hefty chunk of change to buy them. This is where bond mutual funds come in. For example, if you had $10,000 to invest you might be able to buy one bond. But by pooling your money with other people's money, bond mutual funds enable you to take that $10,000 and spread it out over many different bonds. That helps you spread out your risk. However, when individual investors decide to take their money out of a bond fund, the portfolio manager may be forced to sell bonds at less than desirable prices to give them back their money. You could call this liquidity risk. Over the past year, as interest rates have inched up and there have been concerns about credit quality, the price of some bond funds has declined as these risks all reared their heads. What does this mean for you? It means that like stock funds, bond funds also have some risk associated with them. They should not be thought of as "100% safe" substitutes for FDIC insured savings accounts. Rather, they are intended to be part of a well-balanced portfolio. Another way to keep your risk low is to invest in bond funds that have average maturities of 5 years or less because they seesaw around less violently as interest rates move. What additional questions do you have about bonds or bond funds? [This post originally appeared at] Want more financial love? You can follow Women's Financial Literacy Initiative founder, Manisha Thakor, on Twitter at @ManishaThakor, sign up to get her email updates delivered right to your inbox here, and enroll in her innovative new online personal finance course called “Money Rules.”

Do you ever worry about ending up old and poor?

For many women, becoming the proverbial "bag lady under the bridge" is one of their worst nightmares. Myself included. I literally sit down with my husband and our financial planner twice a year to re-confirm that we are doing everything we can to make sure we do not outlive our retirement savings!

Unfortunately, this fear of ending up old and poor is actually a very rational one for a high percentage of women. Recently, I had the chance to hear Karen Wimbish, Head of Wells Fargo Retail Retirement Group, and personal finance guru Jean Chatzky present powerful data collected in a Harris Interactive poll in conjunction with the launch of a new website to help women prepare for retirement, Beyond Today. I'm always looking for useful resources to direct women to, and I think this site can help a lot of folks. First up, the data: (Put your seatbelts on. The numbers are stark.)
  • Nearly 1/3 of women between the ages of 40 and 69 are “can’t estimate” how much money they can withdraw annually from their retirement accounts and about 32% of women in their 40s and 50s estimate they will withdraw between 11% – 30% of their savings annually.   These are unrealistically high annual withdrawal rates - leaving them vulnerable to outliving their savings.
  • While both men and women are under saved for their retirements, the women polled had saved less than men - with a median retirement savings accumulated to date of $20,000 for women surveyed versus $25,000 for men.
  • Worse still, despite longer expected life spans, when asked how much they were aiming for in retirement savings women aimed lower with a median goal of $200,000 versus $400,000 for men.
A savvy, 30-year industry veteran, Karen was kind enough to speak with me about some of the  factors driving this dreary data - and what women can do to improve the odds that their golden years really will be golden. A couple of key themes kept coming up during out chart. First, while many women are absolutely at the table on a day-to-day basis for bill payment and major household expenditures, when it comes to financial planning or investing – women are more likely to report ourselves as a “joint decision maker” than are married men who are asked this question.  Men are more likely to see themselves as “the primary“ decision maker in financial matters – so there is a disconnect between men and women in terms of the role they see themselves playing.  The survey data also showed women to have less confidence in the stock market as a long-term tool for retirement planning. What does all this potentially mind-numbing data mean for your life?
  • If you are in your 20s and 30s: The best action step is to max out your tax advantaged retirement plans (401k type plans and IRAs). Karen points out a great way to do this is to commit to saving a set percentage of your income, rather than a fixed dollar amount, so as your income rises, so too do your contributions.
  • If you are in your 40s: That data shows that this group, which I'm a part of, are the most stressed-out set, sandwiched between entering our peak earnings years while trying to juggle family and elder care responsibilities. In this life stage, the key action step is not to put our heads in the financial sands.
  • If you are in your 50s, and 60s: You are heading into the "red zone" the critical years leading up to retirement where small shifts in how much you save and what you invest in can make the difference. Understanding the gravity of this period is key.
The key takeaway: At all three stages making sure you are actively engaged with your finances and seeking to self-educate yourself is key. Reading blogs, visiting websites like Beyond Today, and engaging the services of a trusted financial advisor to meet with you on an annual or semi-annual basis can go a VERY long way towards increasing your financial confidence, sense of optimism for the future, and even household harmony.  Just as with your health, no one will ever care about your financial fitness as much as you do. What steps are you taking right now to plan for your retirement? [This post originally appeared at] Want more financial love? You can follow Women's Financial Literacy Initiative founder, Manisha Thakor, on Twitter at @ManishaThakor, sign up to get her email updates delivered right to your inbox here, and enroll in her innovative new online personal finance course called “Money Rules.”