Recently I read that women from my generation will never earn more than our fathers did; even though we are much better educated, we will still struggle financially. After taking some time to analyse my girlfriends’ and my finances carefully, with a heavy heart, I had to agree with that statement. We were all very well educated and…, most of the time completely broke.
I started wondering what went wrong that we couldn’t come on top of our finances, even though we had all this fantastic brainpower. Clever, intelligent, well-educated, worldly people should make smart decisions. Well, this is where I was wrong. We are all book smart, life smart too at times, but undoubtedly not financially smart.
Where is this lack of financial literacy come from?
- Misunderstanding how investments work and, often, listening to the financial advisers, who make it sound too complex to wrap your head around. (since women are usually multitasking just to get through the day, anything that sounds or is too complicated goes at the bottom of our to-do list) All that confusion is created on purpose to scare people into buying expensive financial advice and services.
- Overconsumption leading to zero savings. This is a big one, and it takes time to learn how to reject the social pressure to own, at least, everything.
- The pressure to spend and buy on credit because everyone else is doing so. Credit cards can be a short time solution if you struggle and cannot put food on your table. But in the long run, this may be the quickest way to financial misery. The rule is not to buy anything you couldn’t afford by paying with cash.
- Lack of positive financial role models. Women’s magazines traditionally never talked about finances and financial independence, instead of running shit lots of celebrity articles with their opinions of life, clothing, makeup, hair…When was the last time you heard someone well-known talking about overconsumption or frugality or savings?
- Earning less than men. Yes, that’s the fact. Women still earn much less than dudes.
- Not progressing as fast in our careers as men do due to family commitments (childcare and looking after elderly parents usually rests on our shoulders).
- Buying designers bags, clothes and shoes aren’t investments. These are just vanity items supposed to keep us in debt, not give us financial freedom or empower us.
Adverts explicitly targeting young girls and women are meant to create a huge need to belong in a group. But to be part of that “exclusive” group you need to consume, you need to buy something that you most likely don’t need and will never have a practical use.
I started working in my early 20’s, and I had never saved even one penny that would have gone towards wealth building. I believed that money was used for spending only, and it never crossed my mind that it could be a ticket to independence. I was trained well by social norms and marketers.
All the books, clothes, DVD’s and CD’s I consumed over the years almost always ended up in a charity. I was working, spending, getting dissatisfied with my purchases and giving it all away to charity. My weakness has always been clothes shopping, spa treatments, expensive travel and eating out (that includes coffee as well). Luckily, amongst all my financial confusion and misunderstanding, I managed to develop some good habits: such as not buying expensive cars and no substantial credit cards debts.
However, the stillness during the lockdown forced me to analyse my life choices. Since I’m not getting any younger and the huge checks from all those fantastic ideas, films, scripts I’ve had over the years aren’t arriving, I started having this nagging feeling that it is my very last chance to get financial matters in order.
I always had a gut feeling (this is how much I knew about finances) that living off your stock investments was possible, though I had no idea how that was done. That was until I stumbled upon the Guardian article about a retired couple in Canada in their 30’s. That article led me to Mr Money Mustache, whose blog introduced me to JL Collins. Finally, after an intensive period of reading all the blog posts and listening to financial books, I began to understand how finances can work. All those confusing elements that previously made no sense to me started becoming pretty clear.
I’m not a financial expert, far from that, but I’m a woman on a mission, determined to get her finances in order before it’s too late. In this blog section, I’ll be writing about my journey and my discoveries as I try hard to make my way towards my financial independence.
If you are like me, confused but willing to put in the hard work and change, here is a short list what you could start with:
- The first and most important thing you have to do is to get to know the subject. There are plenty of financial blogs out there. At the moment, I found Mr Money Mustache and JL Collins the most suitable for me. If you go to any of their websites, they have a reading list of books you should read (I’m making my way through the list) and they also recommend other bloggers, whose ideas might be more suitable for you.
- Start tracking your spending. Collect all your receipts and see where your money is going.
- Start putting chunks of money into your savings account, regardless if you know where to invest or not yet.
- If you don’t have your emergency stash, start building it. It’s usually recommended that you have six months’ worth of your spendings saved up in cash.
- Before you buy anything that isn’t essential, ask yourself if you really need that. Whatever we purchase and throw out later, it makes its way to a land field. Have you ever watched Wall-E? If not, you definitely should. Amongst tons of its excellent qualities, it also paints a very dreary picture of how our world is going to look like if we don’t get our consuming habits under control.
The cheap clothes we buy and use them once are cheap for a reason and often end up polluting the third world countries. No, charities cannot sell them.
If you have to buy something just for one outing, check charity shops in posh, expensive areas of your city/town, or ask your girlfriends if you could borrow an outfit, a bag or shoes. Or, what I do, save up money and buy one, two clothing items a year that are a bit more expensive, but I know will last for a long time. I have a few companies I have been loyal to for years, and I’m pleased with the quality and durability of their products. You can always head to Project 333 to see how to shrink your wardrobe in a minimalistic way but still stay in fashion.
Change is scary but keep the big picture in mind. You are working towards something much greater than just immediate pleasure that buying new things creates. You are working towards not only your financial independence but also towards a better cleaner future for the next generations (if you are a parent, that should always be on your mind). Don’t think about your change as a sacrifice. If you do, you will start struggling early on. The change should come from within you. Only this way it can be lasting.