Talking Money

When I’m curious, I take surveys to answer the questions that are spinning around in my head. I turned to women I know and began to ask one question – a question I put to you right now. ‘What are you doing now to make sure you’ll have financial well-being for your life when you ease out of working?’ Will you reach a point in your life that you work because you want to and not because you have to?

The first time I posed my question, it happened spontaneously as I took a long stroll in the park with my friend Nora. Nora usually didn’t have time for walks because she is so dedicated to her work as a lawyer. On that day, I turned to her and said, ‘You know, we’ve both made a lot more money than we ever expected when we planned our careers. But where are we going to be when we’re seventy years old? What are you doing to make sure you don’t end up a bag lady?’

My friend’s eyes widened at the mention of ‘bag lady,’ and I knew that I’d struck a chord. She turned to me and said, ‘Well, I have a car and a house, and that’s about where I am right now she said. A few days later, I talked to another dear friend, Sylvia. She gave me the same answer: She had a car and a house. A pattern was emerging. I pressed on.

That night, I called a woman I had known in college. We often chatted by phone just to stay in touch, but rarely saw each other. She lived in New York City, was married with two children, and did a little freelance editing when she had the time. I asked her the same question. ‘We own a co-op here in the city,’ she replied. ‘What about a car?’ I asked. ‘Are you kidding? No. I take the kids around on the bus or the subway,’ she said. Whew! No car.

I even talked to the woman who cuts my hair. Guess what? She owns a small two-bedroom house and, yes, a car. Finally, I decided to go straight to the source. I called my friend Jackie, an investment banker at a large brokerage firm. Surely, I figured, she would have some brilliant inside strategies for her personal finances.

We arranged to meet for lunch one day, and after our entrées had been served, I turned the talk to money matters. ‘So I guess you have an excellent investment program for employees where you work. You’re so busy traveling from city to city, there’s someone at your company whose only job is to make sure that your earnings are well invested, right?’ I asked. I envisioned a committee that provides the company’s investment expertise to employees to ensure that they will have financial peace of mind so they can then do their jobs better.

I almost dropped my fork at Jackie’s response. ‘Well, the fact is,’she said, ‘I invested in some mutual funds and lost money, so instead, I just bought a big house. Oh yes, I have a BMW and a Range Rover, too.’ The pattern was clear. My baby-boomer friends were ‘investing’ in houses and cars and then stopping because they, too, hadn’t come up with any good strategies for growing their money. Our parents, our schools, our employers, our financial institutions, our popular culture-not one had taught my friends and me how to employ our money as part of our formative years.

Something was seriously wrong. Where we are today regarding money matters is very much where we were a decade ago regarding personal fitness. At one time it was commonly believed that if you ran at full speed, jumped up and down a lot, and sweat profusely, then you would eventually become physically fit and thin. Today the more accepted wisdom is that old-fashioned anaerobic exercise-the kind in which you’re moving so hard that you can’t talk-actually sends your body into survival mode. As a result, the body stores fat, probably defeating any weight-loss or health goals you seek through exercise. Now we know that a regular walk in the park that involves both your body and spirit will produce consistent physical and mental benefits. When I comes to money you can employ these same strategies.

And we can find other examples of common beliefs that are now outmoded: for example, our past beliefs about nutrition. When I was growing up, we were told to eat three large, balanced meals a day in order to be healthy and fit. Today, many nutritionists and doctors say that four or five smaller, low-fat meals-one or two of them being fresh fruit or vegetables-make a more healthful diet. Thankfully, the word about proper exercise and diet is spreading rapidly among women of all ages. But many women are still in the dark about money matters and the effective strategies to financial health.

And Wall Street itself deserves much of the blame. At many of the major Wall Street brokerage houses I knew, the primary approach to building wealth was to make big chunks of money for the client-and, more important, for the broker-all at once. No value was placed on slowly, patiently building a bundle for the future. If you buy into that living-for-the-moment rush, then yes, the risks are very high, and the anxieties of first-time investors are an understandable reaction to the frenzied Wall Street approach. But beneath the hype and excitement of the ‘fast money’game is the real motive for the financial industry: generating the highest possible commissions for unscrupulous brokers and increasing the wealth of the firm.

When I worked on Wall Street, I noticed that the investment information itself wasn’t too tough to understand, but it was often presented in a jumbled manner that was heavy on jargon and short on simplicity and logic. It seemed that someone deliberately wanted to make financial information confusing to the average consumer. I noticed also that brokerage statements presented information in ways that confused clients and often omitted essential information-like what a client paid for a specific investment and its current value. With a little effort to straighten it all out, though, and to put it into sensible language, nothing was particularly difficult to understand by me or my girlfriends.

Eventually, I realized that the financial community is interested more in separating you from your money than in building your wealth. As a result, investor education is a low priority. Even those of us who worked on Wall Street making your investments were never really taught how to handle our own personal finances, or to lead others to grow wealth.

‘You mean you knew how to invest other people’s money but not your own?’ – you ask. No. It wasn’t that. The point is that Wall Street isn’t really interested in investing your money, only in getting you to spend it. Let me explain. Wall Street has taught the investor to ‘buy in greed and sell in fear.’ What does that mean? I’ll give you an example: Your broker calls to give you the following hot tip: ‘FLASH-XYZ stock is really HOT. It’s about to go through the roof. You should buy it. Well, if you have a few bucks sitting in your checking account, you may well say okay and take the plunge.

Several weeks later, the price of the stock has declined and you begin to get nervous. What happened to that great opportunity? Your broker’s answers are confusing, even evasive. And the business page of your local paper runs a story about how XYZ company’s profits are way below expectations. Naturally, you think, ‘I really wouldn’t want to lose all of my money.’ So you opt to sell the stock. Bottom line-you did this – you bought in greed and sold in fear. The only person who benefited was the broker, who made commissions on both the buy and the sell.

I once bought a stock called Bolt Technologies in the way I just described, and that burning sensation in my stomach clearly indicated that I’d made a mistake. I wound up selling it at a loss. Because of this unfortunate experience, I was discouraged from investing in stocks again for a long time. The right wealth-building strategy is just the opposite from what some on Wall Street practice. Rather than buying today’s ‘hot’ investment, you want to buy something that other people disregard and keep it until others value it. In this way, you’ll ‘buy low and sell high’-the dream of every ambitious investor. This strategy is the only reliable way to grow your money for a secure financial future. Money is actually made on ‘buying it right’ – more important than ’selling’.

Furthermore, now’s the time to develop and rely upon your own judgment when it comes to making your dollars work for you. Decades ago, many women went to male doctors, who often didn’t listen to what a woman had to say about her own body, but who presumed to know all the answers himself. This happens to women and their money, too-a woman’s competence is questioned and she may be treated like a baby.

For women, the path to building wealth is using self-knowledge, making more personal decisions, preserving their power to choose their own direction – and being aware of and expanding their financial choices. Every woman needs financial legs. We live in a time when a woman can advocate for her own financial well-being – this makes it the best of times to secure our financial futures.