If Current Trends Hold True There Is a Chasm Between Women and Retirement
Snapping The Spending Chain
“You can’t feel healthy and competent in all areas of your Wheel of Life, you can’t look forward to a stable tomorrow, and you can’t feel you’re doing right by yourself and your family unless you keep your money and make your money work for you.
“If you’re spending your money as fast as you earn it, it’s not working for you. If your money is sitting in a checking account doing nothing, it’s not working for you. If you’ve made no investments for your future, your money’s not working for you. And if you have investments but don’t know what they are or how they’re doing, your money’s not working for you.” I surveyed the audience as I was speaking and saw some knowing smiles. “You, too, huh?” I said. “For many years, I failed to make my money work for me. Instead, what money I earned poured through my hands like water.
“This has been painfully true for many working women, who find themselves spending money on clothes, accessories, and grooming because they must always look good. There are also the added maintenance costs—cleaning, laundry, and salon bills—to keep clothes, hair, and nails looking good, and this maintenance can slice a big chunk from a paycheck.
“And women spend their money on other things as well, like vacations, cars, and entertainment. Some drop bundles on furniture, high-tech kitchen appliances and sports equipment, or overpriced health clubs and personal trainers. Many others ﬁx up their homes or spend their money on their children, husbands, or partners. And then there are those women who have no idea how the money spills from their wallets—it simply disappears by the end of the week, and they feel anxious and guilty that the cash is gone.
Only 49% Of Women Have More Savings Than Debt
The Huffington Post reports that women are still behind in saving versus spending. Posted on the newspaper’s blog on August 6, 2013, the paper reported that both men and women are continuing to save more than they are accruing debt on a yearly basis, however, sixty percent of men have more savings than debt while forty-nine percent of women have more savings than debt. The paper also reported that men save 75% more over their lifetime than women. Just something to think about.
“There are lots of good things about spending and enjoying your money. But when this comes before investing for your future, that’s when your Wheel’s out of balance. Once you’ve developed strategies to create your financial future, you’ll be able to spend money guilt free and find true joy.
“My curiosity about money led to some new insights. When I went to work in Philadelphia for an investment banking firm, I thought that I would be in a position to learn about and master the mysteries of money. I had the notion that I would be in a place where I would be initiated into the world of finance and taught how to build wealth. I certainly had the opportunity to hear all the experts—the big guns in the industry—chatter about investment selection, business and industry trends, and the future of the U.S. economy. But after working and listening for a few months, I began to wonder: ‘Am I the only one who went to this movie and didn’t get the ending? I’m not building personal wealth; instead, I’m spending everything I earn. What am I doing? When do I start to benefit from the supposed wisdom of the financial experts?’
“Soon I discovered that I wasn’t alone in the way I was living. Looking around, I saw many other people whose lives were a precarious financial balancing act. Many of these same people were giving investment advice to our ﬁrm’s clients! Something was truly out of whack.
“Financially, I had not yet learned to trust myself, but I was also wise enough not to believe everything Wall Street had told me about investing. It’s a funny thing: I was an investment banker responsible for structuring municipal bond packages for $20 and $30 million; I had a reputation for being innovative and particularly good at making the deal. But I was clueless about making consistently good investments for myself. I did make a few investments. I even purchased some valuable stocks, like Apple. But I didn’t think of keeping my stock for the long haul. Instead, I later sold my shares and used the money for living expenses. This stock could have been the starting point for a long-term investment plan, but at the time, I wasn’t allowing my investments to grow. I was wallowing in financial insecurity.
“I see now that I was focusing on acting the role rather than using what I had learned in my professional life to beneﬁt my personal life. The strategies I was practicing then were focused on how I could spend money to look the part of the well-appointed investment banker, so maybe I would look more competent—a short-term solution.”
Life’s Curve Ball Wake–Up Call
“I began to think more about the importance of having a fund of money for my future after my marriage ended—a time when I saw the reality of basic needs with great clarity.
