When I received my first $20 as a babysitter in my early teens, my dad took me straight to the bank where he insisted I save 10% of my earnings. Those 2 buck-a-roos made a lasting imprint in my memory: I needed to stow away something of everything I made to ensure my future. I give much credit to my parents for instilling in me this healthy mindset toward finances, but it wasn’t until I turned 30 that I actually got serious about investing. In fact, for most of my 20s, I had a singular, narrow perspective on saving: I like my money where I can see it … in my bank account. It took me many years — not to mention meditation and therapy — to separate my emotional attachments to my savings account, and understand that sometimes, risks are worth it.
If you find yourself using words like “anxiety” “fear” or “security” when thinking about your financial picture, pour yourself a glass of something you like — coffee, wine or otherwise — and breathe. You definitely aren’t alone, considering many women are guilty of this practice. The approach isn’t all bad, but it could use a few upgrades.
Here’s a look at some of the ways we could be emotionally attaching to money — and how to break free.
You may be need to be less risk-averse when you invest
Depending on our age and lifestyle, as well as our income and retirement goals, how we invest can vary greatly. Speaking with a trusted financial expert can help us navigate our choices and diversify our investments, but many of us are nervous to take that first step. Lorna Kapusta, the head of women and investing at Fidelity Investments (sponsor of the HerMoney podcast) says more often than not, women tend to be more risk-averse. Instead of looking at what we could accumulate, we focus on the worst case scenario and fear losing it all. Men, on the other hand, see it the other way around, and may even throw their money around in unnecessary ways, since they have more confidence they’ll always see a return.
There are perks and downfalls to both of these approaches, but Kapusta recommends women parse out their short-term and long-term goals, and apply investing different strategies for each. This is where our emotional attachment perspective needs to shift a bit. For example, if a goal is to buy a beach house in retirement, we shouldn’t keep tens of thousands — or hundreds of thousands! — in a basic savings account for fear of losing the money in investments. Rather, it’s more savvy to investigate ways we can reach savings goals faster, with the right strategy. This may mean diverse portfolios across various stock markets, an array of retirement accounts, and other strategies that set us up for success in the immediate future and in the decades we can’t quite imagine yet. In other words, we have to let go of some of the fear around not reaching our goals, and put that excess energy into setting up an account (or accounts!) that can actually improve our chances of making it happen.
You may value the history of money, rather than its future
To build my savings account, I worked full-time and hustled on the side for three years. I had roommates for longer than I would have liked, and I said “no” to expensive shopping sprees. To me, seeing the number in my account grow makes me proud — but also, I get a bit of a mama-bear attitude. I know how long it took to build it — and I want to take care of it with a watchful eye.
While wanting to keep our money snugly in its place isn’t necessarily a bad thing, women can become overly resistant to change when it comes to our finances, says Jessica Landis, vice president at Janney Montgomery Scott. This can be especially true when we inherit a sum of money from a parent, grandparent or spouse. Instead of thinking of it as our money, many women think it is their responsibility to uphold and nurture the legacy. “Perhaps their dad worked for the company his entire life. Maybe the family always spent their summers at Disney, and invested in Disney stock due to their love for the company,” she explains. “During those conversations, women have expressed guilt when thinking about parting with that stock because of what it has meant to the family.”
To combat this, Landis recommends looking at logic, rather than giving into nostalgia. “I’ve seen portfolios lose significant value when women are not able to get past that sense of guilt, and focus on what’s best for their long-term financial picture,” she warns. Shifting our thinking to be more about making modern choices — whether letting go of a stock or moving money to a different account — is actually better for future generations.
You may need to consider the source of your emotional attachments
Though anxiety around finances may not feel as debilitating as, say, a single traumatic event in our lives, carrying around constant worry over money can have a seriously negative impact on our sense of self. Psychologist Dr. Yvonne Thomas, Ph.D, says some of these attachments can be hard to shake — particularly for women. Since women still earn significantly less than their male counterparts on average, we may want to cling to what they earn more tightly. Other people may have emotional attachments to their money due to growing up in poverty, a previous job loss, or myriad other issues.
Dr. Thomas says the best way to combat emotional attachments is to address them head on. We can do it with a professional … but a friend willing to listen will also suffice in most cases. Remember too, that these issues can arise at any point in your life. “Be conscious of separating out what society or your loved ones think and feel about making and managing money, from your true beliefs. Only then can you accurately determine the place money should have in your life,” she says. “For example, if you want to be a stay-at-home mom, it is emotionally healthy and necessary to be at peace with your decision and with the concept that your partner will be the breadwinner, so that you don’t feel guilt, shame or confusion.”
You may act as CFO of your household — but you don’t feel confident to invest
Think about the large financial decisions women make every month: paying the rent or mortgage, budgeting for groceries and vacations, saving for retirement, and so on. Kapusta says most women embrace the role of chief financial officer of their households, yet there’s a disconnect when it comes to investing. While she notes that females tend to save more than men, they often feel as if they don’t have enough information or education to make informed decisions within the stock market, or their retirement portfolios.
In fact, research from Fidelity indicated that only 9% of women think they can invest as well as men. But Kapusta says we should think again. Women have been shown to earn 12% higher returns than men when it comes to individual investments, according to research from the Forum for Sustainable and Responsible Investment. “The key is that we need to help more women recognize the opportunity they have to grow their wealth through investing, and help them feel confident taking steps from saving to investing,” she explains.
One way to retrain our brains is to remember that we don’t have to do everything all at once. We can start by creating a month-by-month blueprint, and simply invest small sums, which may be emotionally easier to process. Then, continue to grow our accounts as we gain confidence and get more comfortable. “When women do invest, they tend to hold a more long-term, conservative view with their investments, meaning they’re less likely to move in and out of the market, which may lead to higher returns,” she explains. “Money is a very personal topic, which is why we all need to create a financial plan and ensure that our money is working as hard as we do.”
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