Women need more money than men. Why? No, not so we can buy more shoes, handbags and manicures. We need more money because we live longer than men, make significantly less salary than our male peers, and are more likely to be single parents raising a family on one income.

Having a child is now the single best indicator of financial collapse.

Women comprise 87% of the impoverished elderly. A woman who works full-time for 40 years will earn $523,000 less than her male counterpart. At age 65, that extra half a million dollars could keep her from becoming one of the elderly poor.

What do these grim statistics tell us? They tell us that women, especially as they become older, are not prepared to take care of themselves financially. Yet nearly 90% of all women will end up managing their finances alone at some point in their lives.

Despite a woman’s greater potential for financial need, it appears that many factors hamper financial equality between the sexes.

What can women do to beat these alarming odds?

Here are a few of my own – perhaps unique – ideas:

Delay motherhood. Or, if it suits you, don’t have children at all. My husband and I purposely waited until we had achieved financial freedom before adopting our daughter because we didn’t want to repeat our own parent’s experiences. We both grew up with work-all-the-time, struggling young parents and quite frankly, that often stunk. We didn’t want money to interfere with our parenting.

Forming a family through adoption rather than pregnancy was a decision I made when I was a mere teenager. The way I figured it, why “make my own” child when there are countless orphans dying for a family already?  Since my husband and I chose to create our family through adoption, my biological time clock wasn’t a ticking time bomb.

One’s forties are the usual peak earning and saving years. By switching the typical order of things, my husband and I experienced our peak financial years ten years earlier than most. This allowed us to put the power of compounding interest and growth to work early. Consequently, we don’t need to earn or save as much money over the course of our life because time is on our side.

Today, financially free, our family hasn’t set an alarm clock in years. Whether it be work, parenting or play, we wake with the sun, eager to spend each new day doing whatever we choose. We waited until we could afford to commit to parenting 100%, together. For our family, the wait has been worth it.

I realize the path we chose isn’t a good fit for many but I do think it’s sensible for parenthood to wait until certain things are in order. Consider taking the time to first:

• finish college, establish your career or launch your business
• pay off your credit cards and other consumer debt
• build an emergency fund
• protect your growing wealth with insurance policies like disability and health
• start your retirement account
• build a solid partnership with your significant other

Share parenting and careers with your child’s father. I have two biases to confess right off the bat: One, I think most kids grow up best when raised by their parents (as opposed to day-care providers); and two, women need to know how to make money (see the statistics referenced in this article, above).

My ideal parenting-career model looks like this: Mom and Dad divide childcare and career hours between the two of them. Rather than settle for the stereotypical full-time working father and the stay-at-home mom, each parent works part-time (20-25 hours each), during different shifts, while swapping care of the kids.

Consider the benefits of this arrangement:

1. Kids grow up spending quality time with both parents
2. Both Mom and Dad get to spend quality time with the kids
3. Both parents have the opportunity to pursue their own career paths
4. No childcare expenses are required
5. Mom hasn’t given up her earning power

I recognize this isn’t an easy arrangement for everyone. Many families feel they both need to work full-time to support their family. Some don’t think their employer would allow them to work part-time. Others are single-parents who can’t count on reliable child-support or parental care from the other. It’s not the perfect solution for everyone. But if it sounds like an appealing idea to you, see if you can eliminate the “yes-but’s” and figure out a way to make it happen anyway.

Refuse to be underpaid. Remember– a woman who works full-time for 40 years will earn $523,000 less than her male counterpart.  When you perform the same work, why in the world should you settle for less pay? Demand what you deserve.

Become financially literate. Almost 90% of all women will end up managing their finances alone so it’s foolhardy to allow the man in your life to handle your finances. Read books, take classes, find a money mentor.

Come to grips with the emotions behind money. The “How To’s” of personal finance are the same for women as they are for men. What is different is our feelings and beliefs about money. It has been demonstrated that most women are raised to nurture and seek acceptance and view money as a means to create a lifestyle. Women spend on things that enhance day-to-day living. Conversely, most men grow up learning to fix and provide. They view money as a means to capture and accumulate value, like a house and retirement. Men don’t spend, they invest. Men don’t want something, they need it. Theirs tends to be a future-money orientation.

