by Richa Gulat

Money may be one of life’s most complicated essentials. We certainly need it to live and usually want more of it for enjoyment. But for many people the decisions surrounding money are stressful. Surprisingly, women are one group likely to encounter a difficult relationship with money. As a group, women are more educated and wellcompensated than ever. Yet as leading financial experts recently noted, being able to earn money does not automatically mean that we manage that money well.
Suze Orman is one of the nation’s leading personal finance experts and the author of several financial best-sellers. Women and Money, her latest book, was published this past spring.
In choosing to author a book specifically for women, Orman says she “never targeted women in her books because she does not believe gender affects the mastery of financial management.” She was, however, astonished to learn how many “smart, accomplished, and competent women” in her life were “clueless” about their personal finances, leading to disastrous consequences. Women’s roles have dramatically changed in this past generation, taking many from home to the office for work. The transition has given women unprecedented access to money, but at the same time, female financial role models are few. “It doesn’t matter whether I am in a room full of business executives or stay-at-home moms, the core problem is universal: when it comes to making decisions with money, [women] refuse to own your own power, to act in your own best interest,” Orman says.

She cites fear, inexperience, guilt, and shame as common reasons why many women avoid issues regarding money all together. But that behavior does not serve women well: many of life’s most important milestones, like the ability to take out loans for school or to buy a home, for example, and the ability to retire are all ultimately financial decisions.

Importantly, healthy financial habits can be learned. Though earning a paycheck is one element of financial success, making smart decisions with the money we earn is critical, too. Below are some simple tips to get you started.

The Cost of Coffee
The hardest part of understanding how much to save is taking an honest look at what you spend. Every small contribution counts but how do you find out what costs to cut out of your budget to save more effectively? One simple solution is a spending diary. Keep track of every purchase you make for a month, including all cash, credit, debit card purchases. Patterns will emerge of where to stop spending and start saving-your daily latte might add up to over $100 a

Turning FICO from Foe to Friend
Healthy habits start young. Like school report cards, check your credit report annually. A credit report, which assigns you a “FICO” score, is your credit “report card,” providing your financial health status to all potential lenders. Routine checks of your credit report can catch errors that can affect your ability to get a mortgage, credit card, or even a cell phone plan. Even if your FICO score is less than ideal, it provides a concrete goal that tracks your annual financial improvement. The government recently made these reports free at .

Don’t Wait for a Rainy Day
Don’t put off to tomorrow what you should start today, especially when it comes to saving money. It’s easy to convince yourself while young that concerns about saving are for the old. If you believe that, simple math proves you wrong. The sooner you start saving, the longer you have to take advantage of compounding interest. For example, if you are 25 and save just $1000 a year, it would be worth $530,000 at the average retirement age of 65, calculated with the stock markets historical rate of 10%. If you start just 10 years later at age 35, it will only be worth $198,000. When it comes to money, time is on your side.

Say Goodbye to Debt
Offered more widely and at younger ages than ever, credit cards are an unavoidable temptation. Though they are necessary to build the credit history required for loans and mortgages later in life, maxed-out credit cards on which you make the minimum monthly credit raise red flags. Credit cards likely have huge annual interest rates, often near 20%. It’s important to know each credit card’s interest rate. A top priority should be eliminating all outstanding, high-interest debt, starting with the debt with the highest interest rate. In order to use credit cards safely, charge only the amount you can pay off in its entirety each month, unless it’s an emergency. The Hardest Part is Getting Started It’s all too easy, particularly if you have made unwise financial choices in the past, to avoid getting back on track to fiscal health.

Remember that just taking the first step toward financial discipline often the hardest part, so begin by discussing financial issues with someone you trust, rather than avoid your financial situation. Talking about money may be uncomfortable but your relationship may depend on it; money is the number one cause of strife among couples, for example. If confiding in a friend or significant other is uncomfortable, look for alternative resources to get started. Books, online guides, and professionals can provide basic financial advice.

About the Author: Richa Gulati is a freelance writer and attorney based in New York City. A graduate of Harvard Law School, she has studied flamenco dance for the past eight years. Her work is available at

(article first appeared in the Fall 2007 issue)