I realized recently that my favorite phrase is “Me too!! Me too!!” You too, right?
As in “You can sing every song from Wicked even though your friends and family accuse you of being tone-deaf??” “Me too!! Me too!!”
Or “You think that Dorothy Parker would have been a way snazzier friend than Jane Austen? “Me too! Me too!”
My connections with people, at least initially, have more to do with similarities rather than differences. Frankly, people are just a lot less frightening when they are familiar. Ditto, it seems, for finance.
Which brings me to this new series. I frequently pose random questions on facebook and twitter. It’s as if I am moon-lighting as a game show host:
“If you were forced to enter a food eating contest but YOU could choose the food, what would it be?”
“If you were forced to enter a donut eating contest, how many do you think you could handle?”
Did I mention that this game show is secretly sponsored by a weight loss centre? *wink* But it’s fun and quirky and raises my Klout score (It’s 69, in case you’re wondering).
OK, but then I ask a simple question about finances and its crickets. Nothing. I have seen people admit to eating ten hot dogs in one sitting. Others have posted graphic descriptions of their bowel movements (yep, really) but I ask gentle questions about financial competencies and I get crickets.
So this series is designed to address that. By showcasing a few women – hopefully some, just like you – we can find a comfortable way to talk about finance. I adore talking about savvy money tips and other awesome ways to save/spend a few bucks. But this series is designed to dig just a little bit deeper. I sincerely want to know:
- Are you one of the 77% of Americans (and by extension, possibly Canadians) living pay cheque to pay cheque? If so, does that frighten you?
- Are you one of the 86% of women who are responsible for the day to day household consumer purchases but at a loss when it comes to your investments (aka retirement funds) ?
- Why can’t we discuss investments without palpitations?
The hope is that by sharing these stories, we can normalize all the uncertainties and fears and doubts and questions we have about finance. Trust me, there are tons.
So, with that in mind, I had a chat with Jessica Gottlieb about her families finances, specifically their investment finances. Jessica is a mom, wife, and writer. She is also extremely patient and graciously accepted my invitation to be the first women profiled here.
Me: Jessica, in your household who is responsible for your investments?
Jessica: I am solely responsible
[At this point, I choke on my coffee. She is so clearly the exception to the rule. So of course my next question had to do with how she hid any financial losses from her husband. Not that I was looking for tips or anything...cough...cough....
Me: Do you tell your husband about the losses too?
Jessica: Here's the thing, I'm 41, he's 46. We have no business worrying about daily gain/losses with our 401k. Our job is not to micromanage that. Our job is just to beautifully contribute to that. And every time he gets a raise, we contribute more.
Me: Do you sit down together and determine amounts to investment?
Jessica: My husband was making $11/hr the year my daughter was born. We were saving 2% of his income, living in Los Angeles that's what you can save. When we've increased our income, we increase the percentage of our savings before we increase our lifestyle [editor's note: That is brilliant actually]. Our lifestyle is not the norm. My husband works ALOT of hours. In the beginning it really was simply that I was interested [in investing], he wasn’t, we had nothing, y’know? He works so many hours so I just don’t think its fair he comes home form work and needs to do one more thing
“Investing is a pretty emotional thing”.
Me: What about you, do you use a financial advisor?
Jessica: Ok, so when I was around 7 or 8, my dad gave us graph paper and we started charting stocks from the newspaper. I don’t have a deep and rich understanding of the stock market but I know enough to know that if i have an extra $100 I am putting $90 towards my mortgage and $10 in the bank. i know that I want to invest in things that keep me safe and my home keeps me safe. I want to own our home. I think that like everybody else, investing is a pretty emotional thing. I invest in things that will let us sleep at night. I want to invest into our retirement, in our home and I want a lot of cash.
Me: Do you think if your husband was more involved in your investment portfolio it would look different?
Jessica: It would probably look a lot more aggressive right now. He’s a bigger risk taker than I am. As the housewife, I have already given up so much control. I have given up a career, [totally not true, check out her bio!] I have given up the ability to change our financial landscape. I don’t think I could give up that much more control. [here is where I blather on with boring financial stuff like the Merrill Lynch study that backs up exactly what Jessica inherently knows - women make better investors than men! Jessica yawns politely, she already knows this]
“It’s not so much what I don’t know as what I don’t trust.”
Me: What don’t you already know about investing that could help you?
Jessica: It’s not so much what I don’t know as what I don’t trust. I don’t trust that the prices of stock and bonds are reflective of their value. I don’t trust Wall Street. And that’s why I’m not in it in a big way. I mean every body is in it in their 401k. But I think I understand enough to understand that they are criminals and they’re not to be trusted with my money. Isn’t that terrible? I just want to be in real estate, REIT’s, I have a few old stocks.
Right before I was married, it was 1995, the year I met my husband. I got a $2500 commission cheque ( I was 25 years old) So I ran to Rodeo Drive to go to Chanel to get my purse because that’s what everybody would do with their $2500 cheque, right? [um, of course!!!] And then I stood there and thought maybe this purse won’t be that popular next year. And then I went home and went on ETrade and I bought Intel at, like, $20/share. Then in 1998 when my daughter was born and our apartment manager didn’t think our leaky toilet was a priority, we bought our first house with Intel.
Me: It’s not always easy though. I mention that the next post in this series is featuring a woman who is unaware of her household investment portfolio. Jessica’s reaction?
Jessica: A part of me is jealous of those women. They don’t wake up in the morning freaking out when they hear the news. It’s probably really nice to feel that taken care. Even though it doesn’t actually take care of them, it’s just a feeling [yep, that is the unfortunate truth, isn't it?]
Me: So I read recently that 77% of American are living pay cheque. That’s scary and downright discouraging. When I bring this up to Jessica, she had another take on what this could mean:
Jessica: “Well, We live pay-cheque to pay cheque. I am a spender, I love nice things, I want nice things. Nice things cost money. So ok, my husbands pay cheque gets directly deposited, minus the 401K, so we have a good chunk we just never get our hands.and then I pay all our bill s and then in 2 weeks we get the next pay cheque. If there was $571 left in our chequing account by the next pay cheque it goes directly into savings, we do not roll over anything. If we didn’t need need for that two weeks, we don’t get it for the next two weeks either. I figure we didn’t need this week, we won’t need it next week either.
I’ve been working with this brand, ThreeJars – it’s an online allowance system. I was talking to the kids about compound interest. And the reason I was drawn to this is because the system lets you give the kids any interest you want if they’re saving. So I give my son 40% interest on his savings. Because his allowance is $10 week….My daughter gets 20% because she makes more money. It’s more about the lessons. We go through excel sheets, and it’s fun pointing out the magic of compound interest….I don’t have the opportunity that my parents had to show [interest] with bank statements because they’re so low. I can however show them that with a credit card because they are so predatory and spiral out of control so quickly. I don’t have a lot of real life experience unless I manufacture them with Threejars. I think that thing that really made the difference in our lives financially, both negatively and positively has been compound interest, and there’s just not many ways to teach it.
Then we went on to discuss children, houses and nyc in August. There may have been a few “Me too!” explosions along the way….just sayin…..
- Jessica and husband have defined responsibilities regarding their household finances, where she is primary investor.
- They have a very clear understanding of their financial horizon and comfort level. In their case, that means more is invested in real estate than in Wall Street.
- Tackling compound interest is the cornerstone to tackling investments.
So what about you? Have you been yelling “Me too! Me too!” while reading or is your story very different? Would you rather talk bowel movements than finance? If you chose finance, let me know – I’d love to feature you in our new series!