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In this week’s Ten Money Questions, we speak with Dayana Yochim. Dayana could be called a happy fool... as she’s the consumer finance expert at The Motley Fool dishing out advice on a variety of topics that deal with spending and saving. I often quote Dayana in reference to her writings on money and happiness. She delivers some fresh zingers below. Enjoy!
1. Are their gender differences in how men and women approach investing and wealth accumulation?
Absolutely. Here's a simple illustration of the Men v. Women money debate. Ask a man to describe what his retirement will be like. He'll talk about freedom -- freedom to leisurely pursue his passions; freedom from The Man breathing down his neck; freedom to watch every single one of those 700 sports channels to his heart's content every single day of the week. (Apologies for stooping to stereotyping on that last point, but you get the picture.)
Ask a woman the same question and she'll also mention pursuing some of her dreams, but her answers are often clouded by fear -- fear of outliving her spouse and her savings; fear of spending her golden years managing a shoestring budget; fear about being financially wiped out by a medical or family emergency; fear of becoming a bag lady.
Unfortunately, her fears are not unwarranted: We earn less over the course of our careers; spend more time than men out of the workforce raising families and shortchanging our retirement benefits and social security/pension payouts; we outlive our spouses and are statistically more likely to live out our golden years in poverty.
This opportunity v. angst angle plays out in how men and women invest, too: Research shows that men are much more aggressive investors -- angling for opportunities and going out on a limb for the chance to earn above-average gains. Women tend to be much more risk averse -- playing it safe with long-term investments (like CDs and Money Market Funds) in order to preserve wealth.
Here's the kicker: When they set their mind to it, women are actually better investors than men, based on surveys of all-women v. all-men investment clubs. Our innate human nature is helps us edge out the boys' portfolio performance: We're methodical, willing to dig into the research, less prone to react to hype for short-term gains, and resist the frequent trading that kills portfolio returns.
My advice on managing your dough?: Go ahead, be a woman. Play up those feminine wiles as you max out your company 401(k), faithfully fund your IRA, cut coupons, cut corners, and research stocks. Even when your budget is stretched, invest at least something every month to keep the savings momentum going. And do it all in high heels and while dancing backwards. You've innately got what it takes to kick some serious butt.
2. What is your most significant memory about money?
The childhood scene that plays with the clearest focus in my mind is that of my mother paying bills. As a kid my impression was that "paying the bills" was a laborious, weeks-long process requiring the utmost concentration, the entire surface of the kitchen table, and the lowest volume setting for whatever my brother and I were watching on TV.
Another memory was revived when I stumbled upon a pair of thank-you notes written by my brother and me to our grandparents nearly three decades ago. His went something like this: "Thank you for your generosity. You really shouldn't have -- especially since you already gave us a set of encyclopedias. I don't need the money... but I promise to spend it responsibly."
Mine read: "Thank you for the 5 dolars [sic]! I bought a doll!! Her name is Cinnamon!!!"
Translation:
Jordan : "I will consider my options and vow to treat the money in the spirit in which it was given."
Dayana: "Cinnamon is mine!!!"
Thankfully, the corrective lens of adulthood has prevailed and my thank-you notes and spending impulses have greatly improved.
3. What is your worst habit around finances?
Laziness. Sloth is probably not the attribute Motley Fool readers want to see me cop to in public, but my feet-dragging, procrastinating, dilly-dallying nature coupled with my full-time job of helping people best manage their finances has led to some pretty creative advice about effective financial shortcuts. Basically, I've turned a major character flaw into a somewhat lucrative and altruistic career.
4. I understand that you come from a long line of teachers. I've read plenty of stories about teachers who retire as millionaires. What's the big
