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Women

plant good seeds

May 6th, 2012

You are a gardener with your money. You are always planting seeds. Some come up exactly as you planned — purple flowers where you wanted them, or sunflowers exactly the right height. But often the seeds aren’t exactly what you expected. The flowers are a different color, they bush instead of climb, they don’t even germinate. Gardeners learn to be flexible, to take deep breaths in, and sometimes they celebrate the synchronicity and propinquity that come from creating in an environment that cannot be totally controlled.

Do you see the connection to money? We study, plan, hire professionals, yet still there is an element to investing and managing money that you simply can’t predict or control. So here are a few things to do so that at the end of the day you can sit back and love the garden you’ve created rather than grumble about the wrong colors, scents and design:

Plant good seeds – Buy quality investments, ones with a track record and solid management. Diversify; don’t use seeds or investments all from the same company.
Be flexible and spend a little time weeding – If something grows too fast or not at all, or is simply not what you expected, pull it out of the portfolio and try again. Investing, like gardening, is a process of trial and error. The key? If you don’t try, you’ll have no opportunity to improve your results.
Prune – Trees and bushes often grow better when cut back and thinned-out. Be willing to sell some of your favorite investment, if it becomes too large a part of your portfolio, and allow an undervalued investment to grow bigger and stronger in its place.
Expect a few failures – There are going to be investments in your garden that fail. It’s just bound to happen, and if you try to avoid this eventuality you will also miss owning the winners. Be willing to explore the edges of your risk tolerance. Don’t violate it, but also don’t let fear be your travel guide.
Be prepared – Soil happens. Rain comes and goes. Frost can bite you in the butt. With investing we can never know exactly what’s going to happen, and I can tell you with certainty that the perfect investment last year won’t be stellar in the coming years. The market, just like the growing year, is cyclical. But unlike the seasons, we can’t always predict that a sudden snowstorm is going to lock us inside our house with eight crazy relatives, four dogs and an ailing guinea pig. You can come prepared with your attitude (flexibility really is the key to happiness), and with your back-up plan (insurance is handy when the rock falls on your foot or the tendonitis in your shoulder from weeding prevents you from working until Spring). Create a financial plan that has the unexpected built into it.

To get to know Luna better, read her story or visit her website.

Categories Women Invest
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Women Wielding Words

by Eleanor Blayney

May 10th, 2011

“The pen is mightier than the sword.” Now there’s an aphorism that shows its age, at least in my experience. Search as I may, I can never get my hands on either implement in times of crisis.

But in its less literal sense, the wisdom of the phrase is still relevant: words can be a powerful weapon, especially in the battle of the budget. Consider for example the word “No!” Uttered in a stern voice, to one’s children or oneself, in the grocery store or in the mall, this one little word can save you bundles.

At times, however, we need to string a few more words together, and put them in writing, to accomplish the same worthy goal.

Very recently, I was reviewing my AMEX business account and noticed a charge for renewing an internet service that I had not, to my recollection, authorized. I asked Candice, my indispensable IT and everything-else person, to look into this and to cancel the renewal, as it was no longer needed. The next thing I know a very curt email lands in my box, saying that no refund can be issued, and reminding me that when I signed up for the service online a year ago, I had authorized an automatic annual renewal. After all, this was “clearly stated” (as in “buried in the fine print”) as the fifth condition of the online contract. Anyone else like me who just checks the “Accept” box without reading all that legal stuff?

An automatic and very loud “NO!” from me sent my bewildered golden retriever scurrying away with her tail between her legs. I was not going to let them get away with this. Absent my sword — which I still could not find — I fired up my keyboard and took aim with a strongly worded email to “Customer Support.”

I will spare you my powerful rhetoric only to say that a BA in English can be handier than an MBA when it comes to scoring a money win. Within the hour, Customer Support capitulated, brandishing a white flag. My money would be refunded.

These “stealth fees” have become epidemic in our recent economy, as everyone is searching for ways to increase revenue. I’ve lost count of the number of times extra cable channels have snuck onto my Verizon bill, only to be unceremoniously expelled in my now monthly phone call to the phone company. The speed with which these fees are eliminated as “errors” upon a word or two from me makes me suspect that they are mistakes only in cases where they are detected. For the untold numbers of subscribers who do not read their phone bills, those fees are probably paying the bonus of some smart management trainee.

In short, words can make a difference to your financial management. Failure to pay attention to the words buried in your bills or the fine print of contracts can cost. On the other hand, the words you use with vendors or service providers can pay. A well-written email, or a carefully prepared phone request, asking them to reconsider the terms of their agreements or refund policies, brings results more often than you might think. I have found the phrase “It may be your policy, but it is not good business,” to be very effective, particularly when delivered to someone at the policy-making level.

