All Us Single Ladies… and Our Money

Manage your own money. Photo by Mike Wilson via Unsplash.

It’s important for us to be taking charge of our financial lives. And plenty do, but many don’t, relying instead on a family member or a dating partner or friend to handle the money and give advice. It’s perfectly fine to ask for help! But everyone, male and female, needs at least a basic understanding of their own finances, including budgeting and investing.

There are several reasons why you need to be able to stand on your own two feet when it comes to finances.

A rising tide lifts all boats

If your parent or friend has done well in the stock market over the past nine years, that’s not necessarily due to their financial acumen. They could very well be smart investors, but the past nine years have been a bull market in US stocks. That means pretty much everyone who invested in domestic companies has seen great returns.

Having an understanding of what is happening in the market will help you keep your investing in context. Everyone who’s invested in the stock market when it’s dropping will lose money, at least on paper, and knowing that’s a feature of the market helps you weather the storm.

Investing is personal

Timelines and risk tolerance are important when figuring out how to spread your money among the different asset classes. Someone with a longer time horizon should have more stocks than someone with a shorter time horizon, and someone with a higher risk tolerance should also have more stocks than someone with a lower tolerance.

Just given the difference in timelines, your portfolio most likely should be allocated more to stocks than your parent’s. Many people who give advice, who don’t work in the financial field, tend to recommend whatever has worked for them. That may not be best for you, even if it was great for them.

The investing world was very different when our parents were in their twenties, so their experience will not be the same as yours.

What made sense for them back then probably no longer works in the modern world, where interest rates are much lower and bonds don’t provide much in interest.

I had a client in his forties who, before he came to our office, asked someone else he worked with for advice. His colleague was older, so he recommended his own 2020 target date fund. My client wouldn’t retire until 2050. The recommendation was way too conservative, especially given his high risk tolerance.

Another client, who was in his twenties, asked his father for advice on his retirement plan at work. He ended up with gold and cash, just before gold started to drop. As I’ve written, cash isn’t appropriate for long-term goals because it doesn’t keep up with inflation.

A professional planner, someone who works in the field, often works with different types of people at different stages of life. They’ve worked with retirees, pre-retirees, and some just starting their careers. They have an understanding of the different needs. A good advisor will set aside their own beliefs and their own financial plan to come up with a plan tailored to you.

When I was a financial planner I worked with a number of clients who had a lower risk tolerance (or shorter time horizon) than I have. I wanted them to be able to sleep at night, and a too-risky portfolio wouldn’t help. We developed allocations that were appropriate for them, which would have been far too conservative for me.

Because for a professional, it’s all about the client.

If you would like some professional advice, there are lots of advisors out there to help you.

Natural processes

When you’re not using a financial professional, your source of advice will probably not be with you forever. Not to be morbid, but the usual way of things is for parents to die before their children. If you’re relying on your parent, at some point it will likely be just you who is responsible for your finances. If it’s a friend or partner, you may not always be together.

Being able to handle your own finances is empowering.

No matter what happens in your life, you can take care of your own money and create your own plan. If you’re not all that interested in the topic, that’s OK — you just need a basic understanding of how your money works.

If you need more financial knowledge, you can buy the book From Zero to $avvy: A Quick Guide to Investing or head on over to www.fabfemfinance.com for free resources to get you started on your journey to financial mastery.

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Unlocking The Secrets To Business Achievement With More Life Balance For Women ⎸Speaker ⎸Productivity Queen ⎸Ghostwriter ⎸Author ⎸Pun Lover

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Jennifer Jank

Jennifer Jank

Unlocking The Secrets To Business Achievement With More Life Balance For Women ⎸Speaker ⎸Productivity Queen ⎸Ghostwriter ⎸Author ⎸Pun Lover

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