** This piece ran last September. I am reposting it, because it was so impactful for so many women (including myself). It is a good reminder for everyone, and possibly an eye-opening one for those who are reading it for the first time. (If you want to get in touch with Michelle, go to the link in the second paragraph.)
If you just read the title of this piece and already lost interest, you are probably exactly the person who should read to the end. And I will admit, I would generally be in your company. Except after interviewing Michelle Smith all I could think of is “WOAH. I need to get my financial shit in order.” Women and money—it’s often complicated. Many women aren’t comfortable with money and it’s an attitude we need to change.
I originally decided to interview Michelle, CEO Source Financial Advisors, because she mostly works with divorced women; I know a lot of women who have gone through (or are in the process of) a divorce and see the toll it can take. But one acquaintance has managed to make her divorce more of a success story (certainly not all smiles, but better than many) and she credits Michelle, in part, with helping her through.
Michelle’s advice speaks to every woman, and especially those in any kind of partnership. Not to be a buzz kill, but as Michelle puts it “Every marriage ends in one of two Ds—death or divorce.” Who wants to wait until you’re at a low point in your life to deal with heavy-duty and possibly life-changing financial issues? Do you know what financial documents you’ve signed over the years (leases, mortgages, LLCs) and what they mean? How about letting go of the emotions we attach to money and learning how to make whatever you have work for you and change your life now—partners or no partners? We all should, and can be, financially savvy. You don’t have be good at math, you just have to make the effort. And for women to be successful at it and have a positive experience, they need a path tailored to their needs and desires. Michelle gets that. Here, she shares some wise financial advice we can all take into account.
Tell me exactly what it is that you do: What I do is it’s actually really simple. I motivate women to be engaged with their money, to enjoy being in charge of it, and help level the playing field for them during their divorces.
How did you get into finance? What was your career path? I have been a financial advisor for 28 years. I started my career at Merrill Lynch. My mother was a financial advisor at Merrill Lynch in the late ’70s, and I would intern with her during college. And I had no idea that I would enjoy this, to me this was complicated math and the stock market was confusing. I remember being so blown away that my mom knew how to read the Wall Street Journal. Then when I worked with her in the summer, I was like ‘Oh my god, this job is like personal finance. It’s not just complicated math and calculus, it’s working with people’s lives and their money, helping them with their money, educating them.’ At that time in the early ’80s, there were no women that did this for a living. And I just became completely hooked on the business, got out of college and started doing this.
Have you always geared your work towards women or did it evolve over time? I would say it really solidified in about 2004, when I got my certified divorce analyst designation. I started working with a lot of divorced women. It came as a result of a lot of women who were coming into my office and they had just gone through a really long or ugly divorce. They literally couldn’t tell me how they arrived at a certain alimony number. Sometimes they didn’t even remember what it was, and this was right after their settlement, after the battle they just went through. They couldn’t instantly recall the numbers from their divorce. And I was like ‘Wow, what’s going on here?’
I quickly realized that there were no personal financial experts in the divorce process at the time. So I developed and cultivated a specialty, and I made it my business to dive deep into understanding divorce and finances. Then by default, because I’m a female financial advisor and I had this divorce specialty, I ended up getting a disproportionate amount of women walking into my office and saying ‘I’ve never dealt with money. What do I do?’ Then when I was able to really get hired by lawyers or hired by clients as part of the divorce, I was the one there explaining to them every step of the way what they were agreeing to, what the pros were, what the cons were, and working with them and their attorneys.
Why is this work so important to you? I have been listening to and working with thousands of women for 28 years. And I watch it change their lives. It’s one thing to have to manage your money, like ‘Somebody died, I got divorced, I inherited money, I have to manage it.’ It’s another thing to be completely participating, engaged in it, enjoying it, and not being freaked out by it.
Why do you think it’s so important that women have an understanding of their finances? So they have options. When you don’t have options, and you don’t understand where your money is during your marriage–how it’s titled, what that means to you, what you’re saving, what you’re spending, if you’ve given away the financial control to your husband–you mentally don’t have options and that’s debilitating.
If you want to leave an abusive marriage but you don’t understand money, it might be something that you allow to keep yourself there. If you’re in a crappy job and you have a terrible boss and you hate your life at work and you don’t understand money, you don’t have options. The fact of the matter is we are in a world where money is important. It doesn’t necessarily make you happy and it’s not the most important thing in the world, but women who get a little too far away from either their ability to make money, or their ability to understand money, give a little bit of power away every step of the way.
