Personal Finances

[Mythos_Ruler]

Something that was written with women in mind, but can apply to anyone:

http://moneycentral.msn.com/content/SavingandDebt/P92994.asp

A few years ago, Barbara Stanny wrote an eye-opening personal finance book for women called “Prince Charming Isn’t Coming.” Her point was that many women harbor the fantasy of being rescued, which stops them from taking control of their own finances.

Lately, watching the Women in Red, I’ve been thinking about Stanny’s book and whether certain money fantasies might be preventing the gals from moving forward.

The line between fantasy and reality can be a tricky thing. Look at Brice. A hard-working single woman in her late 30s, Brice says she knows she probably will never win the lottery, marry a millionaire or hit it Oprah-big with her career. “But I still have those fantasies sometimes,” she says. Don't let retirement

sneak up on you.

And they have an impact on how proactive she is about her finances. “It makes me less committed,” she admits. “Even though I am starting to take some [financial] steps for myself, in the back of my mind the feeling is there that it could still all change for me.”

Male or female, we all have our daydreams about some enormous windfall sweeping away our problems and paving the way to a “Lifestyles of the Rich and Famous” future. I’ve had some pretty indulgent pipe dreams about money. Including some that are downright crazy.

Like the fantasy that my parents have been hoarding cash all these years -- and I’m going to inherit millions. Yeah.

What makes it worse, of course, is that many of us know real people who have had a big, fat windfall. They land a plush job or inherit a bundle. One old friend of mine wrote a novel -- and sold it for $800,000! If you don’t know any fantasy cases personally, there’s always Paris Hilton to make you grind your teeth with envy, and marvel at the insanity of the financial gods. (I have debt, she doesn’t. She has millions, I don’t. Hello?)

So then you think the next natural, disastrous thought: Well, if it could happen to them, it could happen to me. . . .

Then, without even realizing it, you stall. You wait for someone or something to transform your financial life -- and you stop putting in the time and energy it takes to do it yourself. If the money fairy is coming, why sweat it?

The different kinds of money fantasies

Although windfall fantasies are common, there are many delusions when it comes to money. They tend to fall into three categories (which often overlap):

1. Rescue fantasies

Lottery Living: You actually believe you might nab a winning ticket, and you believe this every week.

I’m Gonna Marry a Millionaire: And that single-minded focus keeps you both single AND broke.

Waiting for a Windfall: Miscellaneous hopes for an inheritance, a bank error in your favor, a pot of gold in the back of the garage, etc.

2. Transformation fantasies

The Halliburton Hangup: The idea that someone is going to pay you waaaaay more than they should, and you’ll retire in two years.

Sudden Success: You’ll sell that screenplay or invent a new kind of peanut butter that will make you a gazillionaire.

“Do What You Love, The Money Will Follow”: The actual title of an actual book that has created financial disaster for everyone (except the author, who is now buying Texaco).

3. Avoidance fantasies

Ignorance Is Profitable: The crack-based notion that by not paying attention to your money . . . one day you’ll wake up RICH!

Things Have a Way of Working Out: When clearly they don’t.

I’ll Do It Later: And later never comes.

I’m not trying to make some retro point about women’s lack of financial ability. That’s not the case. After all, we live in the age of the so-called female “alpha earner.”

According to a Newsweek poll last year, 54% of Americans know at least one household where the woman is the primary breadwinner. A recent study by the Center for Women’s Business Research found that female entrepreneurship is thriving: Women start 424 new ventures every day, more than twice as many as mere men. (Sorry.)

Still, some research indicates that women tend to be less confident about managing their own money.

According to a survey by Charles Schwab, about a third of men describe themselves as “very involved” in managing their investments, but only 13% of women do.

A third of women avoid making money decisions because they’re afraid of making a mistake, according to the National Center for Women and Retirement. Only 22% of men felt that way.

The leap from fear to fantasy, and back

My belief is that at least part of what holds women back financially are their fantasies. Barbara Stanny, now also the author of “Secrets of Six-Figure Women,” agrees. “They’re deeply ingrained. They’re part of the collective unconscious,” she says.

Here’s how she analyzes the way in which fantasy contributes to financial inertia:

“Lack of motivation is rooted in some kind of fear,” she says. “The fear comes from a belief or fantasy; and the belief comes from a decision you made about yourself and money that is very old and probably irrational.”

Translation: If you long ago got the idea that you aren’t capable of managing your life (and that someone else should do it for you), that would create a rescue fantasy: Must wait for Prince Charming!

The fear of giving that up and facing reality (and bursting that comfy fantasy of being taken care of) causes you to stall.

Beth also believes that many people in the Gen X and Gen Y cohort are "prone to (money) fantasies because of our need for constant gratification.” (That said, get-rich-quick-schemes plague every generation.)

I also believe that women in their 30s and 40s were raised with particularly mixed messages about managing money. Carole’s mother, for example, was widowed with four young kids back in the early '70s. Although the feminist movement was on a roll at that point, pushing women toward alleged “equality,” most women at that time -- like my mother and hers and countless others -- weren’t raised with that notion.

Our mothers were forced to take the financial reins of the family (for different reasons) -- as many women were during that era of divorce -- but it wasn’t their first choice. Financially speaking, their daughters got mixed messages about taking control of money.

Stanny says you have to acknowledge that your fantasies are there. “Whatever you do, don’t wait for the fantasy to go away,” she says. “I don’t think we ever let go of them completely.”

The key, she says, “is to do what you need to do anyway. Act as if you’re an independent person, in charge of your money, even when you don’t feel that way. Get the support you need from friends or a (financial) advisor. Keep going.”

Last, she says, don’t expect taking the financial reins of your life to be so hard. “It’s easy,” she says. “But it’s uncomfortable. And you have to get used to that.”

Brice agrees. One thing that’s helping her is to realize “that the fantasy doesn’t pay the rent or save your down payment for you.”

And she also agrees that it’s uncomfortable. “Old habits die hard,” she says. “You really have to retrain the way you think, and that’s a complex process.

“You can’t wait for that big windfall to come in and make you rich. You have to forge ahead and make a plan with whatever you have NOW. You can always supplement that later when the big money comes in. But you have to plan with what you have.”

Then she paused, muttered a quiet expletive and exhaled a long, deep sigh.