I often meet smart, successful women who feel confident and capable in various areas of their lives. Yet, when it comes to managing their finances, all that confidence and capability goes out the window. Instead, these same women are reduced to feelings of incompetence, anxiety, or complacency.
I can identify.
When hardship struck my family fifteen years ago, I was forced to confront the financial choices I was making. Though I had a successful career in investment banking and had expertly co-managed investment portfolios worth $6 billion, what I found in my family’s finances was a series of sloppy missteps: stagnant pension plans, exorbitant investment manager fees that were eating away our earnings, and poorly researched investment decisions.
In other words, I was quite capable at investing other people’s money, but not my own. And due to my expertise, I had few excuses.
Though I did eventually get my financial house in order, I was able to change things only when I first came to terms with why I was purposely keeping my head in the sand at the expense of my family’s financial security.
Why Investing Feels So Scary (and How to Diffuse the Fear)
Have you ever really thought about why investing feels so scary? Explore those fears and see how rational they are.
You can also educate yourself about sound money management in order to make decisions from a place of knowledge and strength. The reward for doing so is priceless.
Imagine being able to meet an unexpected financial emergency head on with confidence! Or having the freedom to make an impromptu trip or purchase! Or even knowing that you’re doing all you can to ensure your financial resources will be there for you in retirement.
Taking the First Step
Getting to this point is a process of self-discovery and learning that starts with figuring out where you’re getting stuck when it comes to managing and investing your money. Having worked with many women one-on-one, I’ve found that most of the fears and anxieties that women have about investing tend to fall into one of four categories:
1) The fear of parting with money today to use for the future.
Some women are concerned about what they’d have to give up in their lives now in the name of investing for the future, things like: money for clothes, vacation, food, activities with the kids, or spontaneous purchases. Even though they know they’re supposed to put money away, financial responsibility feels like austerity and lack of freedom.
The truth is, however, that small changes to how and when you spend your money can have a big impact on your financial health. And lift a big weight off your shoulders when you realize just how much you can take care of yourself – both now and in the future.
How you shift your financial choices today is guided by an awareness of what you really want out of life.
And what’s truly important to you.
For the long-term.
Once you are in touch with this, it is much, much easier to make responsible and effective financial decisions going forward. Decisions that will make you feel strong and confident rather than feeling like you’re walking around with a financial ball and chain.
2) The fear of not knowing what to invest in or how to invest.
Some women tell me that they just don’t have a head for numbers and finance. They don’t understand financial jargon. And the instant they start investigating their options, their eyes glaze over.
Do you know why investing feels so scary? Because, we’ve all heard stories about people losing their fortunes. Companies going bankrupt. Stocks going bust. And folks who had to keep working because their retirement plans were decimated.
The ever-increasing range of investment options also complicates investing. Spoiled for choice is not always better. And legal and tax obligations have become more onerous in recent years.
Make it a priority to learn something new about money management every day. Investing becomes less scary when you proactively educate yourself about your financial options. Even five minutes a day will help you build your financial knowledge bank very quickly. Before you know it, the financial pages of the paper will make sense. And you will be investing with confidence.
3) Lack of control once money leaves your bank account.
Yes, stock markets can crash and the economy can turn sour, almost without any warning. Putting your hard-earned money into a seemingly unknown future can be a challenge. But while all investments involve some measure of risk, there are strategies that you can follow to hedge or minimize it.
Start by getting clear about your current financial health and your future financial goals. This clarity makes it much, much easier to cut through the noise and design on an easy-to-follow investment plan that works for you.
Investing should not be a series of random acts undertaken simply to grow your money. Rather, investing requires a plan to help you get from where you are today to where you want to be tomorrow, while managing the risks you might meet along the way.
4) The fear of who you’ll become.
Some women resist investing because they associate money and the act of investing with attitudes and values that don’t speak to them. In other words, they don’t want to gain control over their finances and in the process lose themselves. But the truth is that money itself is a neutral resource. It’s a pretty natural extension of ourselves and our core beliefs and values. No one should have to act in a way that compromises her values. Investing is no exception.
Most of the fears surrounding investing and money management are like the imaginary monster hiding under a child’s bed. Once the lights are turned on and things are put in their proper places, we see that nothing is really there after all.
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