Both rational and irrational decisions can be subdivided into long-term and short-term ones. Possible financial choices can, therefore, be represented by the following Money Action Graph:

You have likely done this in your mind if you’ve ever bought a lottery ticket. Imagine a sum about five or six times your annual income (or what you think your annual income should be) and assume that I just handed you a tax-free check for that amount. Take no more than three minutes—first thoughts are important—to write down, in order of priority, six things you would do with the money. Try to set aside any ideas about what you should do. What do you want to do?

Your answers likely ranged from the sensible to the frivolous, from fulfilling long-term objectives to indulgent whims. Consider the very first thing on your list. Does this tell you something important about what you believe money is for?

There are generally four ways in which we use money:

• Spending
• Purchasing
• Hoarding
• Investing

Relating these uses to the Money Action Graph above, our new graph would look like this:

Let’s consider each of these activities and the kinds of beliefs that underlie them.

Spending. This word is often used in the context of buying everyday, inexpensive items without much forethought. Since women are often responsible for fulfilling the daily needs of a household, most of us engage in this activity when buying food or other necessities. However, we also spend as a form of recreation or entertainment. Have an afternoon free? Let’s go shopping! And off we go buying products and brands we did not even know we wanted until we were told we did by a multibillion-dollar marketing industry.

Purchasing. The activity of purchasing may seem similar to spending, but the formality of the word alerts us to a difference. We usually talk about purchasing when buying big or important things: homes, cars, or life insurance policies. I have never talked about purchasing a bag of Doritos. There is a deliberateness—an underlying rational process—that motivates purchasing.

Hoarding. Hoarding involves keeping something of perceived value for a very long time. It stands in contrast to spending in the sense that it involves holding onto something as opposed to letting it go. When we think of famous hoarders, George Eliot’s Silas Marner comes to mind. He was a greedy man fascinated with gold, a tangible form of wealth that seems even more concrete, solid, and safe than money.

Investing. Investing is a long-term use for money and requires careful, rational consideration. No doubt some investments are made impulsively, but arguably the investor in that case is more of a purchaser or even a spender, buying an attractive idea without careful review of what she is getting.

Using some real-life examples of what women do with their money, the more detailed Money Actions Graph might look like this:

“The first time I sat down with a financial advisor I was 41 — and it was a big step for me. Although my husband and I discussed our investments, I felt incompetent and took no responsibility for decision-making. I was caught in Neverland — sounding assertive like a modern woman, while acting out my role as Cinderella, letting Prince Charming rescue me and take care of our finances. Old messages are hard to shake!

“Our financial advisor sat at our kitchen table and addressed all his comments to my husband. He rarely made eye contact with me, and his tone implied that my questions and input were inconsequential. In response to his dismissiveness, I sat there silently like a good girl and didn’t confront him. I’m sure his actions were unconscious. He never would have believed his behavior unless it had been caught on ‘Candid Camera.’

“Years later, I decided that blooming late was better than not blooming at all, so I set out on my own to find a financial advisor. Whether attending introductory meetings or meeting one-on-one, it felt like the advisors were trying to convince me with their graphs and numbers that this was all too complicated for me to understand. Not a good start for someone who wants to feel in control!”*

Spurred on by these initial experiences, Syble Solomon long ago left Neverland and became an executive coach and speaker about the psychology of money. She now routinely recommends that her coaching clients work with a financial advisor. “Money is a metaphor for life,” she writes, and when people feel comfortable and confident about the way they manage their money, they feel more comfortable and confident in their life.” Syble is the creator of Money Habitudes™, the deck of cards used by financial advisors, consultants and counselors to identify how our relationship with money can support and sabotage our life and financial goals.

Advisors: We encourage you to learn more about the money psychology of women and join us for Syble’s webinar, when she’s nodding “yes,” but meaning “no” on February 13.

For more about Syble and her company, visit her website www.moneyhabitudes.com.

