Photo credit: Louis Leray

In the event of an emergency, over half of Americans would struggle to come up with $2,000  according to a 2011 study by the National Bureau of Economic Research.

Many of us want to save more, but is it possible that in trying to save money you could actually find yourself spending more? As a financial advisor, here are five different ways that I’ve seen exactly that happen – and what you can do get yourself back on the savings track.

1.  Couponing – The best way to use coupons is to make a list of what you need first and THEN look for coupons. Discipline yourself to only clip coupons for items on your list. The worst way to approach couponing is to just flip through the weekend circulars to see what appeals to you. Looking at all those glossy pictures and deals can trigger a perceived “need” in your brain that didn’t exist before. As a result, you can end up buying more than you truly need.
2. Bulk purchases – Unless you are super organized, you can easily end up buying things on sale that go stale (in the case of food products) or buying more than you need (because you forget what you already have at home). Worst of all, by tying up your money in excess bulk purchases, you may not be using that money to enhance your financial freedom by taking actions such as paying-off high interest credit card debt. The best way to buy in bulk is with a careful, well-though out pre-shopping game plan.
3. Inexpensive clothes – My grandfather always said “Buy few, but buy the best you can afford at the time.” The problem with disposable fashion (think cheap tee shirts and bargain priced accessories) is that because the price point is so low, you may be tempted to buy many more than you need (“Heck, since they are only $9.99, I should buy three”). As such, your total cost could be higher than buying just one great item. Also, since these items often don’t last as long, you may have to replace your wardrobe more often than if you bought one high quality piece to begin with.
4. Store credit cards – You think you are simply making a smart move by saving 10% off of your initial purchase, but now you are on a mailing list for all sorts of promotions. Looking through those incoming catalogs or eMags can once again trigger demand where there wasn’t any originally. Also, if you are late on a payment, interest and penalty rates can often be much higher on store cards than traditional bank cards.
5. Vacation specials – When you take advantage of an attractively priced vacation package, you may feel so great about it (“WhoooHooo, what a deal!”) and end up splurging in so many other areas that you end up spending more than if you hadn’t had a deal.

Bottom line, the key to effective saving strategies is simply to be as mindful and conscious as you can in your spending – on or off sale!

Liked this post? Help me spread the word about economic empowerment!

Here are some easy ways to share these ideas with your friends on Twitter and/or Facebook:

• Can saving lead to overspending? [bit.ly link] via @ManishaThakor [http://bit.ly/18d2Qbo]
• “5 Common Saving Strategies That Can Lead to Overspending” [http://bit.ly/18d2Qbo] via @ManishaThakor
• How saving can sometimes lead to overspending: [http://bit.ly/18d2Qbo] via @ManishaThakor

Photo credit: Louis Leray

For entirely too many hard-working folks, there is a significant gap between the retirement life they desire and the one they will be able to afford if they do not adequately prepare for the future. Traditional goals such as living in an inviting home and devoting time to adventurous travel may not be realistic for individuals who haven’t calculated how much retirement money they will have and how much money they will need to support their ideal lifestyle.

This need for financial literacy is particularly acute for women, who face strong institutional financial headwinds in the form of lower pay and more years out of the paid workforce than men on average (for more on this read my blog post on “The 77/11 Effect”).

According to The Transamerica Center for Retirement Studies, many well-intentioned women are not prepared for the future. Their recent study on Women and Retirement reveals some sobering statistics:

• 48 percent of women do not have any retirement strategy at all, despite the fact that 56 percent of women expect to self-fund their retirement through 401(k)s, retirement accounts, or other savings and investments.

• 53 percent of women plan to retire after age 65 or do not plan to retire at all; most of these women cite reasons related to income or health benefits as the reason for this.

• 54 percent of women are “not too confident” or “not at all confident,” compared to only 44 percent of men who share that sentiment; only seven percent of women are “very confident” in their ability to fully retire with a comfortable lifestyle.

Given the statistical reality that women live longer and earn less than men over the course of their lifetime, it vital that we both develop a clear strategy for a comfortable retirement and take action on it.

The first step is to use a retirement calculator to determine how much money will be available to you at your current rate of savings. I like the “Ballpark E$timator” retirement calculator from Choose To Save.

The next step is to identify how much money you will need to live your ideal lifestyle. You may need to consult with a financial advisor to determine how the rate of inflation will impact what you can afford. A rough rule of thumb is 70-90% of your current income (ouch, I know).

