All across the financial spectrum, I'm less worried about the glass ceiling and women being too hard on themselves than I am about a glass barricade made of self-imposed excuses cleverly cloaked as legitimate reasons for women not taking control of their money.
Sometimes taking control simply means educating yourself and being an active part of the process.
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Look out for these five money traps that snag women on the road to financial independence.
Trap #1: It's unromantic, impolite, and inappropriate to talk about money
If you and Prince Charming are riding off into the sunset, you may not need to discuss money. In the Magic Kingdom, your palace is unlikely to have a mortgage. For all others, you're living in a fairy tale if you don't discuss it.
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A great first step out of the money trap: Know what you have. Before you and a partner can become a "we," you need to know what each of you is bringing to the table.
You must find out what you have on your own, what you have with your significant other, and what you may be responsible for. It's the basis for all your other planning and decision-making.
Trap #2: 'Trust me — I'll take care of you'
In our culture, women are sent the message that we will be taken care of. In reality, we tend to be the ones who take care of others at the cost of neglecting our own financial security. Just watch any of the Real Housewives franchise, and you'll get an idea of what I'm talking about.
We believe our spouse or significant other who says (or implies) that they are there to take care of us. We believe our parents who often give us a message that they will always be there as a fallback (never thinking that their situation could reverse dramatically and quickly). Even in tenuous economic times, it's easy to believe messages from our company or boss about how valuable we are and that we'll be taken care of.
However, in spite of good intentions, which are mostly there, the actions don't always follow. You can't ever solely rely on the hope that someone else will — and can — take care of you. For many reasons, some perhaps beyond anyone's control, the promise of financial security as part of a relationship doesn't always pan out.
If you and your significant other contribute financially to your household and lives, you need to be absolutely clear about whose money is whose, who pays for what, what are shared expenses, what are shared "extras" (entertainment, travel, home improvements, giving), and what are individual choices and responsibilities.
Trap #3: Women are too emotional or too impulsive to be good investors
Women may show their emotions more than men, but it doesn't make us less capable of making rational decisions.
Study after study shows women behaving more rationally over market cycles than men — perhaps with a biological basis in lower levels of testosterone — making women less willing to take stupid macho risks. Men trade more often, incurring more fees and chasing gains, which, on average, hurts their returns. Conversely, women hold steady, allowing them to avoid selling at the bottom and buying at the top.
The worst offenders who fall prey to the stereotype that women are too emotional or impulsive to manage finances are women. Maybe it's an excuse or rationalization, but the bottom line is, this stereotype isn't true, so you can't fall back on it.
A first step out of the "not good investors" trap is this: Make a financial plan. Whether you're at the "basic" level or a bit further along and more advanced, you can't be a grown-up woman, a grown-up period, if you don't have a financial plan — a plan you understand.
Trap #4: All womensplurge
Here's the deal. Some amount of spending is fine. (In fact, America counts on it.) But the rationale that spending is good, makes us feel better, or helps us fit in is actually a financial decision, not a self-help decision. And it's a pretty crazy rationale, isn't it? Splurging may feel like a biological imperative — like eating chocolate — but it's not.
That's what every consumer product company aimed at women hopes is the case, and they are making a pretty good bet. Women spend the most money for pleasure, fun, or as psychological salve at exactly the time in their lives that they should be thinking about saving and investing.
I've learned that there is a tremendous freedom that comes from not spending money. The more my net worth has grown, the less interest I've had in material things and the more I want to save and invest.
Treat yourself within your means — and always save. Splurge on one "it" item, and have it be your badge of confidence for the whole year, or even several. And if you do get a bonus, put 90 percent away and splurge with the other 10 percent.
Trap #5: It's too scary to think about
What in your life have you ever done that has turned out scarier than what you feared? Probably nothing. Public speaking, a vacation alone, moving to a new city, deciding to live with someone or to get married, or even having children is not as scary when you actually do it.
Although most people are petrified to learn about their financial needs for retirement, when they push through their anxiety, they are much happier. The Employee Benefit Research Institute found in its annual Retirement Confidence Survey that 42 percent of people determine their retirement savings needs by guessing. But the people who have done the actual math are far more confident about achieving their goal than those who haven't.
Don't let your fear of money and your anxiety over not having enough keep you from the benefits of actually having the information you need to plan for your future.
Excerpted from the book FINERMAN'S RULES, by Karen Finerman. (c) 2013 by Karen Finerman. Reprinted by permission of Business Plus. All rights reserved.
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