Stop sabotaging yourself with excuses
By Elisabeth Miller
It keeps some people up at night. It’s the ultimate motivation for others. And it’s necessary for us all. Money makes the world go ’round, and for women of all ages managing money, investing, and planning for retirement are real concerns. Jean Chatzky, financial editor for NBC’s Today Show, money coach for Oprah’s “Debt Diet” series, and author of several books on money advice, specializes in offering financial guidance to women. Her latest book, Make Money, Not Excuses, highlights women’s excuses for ignoring their financial health, including lacking time, being intimidated, and having no skills with numbers among others. Chatzky goes on to give tips on saving money, avoiding debt, and investing wisely.
To put debt on a diet, Chatzky gives the following tips: Choose debit, not credit, so you can’t spend money you don’t have. Slim down your wallet. Take out all of your credit cards except the one with the lowest interest rate. Wrap your remaining card in a Post-it note with the warning “for emergencies only.” Avoid online shopping. Because it’s easy to click-and-buy, keep online shopping to a minimum. Make a shopping list and stick to it. Avoid impulse buying by writing down exactly what you need and restricting yourself to that list. Visit the ATM only once per week. Pay your bills as they come.
Investing is Imperative Chatzky cites a recent study indicating that 47 percent of women and 30 percent of men avoid investing because they’re intimidated. But, according to Chatzky, the only risk is not investing. She recommends contributing 10 percent of your annual income to an investment plan. The financial pro shows readers the money by citing a powerful example. A $100,000 nest-egg, in a standard savings account at 2 percent, will yield $148,595 in 20 years, and even less when you factor in inflation. On the stock market at an 8 percent return, however, $100,000 would amount to $492,680 in 20 years still $263,508 at 3 percent inflation.
As for where to put your money, Chatzky puts investments on a clear continuum: Stocks: Also known as equities, stocks offer you a chance to buy shares of a public company. Stocks offer the highest risk and highest potential return of investments. Bonds: When you buy a bond, you’re purchasing part of a company’s debt; essentially, you become a lender and earn interest (returns) for your loan. Compared to stocks, bonds are lower risk, but lower return investments. Cash: Cash-based investments include money-market funds and certificates of deposit (CDs). These investments are not subject to market fluctuation, so they are low-risk, but also yield the lowest returns of all investment types.
Investing Tips Younger investors should place more money in stocks and less in cash investments; older investors should do the opposite. The younger you are, the longer you have to allow losses to even out before you need your funds for retirement. As a general rule, 100 minus your age equals the percentage of your investment portfolio you want in stocks. Make investing automatic. Set up automatic payroll deductions for your 401(k) or 403(b). If your company matches your contributions to your 401(k), invest the maximum amount possible. To keep investments diverse, don’t put more than 10 percent of your money in one stock; make sure you put money in different kinds of stocks and bonds; and rebalance (or move) your money into or out of cash investments as returns increase or decrease on stocks.
For more tips on money and investing, catch Chatzky in-person at a seminar on Make Money, Not Excuses on Saturday, February 23, at the O’Shaughnessy Theatre in St. Paul. Call 507-328-4000 or visit http://activenet.active.com/rochesterce  to reserve tickets through Community Education Rochester. For $45, you’ll get a bus ride to and from the seminar, main floor tickets and a box dinner for the ride home. Also, look for Chatzky’s other books, including Pay It Down From Debt to Wealth on $10/Day, The Rich and Famous Money Book, and Ten Commandments of Happiness.
Elisabeth Miller is a local freelance writer, a proud aunt, and a student working toward a Master’s in English.