By DANA ERICKSON – Gazette Columnist
In my career, I get the wonderful opportunity to speak to many different groups on financial topics. Lately, I’ve asked women in these groups a very important question: what’s in your purse?
It is designed to get women thinking about the content of their financial "purse" beyond what I call the four C’s: cash, checkbook, credit card and coins.
Women seem to carry many creative things in their purses – from flashlights to tweezers to wine openers and cosmetics. And it seems the bigger the bag, the more stuff we put into it. A lot of the things that we put into our purses, and spend money on, are not essentials. Instead, these items provide instant gratification, but unfortunately prevent us from achieving greater financial stability.
The concept of unnecessary spending can create fear and worry about one’s financial future. Three out of four women feel financially stressed1, despite the fact that women control more wealth, have more education and are more involved with financial decisions.2
Nearly 95 percent of women are financial decision makers. Yet only 20 percent feel very prepared to make wise financial decisions.3
I like to do an interactive exercise in my session called "Dress the Diva," where we talk about the economic value of the clothing, accessories, shoes and handbags. At a recentn presentation, we added up the cost of an average outfit that a woman would wear, and the total was $305. I then asked the group if they have put $305 into savings that month? Or, thinking bigger, have they saved $305 for their retirement accounts.
Oftentimes, we spend money on our outward appearance, and for instant gratification, but do we spend the same amount of money on our financial future?
We all, myself included, could do a better job of saving more, spending less. I am guilty of a weekend trip to TJ Maxx to see what’s in stock, because "I’m bored," or I buy the Groupon coupon for a local restaurant because it’s a good deal – yet a meal at home still costs less.
But it’s not always clothes and dining out. In a conversation with a client the other day, she shared that she has a collection of more than 400 DVDs. In adding up the costs, she realized that the money spent on that collection could have been a nice contribution to her Roth IRA.
So, the next time you’re cleaning out your purse, or even cleaning your house, take a moment to think about the ways you can brighten your financial future. Think about all the "extras" you spend money on, and make a list of some actionable ways you can stop some of the non-essential spending to create greater cash reserves and long-term savings.
What could you be doing differently, now, to create greater wealth and stability in the future?
Dana Olson Erickson, ChFC, CASL, is a Financial Consultant with Thrivent Financial for Lutherans in Stillwater. She can be reached at 651-439-7091.
1 Survey by Aviva USA with the Mayo Clinic, May 2012.
2 Councit of Graduate Schools Press Release, Sept. 2010.
3 Financial Experiences & Behaviors Among Women, 2010-2011, Prudential Research Study.