Which brings me to my last point about the power of language as a financial management tool: namely, it pays to negotiate the price and terms of just about every service or product that is not a commodity. Negotiation, in turn, takes careful attention to language: to word choice, syntax, timing, and emphasis. It takes thinking through your position, anticipating the response, and creating a compelling counter-offer. It requires, in another words, conviction and skillful communication.

Women are notoriously inept negotiators, not because they are poor communicators, but because they are afraid to ask –- afraid to ask for more pay, for a better deal, for reconsideration of terms. Their eagerness to please can cost them real money. You’ve no doubt heard the saying, “Nice girls finish last”? We should toss than one out, along with our swords, and give currency to another expression:

Articulate women finish first.

Categories Financial Confidence
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Owning Emotion!

by Eleanor Blayney

April 3rd, 2011

“You are SO emotional!” How many times do women hear this from their significant or even insignificant others?

I’ll be the first to confess that this description has been leveled at me, more than once, by various business colleagues during my career. Each time, it was not intended as a compliment nor even as a neutral comment, such as might be made about the weather. Rather, the implicit message was that emotionality was somehow unprofessional – the antithesis of rationality and cool judgment. In other words, to be a better manager and advisor, I needed to pull myself together.

Leaving aside hormonal bursts of emotion, such as those induced by PMS or menopause (even I will admit those particular storms can be a bit much), I do not agree with the notion that emotion somehow scatters our wits or dissipates our effectiveness as professionals. If anything, access to our feelings is a hallmark of psychological wholeness and balance. Those who suppress their feelings, or deny they even exist, are – dare I level back? — the ones in need of self integration, of pulling themselves together. Me, I am quite happy sitting between feelings and facts, and find quite often that wisdom emerges when the two start shouting at one another.

The field of personal finance was originally constructed on a foundation of rationality: the premise is that individuals manage their money dispassionately and sensibly, seeking either to grow their monetary wealth or to protect it. Behavioral finance – a latecomer to the table – arrived to assert that humans, who may share 98% of their DNA with long-armed tree dwellers, are not as buttoned-down or logical as the financial theorists once assumed. Through close observation of people’s choices (such as buying winning stocks and selling losers, or the decision to play golf on Sunday rather than go to a movie with the wife), behaviorists have concluded that individuals often do not act in their own best interest. They use, in other words, certain mental short cuts that lead them far off the straight and narrow path of rationality.

While behavioral finance can be a great source of “people-do-the-darnedest-things” anecdotes and a welcome counterpoint to rationalism, it still, in my opinion, fails to give human emotion its due in the realm of personal finances. Instead, it focuses on the “illogic” of homo sapient decision-making, which implicitly suggests that logic and rationality are more highly valued than the delightful monkey-messiness of being human. Indeed, many advisors use the observations of behavioral finance as “advisories” to their clients. For example, they will explain to clients the behaviorial “availability heuristic” – which leads to the notion that what’s happening in the stock market today will also happen tomorrow – as an example of what NOT to assume when investing.

We have yet to fully acknowledge, even celebrate, the importance and power of emotions when it comes to finance. Far from leading us astray, these emotions provide us information and guidance that can vastly improve the way we understand and advise others when it comes to money. As David Brooks, a New York Times columnist, recently wrote in an op-ed on the new humanism, “Emotion is not opposed to reason; our emotions assign value to things and are the basis of reason” (underline mine).

Brooks is talking in his essay about government policies, but his use of the word “value” puts me instantly in mind of personal finance as well. What he is saying to me, even if his message was otherwise directed, is that emotions and financial value are intimately and importantly aligned. Get rid of the emotions, and we have no basis for our interactions with money. Prices of goods and services can be denominated in dollars, and set by exchange rates, market makers, central banks, and economists, but it is ultimately our feelings and reactions of fear, anger, well-being, and compassion that inform our choice of those goods and services.

Helping women understand money and gain financial confidence is not about eliminating their emotions, but going straight to their core. Women are indeed an emotional gender, and have always relied on those trustworthy emotions to guide us as mothers, sisters, and friends; as community activists, as consensus builders, as the primary ministers to and providers of basic human needs: for education, healthcare, care for dependents. Emotional outbursts may find no place on Wall Street, but elsewhere in the world, these eruptions are changing the global order and are the occasion for getting important work done.

Let it be said: as women, we are rich in emotions! It is high time we understand and appreciate this wealth as it pertains to our decisions and choices about money.

Categories Financial Confidence, Women work
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A New View of Value

by Eleanor Blayney

February 22nd, 2011

When was the last time you told yourself, “No, it’s too expensive”?