* Excerpted from Syble’s article How to attract and retain women clients.

You CAN erase all these mistakes. What are you waiting for?

1. We assume we do not know enough about finances.

Women are generally under-confident when it comes to making financial decisions, and as a result fail to take the steps needed to secure their financial futures. We often choose “safe” investments, rather than taking the necessary risks to ensure our money will grow for our longer life expectancies.

2. We let someone else – a spouse, a parent, a partner, an advisor – take care of everything for us.

This mistake is related to the first. If we think we are not good at finance, we may want someone else to do it for us. But finances are like health: you cannot have someone else keep you healthy, physically or financially. You have to be involved. Furthermore, most of us can expect to spend a significant part of our lives on our own, so we will need to be able to stand on our own two feet financially.

3. We put others’ needs ahead of our own.

Our care-taking “hormone” is what makes us great mothers, partners, and friends, but too often, we put our own financial security at risk to help someone we love. Examples include helping a boyfriend pay off debt, lending an irresponsible friend money, spending so much on expensive child care or schools that we cannot save for our own retirements. It’s no different from what you hear on the plane: You must put on your own “oxygen mask” first, so you are in a position to help others.

Everybody makes mistakes.

4. We do not ask for what we need financially.

Unlike their male counterparts, women are less likely to ask for the salary they deserve or flexible hours because they think they will not be liked if they assert themselves. We fail to ask questions about investing or other financial matters because we are afraid to appear stupid. Women need to put people-pleasing behaviors behind them, in order to get what they are worth and what they need to succeed.

5. We do not talk with our family or friends about money.

Women often think money gets in the way of close relationships, and do not talk to their partners or others close to them for fear of pushing them away. But this silence only compounds relationship problems and can lead to nasty surprises later on, such as learning that a spouse has terrible credit, or that a family member has not been properly insured. Start talking now about money issues, and keep talking regularly. Your financial security depends on honest communication with those you love.

Call it a “runner’s high,” or chalk it up to trying to distract myself from my painful feet, but I spent much of those five-plus hours in deep philosophical thought. I thought about the courage of our military, as I studied the faces and dates of too-short lives emblazoned on the backs of so many runners. I thought about the dedication of the spectators, who not only waited for several chilly hours to catch a 10-second view of their runner, but also propelled 19,999 other runners to the finish with their motivating and humorous signs. My favorite: “26.2 miles? Because 26.3 would just be crazy!!”

Inevitably, I also thought about my work as a CFP® professional. I’ve always enjoyed helping clients help themselves when it comes to financial security, but during that run, I found myself needing my own advice. I realized that getting through a marathon is not all that different from successfully navigating the long-distance journey we call life. So here’s what Eleanor the financial planner told Eleanor the runner, as together we paced through the 26.2 (but not 26.3!) miles.

Both long and short-term goals are important:
There are times when the long-term goal – be it finishing a marathon or getting that retirement account adequately funded – just seems too distant or too overwhelming. I certainly felt that way at mile 18, and so, I expect, do younger adults trying to pay off debt and raise a family, or older Americans watching their stalled 401(k) balances in a stagnant economy. At times like these, it may be best to focus on more manageable short-term goals: getting the highest interest rate debt paid off, working for a year or two longer than you planned, keeping up the pace to the next water stop. Short-term progress has a way of accumulating into long-term success.

Expect – and plan for – setbacks.
From my vantage as a marathoner, these setbacks appeared as training injuries (bad knee, followed by sciatic pain), blistered feet on marathon day, and the potential for terrible weather. I prepared for these by extending my training to include downtime, carrying moleskin on my run, and not trying to be a hero. I told myself if it rained or snowed on race day (as it had the day before), I would wait till next year and try again. These same precautions, in the context of financial planning, translate to: starting your financial planning early, even before you think you need it; getting all the appropriate insurance coverage for your assets and income; and being prepared to revise your goals and strategies in the face of adverse circumstances.

