RSS Feed

Archives

  • 2017 (4)
  • 2016 (16)
  • 2015 (15)
  • 2014 (14)
  • 2013 (16)
  • 2012 (17)
  • 2011 (20)
  • 2010 (20)
  • 2009 (29)
  • 2008 (78)
  • 2007 (6)
  • Categories

  • Posts Tagged ‘finance’

    Here’s Why Financial Literacy Is For Everyone

    Thursday, April 20th, 2017

    little blog pictureApril is Financial Literacy Month.

    “Financial Literacy” is a somewhat new term and trend in the United States, and for that reason, some find it off-putting and discouraging. Don’t let the fancy phrasing scare you, though. The reality is, financial literacy simply means knowledge about money and savings. Even though most of us didn’t learn the basics of financial knowledge in an educational setting (hopefully that will change in the future!), important, life-changing saving information is easily within reach.

    In fact, understanding of the importance of financially literacy only became widespread in the past fifteen years or so. In 2002, the U.S. Department of Treasury created the Office of Financial Education as a way to organize its efforts in the area. The next year, Congress passed the Fair and Accurate Credit Transactions (FACT) Act, which established the Financial Literacy and Education Commission, a group that later published a “National Strategy on Financial Literacy.”

    That means that, hopefully, financial education will become a standard and required part of education. However, just because it wasn’t something you learned about in school doesn’t mean you cannot become extremely knowledgeable on investing, saving, retirement and other financial topics. It is important for everyone to educate themselves about their finances, but know that you don’t need to be a financial expert to make smart decisions. Some basic information can go a long way.

    In particular, it is important to know what you should be doing at every stage of life to make sure you are on track financially and preparing for long term financial security. WISER’s “7 Life Defining Financial Decisions” booklet breaks down key topics into stages and explains how to approach each one.

    For example, when it comes to jobs and careers, when taking a job, consider not only salary but also benefits. There are two basic kinds of employer-sponsored pension plans: defined benefit and defined contribution plans. When leaving a job, it is important to consider that changing jobs, even for higher pay, can cost you a bundle in lost benefits and retirement income. If at some point in your life you decide to stay home full time, think through the family finances, including retirement planning. Where there are large upsides, you will lose compensation, benefits, job skills and contacts if you leave work completely.

    The booklet offers more advice on financial decision-making at every stage of life. By focusing on life stages and basic information, financial literacy is within reach for everyone.

    Why Saving As A Young Person Is Important

    Thursday, March 23rd, 2017

    “Live while you’re young!” “Youth is wasted on the young!” “I’ll sleep when I’m dead!” “Live in the moment!”

    Everywhere they turn, young people are inundated with messages encouraging them to live now, worry later. In financial terms, that translates to “spend now, save later”—and it’s a hard message to ignore. The internal justifications to spend instead of save often sound like this: all of my friends are planning an expensive trip overseas, why shouldn’t I join them? Why not rack up credit card debt—I’ll be able to pay it off later, when I’m older and have a higher paying job! I’m only young once!

    The same mentality leads to young people to taking out large amounts of student loans, beyond what they may be able to afford or what may be worthwhile. According to new research from the National Endowment for Financial Education, more than 70% of millennials (people ages 23 to 35) have at least one long-term debt, which could be student loans or something else, like a car loan. About 34% of millennials have two long-term loans. These numbers alone are troubling, but to make matters even worse, the research also found that about a quarter of millennials with a retirement account took out a loan or hardship withdrawal in the last 12 months. This emphasizes that many young people are prioritizing the present much more than the future when it comes to finances.

    This trend is putting young people at a serious financial disadvantage—making it more difficult to purchase a home, open a business, or pursue other ventures later in life. Here are several additional reasons why saving as a young person is important:

    Financial Habits Are Set When You’re Young

    The same holds true for any habit: the earlier you adopt it and the more often you carry it out, the more likely it is to stick. Being smart with money is no different. If you are careless about money for most of your life, it will be extremely difficult to switch gears and become a scrupulous saver once there is truly something to save for—like a child or a home. The inverse is also true. If you are smart with money from a young age and put in place good habits, like putting a certain amount of your paycheck each month into savings, you are likely to carry those habits later in life.

    Saving a Little Now Equals A Lot Once You Retire

    We often hear about “the power of compound interest.” We,ll that power is only powerful if you start saving young. The more years that go by, the more powerful compound interest becomes. If you save a little bit as a young person, that money will accrue interest and, by the time it’s time to retire 30 or so years later, a little bit of money will have grown into a lot of money. You can only take advantage of this is if you save early.