“The divorce didn’t generate a nest egg for me. What hadn’t been spent, my husband kept for himself. When I left him, I walked away with little more than my car, the clothes on my back, and my American Express card. I felt the discomfort of being without a backup, and my old dream of wishing for a trust fund came back to me with a vivid intensity. The pain of being alone and financially adrift was acute. Often, I imagined the worst. Slowly I realized that it was up to me to create my own ‘trust fund.’ In the years following my divorce, I set out to learn strategies that would put me on a course to have more control over my financial future.”
As I spoke that sentence, I scanned the speakers’ room at the Ranch until my eyes locked on Linette. From the little she had told me, I knew she was experiencing what I had. I went back to my speech, but not before I caught a glimpse of her quietly slipping out the door. I made a mental note to seek her out the next day. I continued my talk.
“After patching up the wounds from my divorce, I went back to work. By using ingenuity, creativity, and determination forged by my experience, I prepared myself to look for new financial opportunities from the cash flow of working. One of my first successful plans grew out of an opportunity arising from my work. The time was right: a large block of municipal bonds was available for a lot less than their full price. The bonds could pay me $20,000 a year in tax-free interest for as long as I owned them. At the time (the late 80s), that would have been enough not only to pay my rent but also to pay at least minimal expenses. This was pretty close to the trust fund for security I’d imagined!
“I was in a very lucky position. Municipal bonds were something I knew about because of the work I had been doing. The bonds I purchased at that time were from a project about to go bankrupt— a life-care facility for the elderly—but I believed it could recover from its problems. If I was right, the bonds would become more valuable as the facility did. So I took some bonus money and also margined the bonds by paying 50 percent of the cost and borrowing the rest, and made the investment. It was a big leap for me. I remember thinking, ‘There’s enough income from these bonds so I could eke out a living even if I didn’t have another source.’ At least it would be enough to cover the essentials for my dignity—to meet my basic needs. It was a stretch and a step to building personal security.
“But at the same time, I was becoming increasingly insecure about being able to continue making money in the investment banking industry because of the constant challenges of the workplace. Discrimination in the business was rampant, there was competition and greed in relationships and it seemed that someone was always trying to jack up the stakes and set up us women to fail. Some of us did; many more survived. But at what cost to our health, our spirits, and our sense of connection?
“Under the circumstances, I never really knew if there would be a tomorrow. I felt that roiling sensation in my stomach, and I knew something was out of balance. There definitely was a big discrepancy between the size of the nest egg I’d established and the way I really wanted to live. I intuitively knew that if something interfered with my income, life would be very different . . . and not necessarily good.
“My world took a tumble around shortly thereafter.”
Creating My Own Corporate Culture
“I was working at an investment banking ﬁrm, sitting in a large room filled with wall-to-wall men—I was the only professional woman. Each morning, I filled a beautiful glass bowl I kept on my desk with a glowing display of yellow tulips. It was a symbolic gesture, of course; I was determined to be feminine but tough in the work world. Apparently, however, I was the only one enjoying the tulips’ explosion of color. The men told me the flowers ‘disrupted’ their work environment; they were a distraction and just didn’t ‘ﬁt in’ with the rest of the room.
“But the beauty of the yellow tulips encouraged me, and I continued to work at a productive clip. I sold a large block of municipal bonds to a client who was head of surgery at a Philadelphia hospital. I received the usual slip of paper from my ﬁrm confirming that I had indeed sold the bonds to that particular client. But about three weeks later, the ﬁrm informed me that the bonds could not be delivered to my customer, because they were ‘never available.’ I was furious, of course, and convinced that one of the other traders had snatched the bonds for one of his clients—traders sometimes pull such dirty deeds. But I was also determined to have the ﬁrm live up to its commitment to my client. I insisted that he be given a similar investment—another package of bonds at the same price.