Success is all about budgeting.
Only in a never-land of infinite energy and limitless resources is it possible to ignore the necessity of budgeting. For the rest of us – runners, couch potatoes, employees, retirees – we have to pay attention to the basic physics of what comes in and what goes out. If outflow exceeds inflow for too long a period, you will hit the proverbial wall. For the marathoner, this happens when she starts the course too fast, or fails to take in enough hydration and calories along the way. For those hoping one day to retire, or educate their kids, or leave a financial legacy, this happens when they spend everything as soon as they get it, or worse, spend it ahead of getting it. It’s extremely difficult, if not impossible, to recover from these situations. Unfortunately, no one was offering me an energy advance at mile 20, just as there are few commercial loans to help out-of-pocket retirees make it to the end of their lives.

It wasn’t until the finish of my run that I discovered the most powerful similarity of all between marathoning and financial planning: once you have done it, you’ll feel like a million dollars! Do the financial part, and you may in fact someday have that million dollars. It all begins with that first intentional step.

Excerpted from Eleanor Blayney’s guest blog for Financial Finesse.

In November, I turn 59 ½.  This is of absolutely no interest to anyone, except maybe to kids under the age of 10 who think half-birthdays are significant enough to merit another round of gifts.  It might also catch the careful eye of a financial planner, who will tell me that on that day I can now dip into my retirement funds without paying a surcharge to the IRS for the privilege of spending my own money.

Oh, yes … and then there are the life insurance companies.  They will take note of this otherwise ho-hum day, by rounding my age up half a notch for purposes of assessing me a fatter premium.

Actually, I myself am interested for more or less the same reason as the life insurers – for I, too, will greet 59 ½ as the beginning of turning 60.  I intend to celebrate that BIG one by … what else? … training for and running a marathon.  It’s just a matter of persuading my knees not to card me at the starting line and thus declining to serve me.

I don’t really relish turning 60, but I honestly cannot think of a better age to be at the moment.  I love having so much time in my column – not time ahead certainly, but time behind me and all the experiences and lessons of the past.  It makes me a wiser mother, a more loving friend, and a better storyteller. The degrees of separation between me and just about anyone else, at least here in the US, are down to just one or two.  If I haven’t met you yet, I know someone who knows you, or someone who knows someone who knows you.  If I have in fact met you, but don’t remember, I have a built-in chronological excuse we can both laugh about without my needing to apologize.

This is abundance.  I am rich in experience, and each day, month, year adds to my stockpile.  To be able to say this — in an economy where scarcity, loss, and promises of the same for the indefinite future are daily headlines — is pretty amazing to me.

I just spent two days with my good friends and colleagues doing some strategic planning for our business, Directions. It was the best business meeting I’ve ever been to in my professional career, as well as the most unusual. All of us are Certified Financial Planners, but we spent virtually no time on our balance sheet or income statement.  The “Show Me the Money” mantra that is usually the touchstone of business strategic planning was entirely absent.  We did not count revenues or itemize expenses; instead we took an inventory of our beliefs about women and their planning needs.  We rejected the notion that our work is about women and money, and embraced the notion that we are concerned with women’s worth, which is a much larger concept that includes not just financial assets, but their intelligence, their experiences, communities, faiths, families, friends, work, and legacies.  We agreed that our purpose is to help women (and the world) appreciate this worth – that it is indeed an asset that never goes into deficit, but grows in value over time.

So while my 59 ½, then 60^th birthday may indeed be momentous to the IRS, life insurers, AARP, and movie theaters wishing to entice me with their senior discounts, I expect to celebrate quietly for an entirely different reason. Never before has my worth been greater, and never after will it be any less.

To which I would answer: Not talking about money with your family, whether it’s during Thanksgiving or at some other point, is even surer to ruin many more holidays in the future. Failure to share key financial information and plans — such as the details about wills, living arrangements and health care coverage for later years, expectations or requirements for family help in the event of disaster – can cause huge upset and disagreement among family members when a crisis arrives. An open and frank discussion today can prevent years of family fracture tomorrow.