Last but not least, you will need to compare the two numbers to see if you need to start saving more aggressively to meet your target. If you feel that you don’t have enough money to maximize your retirement account each month, you should also take a look at current expenditures that are not essential to your joy and livelihood. Using a digital tracking tool such as Mint or Hello Wallet can help you find hidden money, so you can channel more resources toward creating the future of your dreams.

These three steps are basic, but not easy. Investing a bit of time to calculate these figures can pay rich dividends in the future in terms of your ability to make the mid-course corrections to get your dream retirement back on track. Although it may be challenging to practice mindful spending, when you stay connected to what is truly fulfilling in the present as well as your hopes for the future, you will be more motivated to set aside money to sustain your ideal life.

Liked this post? Help me spread the word about economic empowerment!

Here are some easy ways to share these ideas with your friends on Twitter and/or Facebook:

• Are you on financial track for the retirement you dream of? [http://bit.ly/14xkReU] by @ManishaThakor

• 3 steps to develop a clear retirement strategy [http://bit.ly/14xkReU] via @ManishaThakor

• How to Make Your Retirement Dream a Reality: [http://bit.ly/14xkReU] via @ManishaThakor

Photo credit: Louis Leray

What’s going on (financially) in the private lives of couples across America?

As someone who earns a living providing financial advice for women, I’m fascinated by this question. A recent study about the money behavior of mates, conducted by Learnvest and Ameritrade, yielded the following insights:

• The typical couple has three primary financial concerns: Having enough money to retire, enjoy their lives, and live comfortably today.
• Respondents reported that they talk with their partners about money on an average of 20 times a year and fight over money at least 5 times a year.
• Overall, the study found that older generations are more likely to feel in control and secure when it comes to their finances – and they’re also significantly more likely to feel as if they’re on the same page with their partner in regard to money.

Interestingly, while financial conflicts are often listed as a leading cause of divorce, those who participated in the study said that when it comes to finding their ideal partner, money and potential earning were not a priority. Both men and women valued personality, character and looks above financial success. This raises an important question: How can you figure out if you and your sweetie have financial views that could put your relationship in jeopardy – and if so, what can you do about it?

This insightful piece from The New York Times highlights the stories of several couples and what they learned from financial heartbreak. Here are my four favorite ideas inspired by the article:

• Know the financial profile of your partner. Are you marrying a spender or a saver? Ask about potential debt and the state of his or her credit score. Map out a plan together to address any issues that arise from this conversation.
• Talk openly about financial values and goals. This includes the kind of lifestyle you each envision for retirement. Make note of where your dreams overlap and where they diverge.
• Consider a financial three-way. If you do not feel you are financially compatible, but still want to move forward with marriage, consider keeping three types of accounts: yours, mine, and ours.
• Get professional help. Hire a reputable financial advisor to help you find common ground and honor both of your needs. For couples starting out, I am a big fan (and at times financial education partner with) the innovative new full service financial planning firm NestWise. Another firm I really admire for help with investment decisions is Betterment. Both firms manage money for clients of all asset levels in a very similar manner to what I offer to my high net worth clients at the $1 million to $10+ million level.

Financial knowledge creates financial freedom and power. Under the influence of romance, it is easy to be distracted from practical concerns, but including financial planning in the creation of your authentic partnership will help sustain the love life you desire. Having the “money talk” (more than once!) is an investment well worth making in your relationship.

Liked this post? Help me spread the word about economic empowerment!

Here are some easy ways to share these ideas with your friends on Twitter and/or Facebook:

• The Marriage of Love & Money: How to Protect Yourself From Financial Heartbreak [http://bit.ly/13YVSB5] by @ManishaThakor

• Invest in your relationship by having the “Money Talk” [http://bit.ly/13YVSB5] via @ManishaThakor

• How happy couples make money a relationship priority: [http://bit.ly/13YVSB5] via @ManishaThakor

Photo credit: Louis Leray

Creating a strong emergency fund is an essential step to basic financial security, yet many of us find it difficult to set aside a regular monthly amount for savings. As a financial advisor, I think one of the reasons this is such a challenge is due to the way our consumer culture is set up to encourage overspending.

How can you protect your money and ensure that you are consciously applying your resources to your future dreams and goals? The first step is to understand how we are psychologically vulnerable to mindless purchases.