You need options. And understanding your money and wrapping your arms around financial concepts gives you options. Even something as basic as saving money is not the same as investing money. Women can be great savers, but what does saving money get you? Saving money is usually deferred spending. The one problem with great bank mobile apps is you can too easily hit transfer from savings to checking.
Maybe you feel really good that you saved a bunch of money for a couple of years, but then there’s the vacations, or the shoes, or the car, or the piece of jewelry, and in your head, you’re like ‘Well okay.’ Maybe you’re married and he’s paying all the bills, which is dumb thing number two. But he’s paying for everything and you’re viewing that as your mad money. Now you’ve dissipated it, so what?
Let’s do this in pure numbers. If you have $100,000 in your savings account, even if we make it generously earn one percent, if you kept that money in the bank for 20, 25 years, chances are it still wouldn’t be $100,00 because you hit that button that says transfer to checking. And number two, 100,000 grows to $138,000 in 20 years. If you had it invested at even six percent, that same $100,000 turns into $429,000. That $300,000 difference could be a down payment on a house, it could be the money to get you out of a job and reboot your career. If it’s $200,000, it’s a $600,000 difference.
Women have to make the shift and understand that saving money is different than learning how to invest it, because investing it is what builds wealth, gives you choices, gives you options, and creates freedom.
What do you think is the biggest misconception women have about being financially savvy? It’s not what I think, it’s what I know. Women believe that they’re not good at money, or they won’t be good at investing because they don’t have a math brain. I have so many women sit in my office and say ‘I’m really stupid with money, I’ve never dealt with it. I’m really good at this or that, but I suck at money.’ And I say ‘You don’t suck at money, you just haven’t learned it the right way,’ because it’s still a male-dominated Wall Street and the jargon is set up to be exclusive. Nobody explains money to women.
You don’t need a math brain to be financially savvy. You need somebody to work with you, to motivate you, to explain things in English, to not make you feel stupid with money, and you need to learn the difference between saving and creating wealth by investing. That doesn’t take a math brain, that just takes a little dedication on your part, it takes a partnership with somebody to want to help you do it, and it takes a commitment. Just like if you want to lose 20 pounds, you make a plan, right? And you’re not going to do it in a day. You need to make a plan, but in a way that’s enjoyable, not dreadful. Money isn’t dreadful, money’s super fun.
Besides saying they don’t have a math brain, what else do you hear from women when they come seeking your advice? The words I hear all the time are ‘I’m ashamed that I don’t know any different. I’m ashamed that I let my husband deal with the money and I never understood it. I’m ashamed that …” I call it the money coma, they’re in a self-induced money coma. But really what they were living in is a little bubble, and bubbles burst. So if you let someone else handle everything, the bubble’s going to burst. And you’re going to have no control. So feeling overwhelmed, confused, ashamed, intimidated … but ashamed is a huge one for women.
How do you turn it into a positive experience for them? It’s a ‘from-to’, and it’s staged. It’s not overnight. It’s not hard, but it’s a commitment and you have to follow steps. And I look at it as, how do you shift from being ashamed to being proud that you’re understanding it more? How do you shift from being completely uninterested to engaged?
I created a program, ‘From Wife to CFO’. It has three tiers. And the first tier is the essentials. Even if you’re not getting divorced. I’ve got women who’ve got unbelievable jobs and they were so busy taking care of their kids, they were working during their marriages, but they never took the time to understand money. And now they’re like, ‘Oh my god, do I have enough for retirement? Do I have enough to spend what I’ve been spending when I have the paycheck when I stop having the paycheck?’ So it’s the essentials. It’s stage one. It’s moving you from being completely disorganized with it into a conquerable step to be organized.
So maybe for that person, I set them up on e-money. When I say to somebody what are you spending? They’ll be able to immediately tell me what their mortgage and their cell phone bill is. But when I get into the discretionary spending, it’s kind of like ‘I don’t know, I just spend what I want.’ So the first step for them might be getting you organized on an e-money program that puts all your credit cards and your bank accounts into it so that on a monthly basis, you see what you’re spending.
Step two is what I call ‘The Opportunity to be Fully Engaged’ and step three is a year-long process to ‘Financial Dependence No More’. These steps of moving you from these emotional places into an organized, conquerable, stable plan.
