When I was a Senate staff attorney, I remember one day walking the halls of the Senate building and over hearing a conversation between two male co-workers. They were talking about their stock portfolios. They discussed about how well Latin-American stocks were doing. I had just started putting money into my state retirement plan, but really didn't know what I was doing. I was intrigued and admittedly a little envious. I felt clueless and left out. 

 

Never wanting to feel that way again, I decided to take a course on investing at the University of Washington. I loved it. Coming from a family that taught me strong work ethics, I knew how to work hard for money. In that class, I learned how to make my money work hard for me.

 

That's when I decided to leave law and pursue my journey into a career in finance. I knew that I could do well for myself with this knowledge. I also wanted to pair my knowledge with my newfound passion, and analytical and counseling skills to help others in their journey towards wealth, because I knew there were other smart people that needed help and had the same unease around investing as I had when I was at the Legislature.

 

For each of us, our reasons for doing what we’re doing and our goals are different and very personal, but there many commonalities.  First, I speak to a lot of women about money and ask them how they feel about making financial decisions. Many answer clueless, inadequate, or nervous--very much like I felt among the group of guys discussing their Latin American stock investments. 

 

Then I ask, how do you want to feel. In charge, certain, and relaxed are most often the answers I get. This is important to know because, whatever you are feeling around finances, know that you’re not alone.

 

The second commonality is that women do not limit ourselves to easy tasks. We raise smart, beautiful kids…and husbands, create welcoming homes, build careers, and nurture relationships. We take care of everyone, but ourselves. 

 

The third of the commonalities are the statistics. Every mortality table shows women living longer than men. Therefore, women are more likely to be single sometime in our lives due to divorce, death of a spouse, or decision to remain single. Because women live longer, our medical expenses will be incurred over a longer period of time and because our bodies are older for longer, we’ll be more expensive to maintain.

 

Unfortunately, while we cost more, women typically do not have as much in retirement income as their male counterparts. Generally we do not receive the salaries of our male counterparts. Additionally, women spend more time out of the work force raising children, caring for parents, etc.  Consequently, women retirees receive only half the average pension benefits that men receive, can save less in our 401Ks, and have lower social security income. For this reason, it is important for women to understand finances. 

Following are six steps to building wealth. While they are not easy, as with most things in life worth pursuing, following these six steps will get you well on your way to building wealth.

 

Step One:
The first critical step is to organize yourself. Purchase a file cabinet. Locate and file your birth certificates, social security cards, passports, deeds, mortgages, wills, financial documents, etc. Complete this personal document locator and keep it in a secure location. Every married woman should know about their joint finances--whose name is on what. Make sure your name appears on the deed to your home and other real estate you jointly own.

 

Step Two: Figure out your net worth, which is what you own minus what you owe. On a piece of paper write down in one column all of your assets, like retirement funds, jewelry, artwork—full value, even if you don’t own it free and clear. Then tackle liabilities in the other column, like major credit cards, department store cards, student loans, family loans, etc. Be honest with yourself. It is possible that the number will be a negative one. Don’t be ashamed or embarrassed.  Move on to working to increase your net worth.

 

Step Three: Create a family budget and stick with it. Figure out your sources of income (wages, dividends, bonuses, etc.) and how you are spending your money (credit card payments, auto, discretionary, etc.).  Get your whole family on board. Remember it’s a family budget. Think of your parents. Are there similarities in your spending habits? Are they positive or negative? If so, think about what kind of message you are passing on to your children.

 

Step Four:  Outline your goals and be specific.  Envision the lifestyle you want and attract it. If you write it down, you increase your chances of meeting your goals. 

Step Five. Put your savings on auto-pilot. Once you have the plan in place, then set the money in motion. Automatically save each month into your 401K, IRAs, savings accounts, etc. Don’t delay--time is money. 

 

Step Six. Create an Asset Allocation Plan. This is a plan of how to invest your assets among various types of investments, so that you can stay disciplined and not chase what’s hot. A diversified portfolio allows you to participate in good markets and cushions losses in bad markets. Higher returns are possible only by investing in riskier (investments. So when formulating your goals, consider your investment time frame and your risk-tolerance level. Find the right balance for you. Conservative portfolios tend to consist primarily of cash and fixed income investments, while more aggressive portfolios are concentrated in more equity investments.  Periodically readjust your portfolio to keep it in line with your plan. Additionally, remember to periodically compare where you are in relation to your plan.

 

Building wealth is a journey.  Confucius said, "A journey of a thousand miles begins with a single step."  Take the journey with the support of your family, CPA, and attorney.  Feel free to contact me for advice.  Make it a learning and growing experience. Attract it, allow it into your life, and you will get it. 

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