“Several days later, the office manager called me on the carpet. ‘You don’t seem to be playing on the ﬁrm’s team,’ he complained. This confused me, because I thought that serving my client would be in the best interest of my ‘team.’ But the ﬁrm thought differently. They hated me for standing up to them, just as they hated the tulips.
“The truth is, had I been male, the same thing might have happened to me, because this is how the brokerage business operates. But I had to stand up for my client and for my values, and I simply had to create an environment in which I could live: The tulips were going to stay. Suddenly, I found myself starting my own business so that I could create a more livable work environment for myself— one with a corporate culture that reflected my personality and beliefs. Oh, I could have gone to work for another ﬁrm, but I sensed that the same problems would dog me, because that certainly had been the pattern for me and for many other women then and even now. I wasn’t the only woman who could not live a full life on Wall Street. But going the distance wasn’t the issue. Quite simply, I no longer wanted to live in the harshness of a work world I didn’t manage; I no longer wanted to have other people chart and control my destiny.
Leaving Financial Security For A Life Unknown
“Leaving the security of a corporate job wasn’t easy for me; it took all my courage to become an independent businesswoman with my own name on the door. But I took the plunge. I started the first female-owned investment banking ﬁrm in the United States to underwrite and distribute municipal bonds—that is, debt certificates issued by state and local governments to finance buildings and other projects in various communities.
“Fortunately, I had already built up a network of contacts among municipal finance managers, and I was able to use it to launch my new business. I went to the city treasurer in Philadelphia and requested that my company be allowed to be an underwriter for bonds issued by the city. My company helped underwrite a municipal bond issue for the Philadelphia school board. As a result, we became the first female-owned investment banking ﬁrm to underwrite a municipal bond issue in the United States.
“In time, Perry Investments Inc. was the investment banker for many major municipal projects. We helped underwrite the financing for such projects as the United Airlines terminal at O’Hare International Airport and the new Comiskey Park in Chicago, and the parking complex at the Philadelphia International Airport. We also handled a part of the bond refinancing of the Moscone Center in San Francisco, and helped several state governments, including that of California, to put together bond issues. My ﬁrm owned large blocks of municipal bonds—tens of millions of dollars’ worth—and sold the bonds to bond funds and institutional investors—pension funds, college endowments, and the like.
“I loved this work and I was good at it. Running Perry Investments gave me the opportunity to broadcast to the world that women could take on a challenging financial job and its risks and rewards. Soon my ﬁrm was visible enough to influence perceptions about women on Wall Street, which helped me to expand the opportunities for women in the big male-dominated brokerage ﬁrms. I got a not-so-small thrill from knowing that the ﬁrm I’d left was seeing Perry Investments’ name on bonds they were trying to obtain.
“I did little things to help keep our ﬁrm and its special status in the industry visible. For example, when I started my ﬁrm, I chose pink stationery. Everyone warned me not to use pink in the navy blue, pin-striped investment world. But my mother, who had created a successful travel business, always said, ‘You don’t have to worry about what people say about you. It’s only when you are unimportant enough not to be talked about that you have to worry.’ I embraced my mother’s philosophy, and stuck with pink.
“Being unusual had its advantages. One day, I was in the state treasurer’s office, and I asked him if he had received our bond proposal. He pointed to a huge stack of proposals in the corner of his office and said, ‘Oh, yes. How could I miss it? Yours is the pink one in the middle there.’ ”
Professional Success Personal Investment Mistakes
“Meanwhile, despite the success of my business, my personal financial education was proceeding slowly. Here I was, thirty-six years old, with $100,000 simmering in my business checking account and naive about how to employ it. I had made that cash, and I did not want to allow it to just sit and gather dust. I was grateful for how far I had come professionally, and although I recognized the need to generate more money, I was also cautious about Wall Street because of my experience as an investment banker. As a consequence, I turned away from the stock market and began to experiment in other investment areas.
“Perhaps you feel uneasy because you know little about putting your money to work. I’ve made my share of zany money choices, as you’ll see. But I’ve also learned from these sometimes painful experiences, and I eventually carved out some effective strategies for myself.