Modify your money mindset to a more functional one.

Create a lifetime financial plan. I use Microsoft Money’s lifetime financial planning tool. (Too bad this useful software program has been recently discontinued! Anyone know of a replacement that includes a lifetime planner?)

If you are married or in a committed relationship, invest in it. Money ranks as the first most argued topic for many couples. It has been estimated that an astounding 80% of divorces are the result of money disagreements. A good marriage takes effort. I’ve been married for 22 years, so believe me, I know.  We schedule regular date nights (sans kid) and see a counselor for “maintenance tune-ups”. Money and time well invested, I assure you.

Push for national change in Congress, state legislature, public schools and at the corporate level. Support systems that will help to ease financial differences between genders.

Readers, how do you think women can beat the odds? Please add your ideas in the comments section.

Related posts:

1. How to Make Money Management a Family Affair
2. Happy People Make More Money
3. 5 Things The Marshmallow Test Can Teach You About Money Management

Aim, Ready, Fire!

Entrepreneur CliffsNotes from a Penny-Pinching, Pajama-Clad, Self-Made Millionaire

(photo by Okinawa Soba)

This is a lengthy post (2500+ words) as it contains nearly everything I know about how to be your own boss, in an abbreviated 3-phase format. If you’ve ever dreamed of making money doing something you love to do, I think you’ll find it well worth your time to read. First, a little about me and my entrepreneurial background to provide context for this filled-to-the-brim resource…

I’ve bootstrapped half a dozen small businesses including a couple of dog training schools, home and pet care services, a construction company and most recently, a coaching business. I started each business with less than $1,500 in capital investment. Because I hate alarm clocks, rigid working hours and panty hose, I choose to operate businesses that honor my personal preferences. I wake when I am rested, eager to do what I want to do, when I want to do it. More often than not, I work from home in my pajamas.

My entrepreneurial success didn’t require a diploma. Impatient with seemingly pointless prerequisites and eager to start making my own money, I dropped out of college. I now consider myself a lifelong learner and return to school whenever I want to learn a specific new skill.

“Most self-made millionaires possess average intelligence. What sets them apart is their openness to new knowledge and their willingness to learn whatever it takes to succeed.” (The Seven Pitfalls of Business Failure and How to Avoid Them by Patricia Schaefer)

Unfortunately, I was a drop out with no vision for my future. I began my adult working life as a graveyard shift donut and coffee waitress. Fortunately, I realized that I was too good to settle for minimum wage. I quit pushing donuts and took a job that would allow me to explore my interests. Because I’d always loved animals, I applied for a job with a veterinary hospital and during this same time, I also negotiated an unpaid apprenticeship with a professional dog trainer to learn marketable new skills.

Don’t tell me what to do! I am the boss of me. As an employee, I resisted standard operating procedures — particularly when I could see a more effective process for said procedures. Recognizing that I found it difficult to do business someone else’s way, I took what I learned as an employee and apprentice and moonlighted with my own business. Once my own business income matched my employment income, I quit my job. I’ve been self-employed since my early twenties.

How much is enough? Unlike the typical American, I have resisted the temptation to inflate my lifestyle to match my income. Rather than make more and spend more to keep up with the Joneses, I enjoy a lifestyle of voluntary simplicity. I value my time, hobbies, recreation and personal relationships more than I do money. Therefore, my moneymaking ambition has always been to make just a little more than enough. Because I pay myself first, I am 100% debt-free and have accumulated over a million dollars. I can afford the luxury of free time. Here’s a wonderful story, written by an unknown author, that aptly illustrates the concept of ‘enough’:

Story of The Mexican Fisherman

(photo by CaptPiper)

An American investment banker was at the pier of a small coastal Mexican village when a small boat with just one fisherman docked. Inside the small boat were several large yellowfin tuna. The American complimented the Mexican on the quality of his fish and asked how long it took to catch them.