You have a very positive viewpoint on money and talk about financial inspiration and that it is part of a creative mindset. Can you explain a little bit about that? Money is just money. We’re the ones that put the emotions on it. We’re the ones that let it freak us out, let it scare us. Money’s neutral. So if we know at a baseline that money is neutral, how we interact with money is what makes our experience.
Have you ever done anything in your life where you might have been inspired to do it but knew nothing about it? You learned, right? Women often don’t feel financially inspired, they feel financially drained or financially stupid. Again, it’s being inspired to create a whole different money paradigm for yourself. The word empowered is so overused, but it’s applicable here. And finding the inspiration and the excitement is an energy. It’s incredibly creative to sit down and design a financial life and create a financial portrait or yourself. It’s also really different than sitting with an old, white male financial advisor who says ‘Let’s create a financial plan that you can stick to.’ That’s like ‘Shoot me!’ right? But sitting with somebody and saying ‘How are we going to design your life with dollars in a way that works for you? What do we have to do? What do we have to change? What do we have to look at?’
Let’s say I’m sitting with you, and your spending is unsustainable from a pure financial planning perspective. I’m looking at your spending, and I say ‘This is not going to work long-term. It’s going to work while you have a paycheck, or it’s going to work while you’re married, but if your assets get split in half and you lose your income, it’s not going to work.’ What I do is instead of saying we have to make a budget cut across the board of 25% of everything, I say ‘Let’s get creative. Tell me your four most important categories that make you feel great and whole.’ Very often for women, it’s being able to spend money on vacations with their kids, their current housing, some people still want to buy exactly the same amount of clothes, some people want to dine out, buy organic food. But we identify your four most important, makes-me-feel-whole categories and we don’t touch those.
We make the adjustments in the other places. It’s no different than a diet. If you can’t eat something for the rest of your life, you’re gonna want it more.
When the women you work with start to feel financially savvy how does it change their lives? Like I said in the beginning, having the mindset that you have options is a game changer. Even if you can’t financially turn something around right now, knowing that you’re going to do it releases something really negative inside. Once they’re there after a year, I’m blown away at the courage they have in other areas of their lives. It’s an incubator for life change. It’s like you are going to conquer shit that you thought you were never going to go for because you feel stronger.
Besides seeing you what can women apply and do now? What are steps I can take myself ? If you’re married and you have no idea where your money is, what it’s worth, how it’s managed, or if your name is on it, find out now. While you’re married. Because all marriages end. So if you have no idea what’s in your name, what’s in his name, what’s in joint name–if you’re just one of those women, and I don’t say this negatively, that just signs whatever he puts in front of you, you don’t do that anymore. You read it and you ask questions. This can be incredibly scary for a lot of women. I want to put an asterisk on this; it’s the proper advice, but sometimes that conversation with your husband is terrifying.
And this isn’t going to be an overnight thing if you’ve been in a marriage for five, seven, 10, 15 years and this has not ever been a conversation you’ve had. But you’re gonna have to find your words and the courage and the right time. You don’t bring this up after you’ve had a fight about something else. You bring this up at a good time, when you have space, the kids aren’t running around, and you just say that you really want to understand where the money is, how it’s titled, you don’t want to be blind, you don’t want to be in the dark, I trust you but I’d really like to understand where it is.
If you’re a woman who knows where your money is but you don’t really have a handle on what the household income is you need to start there and say ‘Okay, what can I do this month to help me go from dark to transparent?’ Is it a question? Is it a conversation with the accountant? Wherever you are, you just need to say ‘Okay what do I know, what do I need to know, and who do I need to talk to understand?’
Find the courage to ask the questions. It’s not easy, but it’s never going to be easy. Feel the fear and do it anyway. You’ve got to understand, and you’ve got to avoid the bubble. It might cause an argument. But at the end of the day, what would you rather do? Have the argument now, which by the way might also be diagnostic if somebody protests too much, or in a divorce lawyer’s or an estate planning lawyer’s office and be blindsided? You’re going to have to learn it.
Your final words of wisdom for somebody who’s having a life changing event or going through a divorce, and they feel helpless or discouraged? It is a drastic life event, and I’m not going to minimize that. It is hard. And it’s a process, and it’s up and down, and it has its moments. But I have seen more good come on the other end of it of women who get their economic freedom, their power back, feeling capable, savvy, supported, and feeling I can do this. You’ll get there. You will be on the other side of this. That’s just a fact.