But like all good advice, this is easier said than done. Particularly for us women. So many of us grew up believing it’s not nice to talk about money. Or perhaps we don’t have the financial training to really understand what is being talked about. Some of us, quite frankly, just don’t have the time, given more immediate demands of young children and career tracks. And even if you completely get that it’s important to have the “talk,” how do you start the conversation without seeming to be nosy or greedy?

There is no one perfect script – how you begin will depend on the person you are talking to and the quality of the relationship. What you say to Mom and Dad is likely to be very different from what you bring up with your siblings, as may be the emotions you experience in these two conversations. Nevertheless, here are some ideas for launching these important topics as productively and peacefully as possible.

• Emphasize that you care about the other’s wellbeing. Explain that you are asking these questions or bringing up these subjects because you really want to know what the other person hopes for and needs in the way of financial security, so that you are better able to honor and respect their wishes.

• Acknowledge the importance of financial privacy and autonomy, even among family members, but point out the many ways a family is inevitably linked where money is concerned. When an individual dies, divorces, or remarries, there are necessary financial implications for the family, particularly if there are dependents to consider.

• Model the kind of response, in terms of openness and detail, that you hope to get by sharing your own information first. For example, you might say to your parents: “Mom and Dad, I want you know that I would like to provide for my children in the following ways in my estate documents, and it would be helpful to me in finalizing my planning if you were to share with me your own estate plans.”

• Honor your own boundaries and capabilities, as you share with others your financial plans, and learn of theirs. You might say to a sibling, for instance, that you cannot financially support your nieces and nephews if anything were to happen, even if you are willing to help raise them. You might tell a child in college that you are prepared to let them live at home after graduation, but only for a six-month period. Limits need to be established now; trying to impose them later in the midst of turmoil or disruption is almost impossible, and likely to be misunderstood.

• Where it is really difficult to talk calmly and clearly about financial matters, consider writing a letter instead. In this way, you get a second chance to edit yourself as you express your financial hopes and intentions, both for yourself and the other family member. You can also get questions asked that need answers, without veering off into disagreements weighted down with “old family baggage.” Explain your intentions for writing it down, you don’t want anyone thinking you are trying to begin an official paper trail.

• When all else fails, consider using a third-party as a neutral facilitator for a family conversation about money. A CFP® professional who offers personal financial planning would be a suitable expert to guide this conversation, having had extensive experience in helping clients through the big financial events of life. He or she will understand both sides of the family dialog, and can suggest ways to resolve money differences. A financial planner will also add an objective view of the financial issues under discussion.

There are a lot of situations in which “talk is cheap,” but not when it comes to families talking about money. I remember bringing up with my mother the touchy subject of “who would get what” when it came time to distribute her jewelry and prized possessions. If it had not been for that conversation, I truly believe that my older sister and I — lifelong arch rivals in all matters of materiality – would still not be speaking eighteen years after my mother’s death. It would have been a case of “I want that! It’s mine!” erupting word-for-word from both our mouths as we tried to divide my mother’s effects. But what in fact happened was far different. Remembering our family tête-à-tête, I was able to pick up my mother’s heirloom engagement ring and calmly hand it to the third and oldest sister.

We were all at peace because “it’s what Mom said she wanted…”

Margie Carpenter

Investment professionals often talk more about stocks and the stock market than bonds and the bond market. “The stock market is so volatile!” “Buy low, sell high!” “Is this a good buying opportunity?”, and my personal favorite (cough), “What is the next hot stock?” By the way we talk, you might think the stock market is not only more influential, but also much bigger in size than the bond market. This is simply not true.

By recent estimates, the worldwide bond market’s total value is about $82 trillion, while the worldwide stock market’s value is approximately $45 – $50 trillion, which is a little more than half the size of the bond market. Does this surprise you? It surprises a lot of investors, but there are good reasons for this size difference.