    Cost of Living Grows As You Age

     It’s easy to assume that because you can support yourself now, you’ll be able to do so later. However, the cost of living grows dramatically as you age. The odds increase that you will become a caregiver, in terms of both finances and time, for an aging parent or a child. Medical costs also increase as you age. Your salary will also likely grow, but it may not grow enough to support these costs, let alone enough to put aside enough for retirement, when your income will decrease dramatically. Saving early helps ensure financial stability throughout your entire life.

    Celebrating Women’s Contributions to Finance

    Monday, March 7th, 2016

    March is Women’s History Month! WISER is commemorating the occasion by reflecting on the role women have played, currently play, and will play in the world of savings and investment.

    Today, women fill the ranks of the banks and other financial companies that manage our investment portfolios and savings—the things that make retirement possible. They work on the floor of the stock exchange, they are certified financial planners—they’re present at just about every level of the money machine that allows the money you save to grow and help you reach your long-term financial goals. Just like in any industry, that diversity makes the financial industry more resilient, creative and forward thinking.

    Of course, there’s still room for improvement. Women are still underrepresented in leadership positions and all of the top banks are currently run by men. Yet women have made incredible progress, and during Women’s History Month, it is worth reflecting back on how very far we have come.

    Despite the fact that they were unwelcome by most during their time, a number of women were able to break into the world of finance. Here are three of those trailblazers, and the lessons they can teach us today:

    Abigail Adams

    Abigail Adams

    Abigail Adams. Photo: Wikimedia Commons

    Abigail Adams is most often remembered as the wife to her husband, John Adams, who was the first vice president of the United States and the second president, and the mother of John Quincy Adams, the sixth president of the U.S. The loving marriage between Abigail and John- a match of two intellectuals- is well documented by the many letters the two sent back and forth. However, there was one topic that caused contention between the two of them (something that might sound familiar to anyone who is married)—money. While John was away on state business, he put Abigail in charge of the family’s money affairs. He instructed her to invest exclusively in land, but she realized that U.S. government bonds would be a better return on investment. Although the couple’s money was legally his under the laws of the time, she was able to put some aside and invest with the help of an uncle, who acted as a trustee. Her personal investments quickly began to accrue more interest than her husband’s suggested ones.

    Abigail is a role model for anyone who feels like their voice isn’t being heard when it comes to managing the family’s financial decisions. Although her husband was insistent about investing in land, her idea of investing in government bonds ended up being the better idea. She teaches us that putting all of your faith in your partner to make the right financial decisions is not always a smart idea. Do your research, get involved and make financial choices as a couple.

    Hetty Green

    Hetty Green. Photo: WIkimedia Commons

    Hetty Green. Photo: Wikimedia Commons

    Hetty Green was born in 1834 to a wealthy family. By the age of six, Hetty was reading financial papers to her father aloud, and by age 13, she was the family bookkeeper. As she got older, Hetty’s interest in finances grew, and she is well-remembered for turning her moderate family fortune into a huge fortune that made her the richest women alive at the time. At its height, her net worth was estimated between $100 and $200 million- the equivalent of $2 to $4 billion today. Gossips at the time referred to her as the “Witch of Wall Street” and the Guinness Book of World Records even named her the “World’s Greatest Miser” for her extreme penchant towards saving;one rumor says she spent half an evening searching her carriage for a lost two-cent stamp. However, as one obituary of her pointed out, the characteristics that many criticized her for would have been considered commonplace in a man.

    Hetty’s attitude towards investing and saving that she credits with helping her amass her huge fortune is still valid today. She made a rule of investing conservatively and always having enough money in cash reserves to last through any market tumult.

    Muriel Siebert

    Muriel Siebert, better known as Mickey, is famous for being the first woman to own a seat on the New York Stock Exchange. In 1967, she founded her own brokerage firm, Muriel Siebert & Co. Inc., and that same, year, she sought to purchase a seat on the NYSE. Doing so requires sponsorship from two current seat holders, and the first nine men she asked turned her down. Eventually, she was able to land the seat, and in 1977, Mickey was appointed as the first female Superintendent of Banks for New York State. During her tenure, she oversaw assets of $500 billion, and not a single bank failed.

    When Mickey purchased a seat on the Stock Exchange in 1967, she was the only woman out of 1,365 men. It took another ten years for another woman to join her. Even if you feel like a fish out of water while navigating finances and retirement saving, persevere!

     

    Just like Abigail Adams, Hetty Green and Muriel Siebert, you can make your own financial history—and there’s no better time than Women’s History Month to do it. A great way to start is by visiting WISERwomen.org to learn more about saving, investing and retirement planning.

    WISER

    About Us

    WISER is a nonprofit organization that works to help women, educators and policymakers understand the important issues surrounding women's retirement income. WISER creates a variety of consumer publications including fact sheets, booklets and a quarterly newsletter that explain in easy-to-understand language the complex issues surrounding Social Security, divorce, pay equity, pensions, savings and investments, banking, home-ownership, long-term care and disability insurance.

    Read More