Why women have less money

This is about why women have less money. I don’t mean the wage gap. I mean why we have less money in the bank and in our retirement accounts. Why don’t women save? I asked four friends to share credit card statements ranging in ages from 22 to 66. Here is where the money goes:

1. Fake lashes

2. Nails

3. Hair

4. Make up

5. Skin care

6. Subscription boxes

7. Alcohol and eating out

We often worry about money yet we put others first including dependents (even 29 year old dependents). We are shy to ask questions or get help on managing money or investing. Maybe we invest so much in our beauty because as young girls growing up we were peddled the idea that if we are more attractive we will have more opportunities or we will attract a richer mate. If having fake lashes makes you feel like Wonder woman, I say go for it. If it gives you that boost of confidence to speak in public, ask for a raise, turn down a troll and demand better in your romantic life then those fake lashes maybe are a good investment. Realize though where all your money is going. Economics has a phrase called “opportunity cost” which is a great lesson for everyone not only the business majors. If you spend $100 on alcohol on Friday at the club, that is $100 you do not have for rent, utilities, or to start a bank account. Actually, let’s get even more real. I have one friend that has been paying the minimum on her credit card for over 15 years. Her trip to Mexico she put on that card is costing her extremely high interest you will never recover on savings account interest. When you buy a car or a house, there is the Truth in Lending Act which requires lenders to tell you how much with interest that new car or house will actually cost you. There is nothing like that in place for credit cards. You can find calculators and do the math yourself or check out Nerd Wallet.

Some smart money moves you can make are:

1. Take that tax return and bank it. Don’t spend what you get back from the IRS. Everyone should have a rainy day fund. Put money in a savings account you don’t touch unless there is an emergency. Emergencies include actually ending up in the ER at the hospital, your car breaking down, or facing a brief period of unemployment.

2. Open an investment account somewhere with low fees on trades. Some people use Robinhood (not affiliated with them at all and not sponsored). The commercials from Robinhood these days mention a 3% match. What’s a match? Some employers offer a dollar for dollar match on retirement accounts. If you save $75 a month in retirement, your employer puts in a $75 match for free. That is free money. The 3% match is not as great as dollar for dollar but it is better than nothing. Other places like Charles Schwab (also not a sponsor and not affiliated with them) allow you to do low cost trades on stocks. Please do not make it complicated and start thinking you need to invest in options or gas futures. Buy a stock in a company you know something about and that you believe has the potential to go further. There are books like Understanding Wall Street that can explain investment principles and theory. Women sometimes throw their hands up and say, “it’s too complicated.” Anything worth having is hard and is going to require some work. Do the work.

3. Make investment goals. If you plan short-term and long-term investment goals, you are making wise and planned decisions with your money instead of reacting to every sale or temptation that comes by. It may sound so fun to book a weekend trip with friends but try to figure out all of the expenses in advance like food and gas. Do you want to save that money, spend that money on the trip, or spend that money on yourself?

Here is to a happy and wealthy week.