The bond market has many issuers, including governments, agencies, states and municipalities (taxable and tax-exempt), mortgage-related and asset-backed bonds, and corporations. Not all of these entities are in business to earn profits. The bond market is a massive, decentralized network of buyers and sellers. It is easier to issue new bonds than stocks; bond issuers simply establish the terms and bring the bond(s) to market. There are no stringent listing requirements or hurdles, such as there are with stocks. When you purchase a bond, you are lending your money to the bond issuer in exchange for a regular interest payment, and you expect the return of your loan amount when the bond matures. Bond market movements are influenced mostly by changes in interest rates, so is more of a current assessment of how our economy is doing now. There is more demand for bonds than stocks around the world, since bonds are generally less risky than stocks and provide a more stable return.

The stock market, on the other hand, is made up exclusively of public (as in “publicly-traded”) corporations, and stocks are traded in a centralized marketplace consisting of only a few exchanges. To issue new stock, companies must provide detailed financial information including their net worth so that new shares of stock can be appropriately priced. When you purchase a stock, you are buying and therefore own a part (albeit small) of the company and there is no specific maturity date on your investment. As an owner of the company, you can vote on important shareholder issues, and you can own those shares as long as you like. A company’s profitability is extremely influential on its stock price. Stock market movements are more of an indicator of where the economy might be headed, and is typically focused on predicting future earnings of companies. Consumer sentiment plays a huge role in how the stock market performs. Movements in the stock market tend to be more volatile, due to its perceived and actual risks being greater than those in the bond market, and therefore the expected returns for stocks are greater.

There are always exceptions to these general rules of thumb. Bonds do sometimes outperform stocks, (depends on type of bond, time period used, etc.) but generally, stocks are expected to outperform over longer periods of time.

So which market, stocks or bonds, is more influential around the world? It depends on your perspective of course, and how much you might own in each, but in terms of sheer value and size, the bond market is the clear winner.

To learn more about Margie Carpenter, visit her website, Bell Tower Advisors.

I began doing some internet searches and talking to planners that I knew. Almost everyone agreed that there was a definite need for women-focused planning and also agreed that they would not know where to begin. I finally stumbled across the Woman’s Institute for Financial Education and from there visited Money Clubs. Both sites were helpful in reaffirming my belief that women were looking for a way to reach out to one another to discuss their financial concerns. And, the Money Club site also provided some ideas on how to structure the meetings and topics. This provided me a starting point, but I ended up personalizing the meetings and my approach. I was looking for something different from the Money Club structure and an approach that was unique to both the women invited and me.

Our first meeting was held in the office conference room and I served beverages and a selection of cookies. I am not sure who was more nervous, the ladies invited or me. We all took a deep breath and decided we would hope for the best and discuss finances – out loud and with strangers. We started with simple introductions, who we were and what we hoped to get out of the meetings. It was almost immediately a lively conversation with relative strangers opening up like old friends. I remember one participant saying that she hoped I would start another group soon because she had friends that could benefit from these types of conversations. I suggested she bring her friends to the next meeting and she laughed and explained she would never discuss money in front of her friends or neighbors.

Let me take a minute to explain the makeup of our little group. We have a variety of ages from late twenties to retirement. Everyone has worked outside of the home although some have not been the primary wage earner. We have single, married, divorced, widowed, childless, mothers, grandmothers and every stage of life and wealth accumulation you can imagine. And we are a group of about ten. I believe the diversity of the group adds to the richness of the conversations. At that first meeting, I asked for suggestions of topics that the group would like to tackle in our monthly meetings.

So far, we have had a meeting dedicated to retirement planning and a discussion of the variety of retirement planning vehicles that are available. We invited an expert on reverse mortgages to come and talk to the group and answer our questions. A local estate planning attorney came to one meeting to explain the importance of wills, trusts and answer questions about wills and probate. Next month we are having a personal organizer come in to give up some tips on ways to organize our important documents and home offices.