“My first investment outside of the stock and bond markets was—believe it or not—in a friend’s egg roll company. He was an older man who, in my estimation, had been extremely successful in business. He had built a hotel in China and had other projects that seemed to be financially sound, and they had made him a millionaire many times over. Besides, he was a friend, and I thought he would also take care of my money. I gave him $50,000 for a piece of Eggroll Fantasy, a company that produced the highest-quality egg rolls on the market. The company made eight different varieties, including chicken cashew, broccoli and cheese, shrimp, vegetarian, and beef teriyaki. The egg rolls were sold wholesale to restaurants and hotels, and served at Madison Square Garden in New York City and even at the White House. It all sounded great.
A Lifetime Supply of Eggrolls
“But the real story was that things inside the company weren’t working well. I discovered that the business had a host of problems: overspending, flat sales growth, and serious management weaknesses. To help right the company and protect my investment, I became a member of the board of directors. And one of the corrective steps we had to take was to insist on my friend’s resignation from the ﬁrm’s management. So far, the only beneﬁt I’ve derived from my $50,000 is that I got to eat egg rolls whenever I wanted to.”
This story gets a laugh whenever I tell it, and the audience at the Ranch was no exception. I laughed, too, because I no longer feel the sting of this unfortunate investment choice. Besides, the egg rolls were delicious.
“I must admit, though, that if my investment education had to be based on learning from mistakes, I’ve been thorough about it! My next misguided investment choice involved a medical supply company. The company made ceramic sterilizers. The technology was superb, but the management was inept. I lost another $15,000.
“Even with my MBA, I made these mistakes and simply didn’t get it. I trusted others instead of myself and, more important strategically, I didn’t have ways to monitor my money.
“These blunders could have been critical. I took part of my security money—money I needed for my future—and blew it. I was gambling my future with my heart and soul, not to mention my butt, which surely would be sitting on the street.
“One night, as I thrashed about in bed desperately trying to sleep, the folly of my misadventures in investing slammed into me. I sat bolt upright from under the covers and said to myself: ‘You’ve got to get it together, honey!’ I realized that even though I had worked in investment houses, handling billions of dollars, and even though my own business was now generating a respectable income, I had no plan to ensure my future well-being and comfort. If I wasn’t careful, I could make it big real fast and lose it in a blink.
“All of this might sound painfully familiar to you—you may have your own investment horror stories to tell, whether it was $100, $1,000, $100,000, or $1 million that got scooped from your hands. I know one woman—she is in her early thirties—who finally escaped the dungeons of credit card despair and managed to accumulate $3,500 in a money market account. She planned to drop it into a mutual fund, but a friend told her to invest the money instead in a hot new company that sold ‘cutting-edge’ beauty-care products. She could have a piece of the company, sell the products, and triple her money within a month. The young woman followed her friend’s advice and lost her entire $3,500 in a pyramid scheme—an elaborate scam in which only a handful of people at the top actually make money, while everyone else is left trying to sell expensive soap and shampoo to their friends and neighbors.
“Let’s not judge our mistakes too harshly. Let’s not cry over setbacks or let them stop us from future investing. What’s important is that we learn from our journeys and adopt new attitudes that will take us down some different paths in the future. Above all, we have to reject the idea of quick cash and instant riches and, instead, welcome the principle of lasting cash.”
Joan Perry is the publisher of www.WomensWealth.money, the national authority site for women and money. She is a Best Selling Author of ‘A Girl Needs Cash’, Random House; and Living Proof, Celebrating the Gifts that Came Wrapped in Sandpaper (co-authored with Lisa Nichols). Joan is also the creator of The Women’s Wealth Model, A Heroine’s Journey to True Wealth,. As a pioneer in the field of women’s wealth, she founded the first female-owned investment banking firm that underwrote and traded municipal bonds for major governmental entities. Now as a women’s wealth advocate, she serves as a teacher, coach, writer and speaker.