According to Seattle Money Coach, Mikelann Valterra, http://www.seattlemoneycoach.com/, there are healthy ways to set boundaries on your spend. For instance, she points out that we should be careful in stores that are new to us. Dopamine is activated when we encounter something new and exciting. Our elevated brain chemistry makes it difficult to say “no.

Here are five strategies I have found helpful in making more conscious spending decisions.

1. Limit time spent shopping. The longer we are exposed to a retail space, the more vulnerable we are to purchasing something we don’t need or even want

2. Limit exposure to advertising.  If you receive catalogs you don’t want, call the 800 number and asked to be taken off the list so you are not tempted by things you didn’t intend to look for to begin with.

3. Wait a week before buying anything over $100 (if it’s a “want” rather than a “need”). Put the item on your mental back burner. After seven days, ask yourself if this is a passing interest or something that will really bring authentic joy into your life.  This practice of mindfulness can lead to greater fulfillment in your spending choices. You may be surprised at what you decide to buy versus pass up!

4.  Make a list of daily joys and small pleasures – and act on them. Perhaps it really is a morning latte or a special candle near your bath that bring you happiness. The point is not to deprive yourself, but to commit to finding joy in ways that do not add financial stress. The more small daily joys you have, the less likely you may be to splurge on something out of your budget that really doesn’t fulfill you.

 5. Make a list of your overspending triggers. Protect your peace of mind and your net worth by understanding the circumstances that make you vulnerable to overspending. Identifying your vulnerable spending points in advance can help you keep from repeating ingrained, unhealthy patterns.

In today’s consumer-driven society, it’s easy to fall in to the trap of using “shopping” to make us feel alive, valuable and satisfied. These five steps can help increase the odds that the money you ultimately do choose to spend truly supports your authentic joy.

Liked this post? Help me spread the word about economic empowerment!

Here are some easy ways to share these ideas with your friends on Twitter and/or Facebook: 

• Trying to break the habit of overspending? Here are 5 tips from @ManishaThakor [http://bit.ly/ZJMeOn]
• Protect yourself from the dangers of overspending with these ideas from @ManishaThakor [http://bit.ly/ZJMeOn]
• Want to get your spending under control? Here are 5 suggestions from @ManishaThakor [http://bit.ly/ZJMeOn]

In this interview with Meggan Watterson, Harvard trained theologian and author of the critically acclaimed new book REVEAL: A Sacred Manual For Getting Spiritually Naked, you’ll receive insights on the relationship between self-worth and net-worth, facing financial fear, and how to identify your true calling. As someone whose work focuses on women and money, I found Meggan’s answers fascinating!

Q: Do you see a relationship between self-worth and net-worth? If so, what do you see?
Meggan says: “Yes. Absolutely. I can only speak for myself and from my experience, but the more and more I held the true worth of my particular kind of work in the world, the more I earned financially for doing the work. I think also initially it was hard to charge for something that came so effortlessly to me. I never charged for my spiritual mentoring because it was something I HAD to do- it was a part of who I am. It felt like it was such a gift to be able to express that side of who I am that it never crossed my mind to charge for it. But then, gratefully, I saw that my soul-work in the world was simply this: letting who I am be what I do. So now I let my gifts support me financially, and it’s bliss.” 

Q: What spiritual advice would you give to a woman who is overwhelmed by finances?
Meggan says: “Whenever finances have gotten tight for me, I had the habit of reacting by constricting myself. Penny pinching, bean counting. In other words, focusing on the lack. By focusing on how little I had, I let more and more of that idea – that I had less – into my life. Instead, I’ve conditioned myself to respond to times of financial challenge by expanding. I do this by focusing on all I have. I count my blessings whether those blessings are material or physical like my health. I take time every day to make a mental list of just how much I have to be grateful for- of just how much I have- and always will have- no matter how much financial wealth is reflected in my bank account. My true weight in gold is in my capacity to love and be loved- and a diminishing bank account has absolutely nothing over that form of gold.”

Q: How does your spirituality shape your views about money (and ability to identify your true calling)?
Meggan says: “A good friend, and REVEALer Kate Northrup once said to me that money is energy. It’s not real. We made it up. Something in me clicked when she said this. Old beliefs and ideas about spirit and money just went poof. And I understood that money is an energetic exchange. This shift helped me to see the flow that happens between me and the person who hands me a check. The exchange is actually even. I offer something of equal value to that check. I also see that in this way the person receiving spiritual mentoring from me can honor a dollar value to this important spiritual work in their life. The energetic exchange of money helps them see the value and worth of this work.”