Looking back on the last six months, I can see a lot of ways that I could have improved on our initial meetings. And I echo the suggestion that having the participants take ownership of the topics and meetings would make the experience more fulfilling for all concerns. And, I appreciate the patience and willingness of my first group of guinea pigs to embark on this curious adventure with me.

But I think the most important thing I have learned to date is that each meeting of this group enriches me far more than it possibly benefits them. This monthly meeting has been an important first step to teach me how to change the conversation about money for my women clients.

I sincerely believe the entire experience would have been better for all if I were more prepared and not “winging” it. The importance of knowing how to make it a comfortable experience for all, when to talk and when to respect the silence, how to make a circle. I intend to start another group now that I have returned to Chicago, but before I do, I am going to participate in the Directions webinar series on Circle Training.

For more information about Carol Lee, you can email her: cleeroberts@sbcglobal.net.

The adults who are hesitant to ask information of their parents are afraid of being seen as greedy, in competition with their siblings or even of anticipating their parents’ deaths. This kind of avoidance generates anxiety and worry, often for years as they secretly wonder about the estate issues or dread dealing with their siblings.

It will take some courage and some skill to initiate this conversation but it could easily be that your parents are afraid to bring it up and would appreciate your initiating this conversation. It also helps to begin “softly” and with open ended questions such as “What you would most like to have happen in our family when you are at the end of your life?” ” How can all of us help you with that?” If your parent is in denial and will not discuss the topic, approach this indirectly by telling stories of your friends and their parents.

Parents tend to be blissfully unaware of the possibilities of sibling wars when they make inheritance decisions on their own and keep them private. The best outcome for your whole family may be to tell your adult children about your decisions and let them express their opinions and have some input as well. Emotions that truly should be part of the parent relationship can often be acted out on the siblings after the parents are deceased.

What gets in the way of parents calling a family meeting and reviewing estate concerns? Many do not know that it is important to do and it never occurs to them. Many parents perceive the assets to belong only to them and thus they have complete freedom to do as they wish. This ignores the next generation’s feelings that the assets belong to the whole family. In addition, as parents approach the last stage of their lives, they do not want to risk having a child upset with them or alienated from them and believe that keeping inheritance terms secret will preserve their own relationship with their children.

Best practices in today’s modern family include an open family meeting about the future process that the children will go through, some input from them and an open discussion of why certain choices seem desirable and the contained expression of feelings about this.

For more information about Dr. Gresham’s work on issues related to inheritance, money management, and family values, click here to visit her website.

Not long ago I realized the same is true for my time. I commented about this to a dear friend who is a Jungian analyst, “I’ve noticed I always think my money and my time will stretch further than they can.” She suggested I look for the “pull,” or the “magnet,” in each activity that leads me to over-commit, whether it’s my time or my money. I wasn’t sure right away, but suspected it had to do with wanting to please everyone. She smiled wisely, saying, “I think you are probably right.”

So that was a start. But what to do with this helpful new insight? If you are an innate people pleaser, you cannot just stop, even if it is the right thing to do. Pleasing people keeps you connected, and for some of us, connections are life sustaining.

Until recently, I could see the problem but not the solution. Then I spent a year in a coaching group learning how to rediscover our true selves and live them fully. The single most important thing I took away from the process is this: I am enough. It’s a simple realization, but it has taken me a giant step closer to being complete, without anyone’s input, and actualizing my whole self.

I am growing less reliant on others’ approval, others’ reassurance, others’ praise. And in that process I am more able to set – and keep – clear boundaries around what I can and cannot do, what I want to do and what I don’t want to do. Do I still have time and money issues? Well, yes, they have not cleared up overnight. But I have hope. I have a clear plan now. I know how to get where I want to go. Whether I’m managing my money or my time, I am more purposeful.

So let me ask you this, are you enough?