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Financial Perils of the Single Woman

Being a single woman is serious stuff – financially that is.

One website recently published a humorous list of the advantages of being a single woman today.  “You don’t have to be worried about not getting a special gift from Him on your special day because there is no Him.”  Or: “There is no argument about where or when to go on vacation.”  Toilet seats were also mentioned.

This may not amuse 30-something women with serious concerns about whether they’ll marry and have children.  But face it: single women of all ages have more difficult money issues than their married friends.  When two incomes are coming into the household, a couple shares the rent or mortgage.  Fixed expenses can add up over a single woman’s life or during long bouts after, say, divorce.

“Single women are far more at risk,” said Wendy Weiss, a former financial adviser who writes a blog on her website, Hot Flash Financial.  “If we make 77 cents on every dollar [men earn], men have 23 percent more discretionary income, and that’s usually the amount we advisers recommend you put away,” she said.  Women also live longer and need more money to get through retirement, she said.

Prior to retirement, the rule of thumb is that single people need well more than half, possibly as much as 70 percent, of a childless couple’s combined income to afford the same lifestyle.  It is higher for the poor (whose fixed expenses consume more of their total income) and for single mothers (for obvious reasons). …Learn More

Pennsylvania Strong in Fin Ed – For Now

Talking to teenagers taking personal finance at Panther Valley High School in Pennsylvania made me wonder why these classes aren’t a top priority everywhere.

These kids are even teaching their parents a thing or two about money. Jordan Kulp saved her mother $30 by finding a scooter for a cousin’s baby that her mother had wanted to buy on a shopping channel. Now that Jake Gulla’s mother sits in on his personal finance class, she is “spending [money] a little more wisely.”

And William Digiglio’s father wanted to sell a shield for $100 that Chris Evans apparently carried in the “Captain America” movie. William put it up for sale on eBay and snared $20,000 for the shield, which his father had won in a contest. For class projects, “we had to research rather than taking them for face value,” he explained.

statesThese Panther Valley students have helped make Pennsylvania, for a third year running, the state with the highest number of students scoring in the top 20 percent on the federal government’s 2012 test for the National Financial Capability Challenge (NFCC), according to Mary Rosenkrans, financial education director for the state’s Department of Banking.

Pennsylvania also had the highest number of students who took the test (7,404) and the highest number of participating schools (123). (Oregon had the highest average test score: 79.5 percent, compared with 69 percent nationwide.)Learn More

Middle Schools Vie in Video Contest

The Massachusetts Financial Education Collaborative (MFEC) had one big reason for targeting its video contest to middle school kids: advertising.

“Hey, you gotta have a cell phone. You gotta have these jeans. The contest seemed like a great way to bring awareness” to the issue of kids and our consumer culture, said Andrea Wrenn, mother of five, education consultant, and the MFEC volunteer who oversees the contest.

Two Massachusetts middle schools submitted videos exploring kid consumerism in the first year of MFEC’s contest: the Norwell Middle School and the Hill View Montessori Charter Public School in Haverhill.

Squared Away encourages readers to support the new effort by clicking here to vote for your favorite video! The voting deadline is April 27.

The contest is among the creative ways communities are encouraging children and teenagers to learn about the money issues they deal with – a play recently staged by Cambridge high school students was another.Learn More

Cartoon drawing of a family

Birth Order Matters

Evidence, though scant, suggests that financial shortcomings may be related to birth order.

But there’s plenty of non-financial research indicating that the stereotypes linked to first-borns and “later-borns” are often on target. First children who are best-positioned to relate to their parents often become high achievers (Abraham Lincoln or Warren G. Harding), while their attention-seeking youngest siblings tend to be more creative, social, or funny (Jay Leno or Stephen Colbert, who is the youngest of 11 children).

To get at financial behaviors linked specifically to each ranking in the birth order, a 2011 study found that later-borns tend to be the big risk takers. And a February Bankrate.com article featured psychologists and financial advisers who said that they have observed clients’ money problems that they believe are linked to birth order. Below are excerpts from the Bankrate.com article:

Responsible first born: “More often than not, being a perfectionist leads to burnout and giving up or setting unrealistic financial goals,” says Derrick Kinney, an Ameriprise financial adviser at Derrick Kinney & Associates in Arlington, Texas. “That may sabotage your finances.” …Learn More

Impulse Saving May Be ‘New’ New Thing

You’ve heard of impulse purchases. But how about impulse saving?

It’s purely an idea at this stage, and it may not work. But a New York City check-cashing firm plans to start a program that will allow customers to throw $20, $10, even $1 into savings – on impulse – when they’re cashing a check or flush with cash.

“I know my customers,” said Joseph Coleman, president of RiteCheck Cashing Inc., which has 12 stores open 24/7 in Harlem and the Bronx. “If they could put $5 away or $20 away for a television they wanted, to buy a car, or for Christmas, they would do it.”

Key to making the program work is simplicity, operating on the theory that barriers and red tape thwart savings deposit; if a customer wants to open a savings account, RiteCheck will print an application that’s already filled out and needs only a signature. RiteCheck teamed up with long-time business partner Bethex Federal Credit Union to open and manage the accounts.

“People have intensions to save” but “get derailed by the lack of a clear, easy path to start saving,” said Innovations for Poverty Action’s (IPA) Jonathan Zinman, a Dartmouth College economist who worked with Coleman to create the product. The non-profit IPA granted $15,000 this month to set up RiteCheck’s program…Learn More

Street signs at the intersection of Broad and Wall Street.

Questioning Wall Street Convention

Walk into your financial adviser’s or broker’s office, and the conversation inevitably leads to your portfolio’s “asset allocation” and “total return.”

Financial planners, the media, investors – we’ve been under Wall Street’s spell for three decades. But a small chorus of skeptics, bucking the orthodoxy, argues that brokers and planners don’t always match investments with an individual’s goals and needs. The human gets lost – in more ways than one.

“People are being guided by the asset management industry,” said Boston University finance professor Zvi Bodie, co-author, with consultant Rachelle Taqqu, of “Risk Less and Prosper: Your Guide to Safer Investing.”

The industry’s premise is that “you can’t afford not to take risk,” he said, referring to the tenet that more risk means a larger potential return. But what happens if you roll the dice and lose? “They never say that,” he said.

Keen to this critique, Barclays in London and a few other large investment houses have started pitching wealthy clients by focusing on their “unique” circumstances.Learn More

A group of women in business attire holding signs with question marks on them in front of their faces.

Women Crave More Information

It’s common knowledge that women save less in their retirement plans than men do. This is a major problem, because they live longer, are more likely to require nursing home care, and need more money.

To learn why women save less, Karen Holden and Sara Kock at the University of Wisconsin, Madison, recently conducted focus groups with state employees and analyzed data for the Wisconsin Deferred Compensation Program. Similar to a 401k, the program for Wisconsin government workers also allows tax-deductible, voluntary contributions, though there is no employer match. Squared Away interviewed Holden about their findings.

Q: Do women save less, because they earn less?

Holden: Average lower earnings are a factor but more surprising is that, at any specific salary level, women contribute a lower percentage of their earnings than do men. Women on average contribute 6.28 percent of gross pay, compared with 7.03 percent for men. While lower pay and age differences accounted for some of that, being a woman led to lower contribution rates. …Learn More

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