Some of us have banished this phrase from our vocabulary or say it in a voice so tiny, it cannot be heard over the loud beckon of something that we want. We don’t like telling ourselves “no,” with the result that the mental chatter in our head consists mostly of justifications for the “yes.”

For others of us, “too expensive” is an automatic barrier we erect to keep us from engaging fully with what the world has to offer. We don’t take the trip, go out for a nice dinner, buy the premium brand, or sit in the best seats, nor do we even let ourselves be tantalized by these luxuries. No mental small talk here. The price is too high – discussion over.

There is, of course, a vast middle range between the automatic self-indulgers and the knee-jerk self-deniers. It’s here where questions of value reside – where we have to do a bit of thinking as to whether a given expenditure is really worth it.

Actually, it can involve a lot of thinking. Value is an elusive and highly subjective concept, not to be confused with price. One woman’s trash can be another woman’s treasure, as any inveterate prowler of Saturday yard sales will attest. Taste, too, may play a part – if you don’t like caviar – you’re unlikely to appreciate, let alone pay the going rate for those exquisite, slimy eggs.

There may be as many different registers of value as there are individuals. Generally speaking, however, these registers fall in one of the following categories:

Affordability. In this case, we make our determination as to what we will pay based on what we CAN pay. While this approach has the merit of keeping us out of cash flow trouble, it discounts the importance of quality in our purchase decisions. The warning “you get what you pay for,” can be relevant here.
Cost/benefit analysis: MBAs and economists favor this approach to value, particularly when evaluating alternatives. The most valuable option will be the one with the most benefits per unit of cost. Sounds sophisticated and scientific, but benefits (as well as costs) can be highly subjective and emotional. Name brands use this subjectivity to their advantage. Branded products or services almost always cost more than generics, while offering virtually the same features. But when it comes to choosing a bottle of ketchup or aspirin, the thought that Heinz or Bayer was what “Mom always used” trumps the just-as-good generic every time.
External reference: Sometimes we decide what is valuable based on what others think, do, and spend. When we are teenagers, this shows up as “peer pressure” and is, unfortunately, very powerful. The problem is, however, not all of us grow out of this way of thinking. In its adult form, this is referred to as “keeping up with the Joneses.” Either way we are looking outside ourselves for our measures of value.
Internal reference or self-esteem: When we truly appreciate ourselves, in the sense of knowing ourselves and how we choose to live our lives, the question of monetary value becomes simple. We don’t need accounting or economics courses to know if the price is right, and we certainly don’t need advertisers or trend-setters to tell us what to buy, and for how much. We define value as whatever best honors us and sustains us. Our use of money – what we buy, save, or give – is not a source of shame or indecision, but a form of personal expression.

At Directions, we believe self-knowledge is the first, and perhaps most powerful, lesson of personal finance. This knowledge will not, of course, eliminate those occasions when we must tell ourselves “it’s too expensive” or “I can’t afford it.” But this self-talk is no longer about denial, but affirmation that we are making a choice that honors what is most important to us.

Categories Personal Finance for Women
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Mistrust and Responsibility, My Generation’s Perfect Storm

by Candice McGarvey CFP

November 5th, 2010

I was a preteen at the time of the Tylenol tamperings when seven innocent consumers died of cyanide poisoning. I remember the transition between receiving home-baked treats at Halloween and receiving only prepackaged candy with a recommendation to have it x-rayed by police before you ate it. I am now raising children who are not allowed to walk to the bus stop alone, play in our yard unattended, and they definitely don’t speak to strangers.

I am representative of a generation that drives everyone, including ourselves, crazy. My mother’s generation grew up fearing the Russians, never having even met one, while we grew up worrying about the terrors that lurked just around the corner: gunmen in our schools, bombers in our churches, deadly viruses in our bedrooms.

As a result we don’t trust anybody, and do everything ourselves: We rely on information and the internet, rather than experts and experience. At the same time, the volume and speed of information add further fuel to the flame of our generational fears. There is always evidence, not just that something could go wrong, but that something will go wrong.

As women of Generation X, we were fortunate to have been told we could accomplish anything; nothing was outside our reach just because we were women. We pursued higher education at a record-breaking pace while assuming we could raise families at the same time we accomplished our professional goals. What we are facing now is a perfect storm of responsibility: we can do everything (or so we think) but we can’t trust anyone. Our do-it-yourself attitude results in a conundrum one of my friends describes as “Choosing between to-do list items that are either ‘Important!’ or ‘URGENT!’ So I choose the urgent, and the important stuff never happens.” Unfortunately, finance is often on the “important” list, we know we need to take care of it, but it will have to wait until we get a break between crises.