The Mexican replied, “Only a little while.”

The American then asked him why didn’t he stay out longer and catch more fish. The Mexican replied that he had enough to support his family’s immediate needs. The American then asked, “But what do you do with the rest of your time?”

The Mexican fisherman said, “I sleep late, fish a little, play with my children, take siestas with my wife, Maria, stroll into the village each evening where I sip wine, and play guitar with my amigos. I have a full and busy life, senor.”

The American scoffed, “I am a Harvard MBA and could help you. You should spend more time fishing and with the proceeds, buy a bigger boat. With the proceeds from the bigger boat, you could buy several boats; eventually you would have a fleet of fishing boats. Instead of selling your catch to a middleman you would sell directly to the processor, eventually opening your own cannery. You would control the product, processing, and distribution. You would need to leave this small coastal fishing village and move to Mexico City, then LA and eventually New York City, where you will run your expanding enterprise.”

The Mexican fisherman asked, “But, how long will this all take?”

To which the American replied, “15 – 20 years.”

“But what then?” asked the Mexican.

The American laughed and said, “That’s the best part. When the time is right you would sell your company stock to the public and become very rich; you would make millions!”

“Millions – then what, senor?”

The American said, “Then you would retire. Move to a small coastal fishing village where you would sleep late, fish a little, play with your kids, take siestas with your wife, stroll to the village in the evenings where you could sip wine and play your guitar with your amigos.”

Author Unknown

What drives YOU to want to be your own boss?

Aim…   (Step One: Zero In On The Right Business)

(photo by AjDele Photography)

What do you love to do? Do you make money doing this? If not, why not? What are your unique talents? What are your personal priorities and values? Your quirks? Your passion will be evident to your customers and will prove value. Put aside all judgement as you brainstorm ideas. Need inspiration? Try these exercises:

• Create a Treasure Map to Your Rich Life
• Find Your Zingers

Is there a need for what you offer? Next time you can’t find what you are looking for, realize you just identified a business opportunity.

What is your risk tolerance? If your tolerance for risk is low, avoid reinventing the wheel. Pick a known moneymaker.

Example: While plumbing isn’t a romantic business, it has been in steady demand for as long as humans have enjoyed running water.

Is the money worth your time? Calculate how much you anticipate making and how many hours you’ll need to work to earn the revenue. Then calculate the dollar value of your time.

Ask many questions:

• Talk to people in your chosen niche: vendors, sales reps, technicians, consumers, your future competition.
• Ask for feedback from those who are supportive, optimistic and successful. Avoid naysayers.
• Interview those who have been-there-done-that.

Try it before you buy into it:

• Find a mentor.
• Be a shadow.
• Volunteer.
• Work to learn, not to earn. Negotiate an apprenticeship.
• Work for your future competition.

Would you be better off buying an existing business or starting from scratch?

• An existing business with a successful history is more likely to succeed.
• A start up is attractive due to a lower beginning investment.

Ready…  (Step Two: Set Yourself Up for Success)

(photo by andreasnilsson1976)

Do your research:

• Be an ethical mole and work for your future competition. Learn how to navigate the maze on someone else’s dollar.
• Analyze your competition: supply, demand, prices, strengths, weaknesses. What can YOU offer that your competition doesn’t?
• What are the demographics of your targeted customer? How will you reach them?
• Clarify your business identity by carefully selecting your niche and business name. Be sticky! (ex: Jen Smith versus Millionaire Mommy Next Door)

Spin your web (create a support system):

• Don’t try to wear all the hats. Reports on business failures cite poor management as the number one reason for failure. New business owners frequently lack business and management expertise in areas such as finance, purchasing, selling, production, and hiring and managing employees. Build your team of players and seek help from a bookkeeper, CPA, attorney, manager, sales and marketing specialist, etc. Weigh the advantages of hiring subcontractors versus employees.
• Participate in networking, professional and business support groups.
• Limit your exposure to toxic people. Don’t allow negativity to bring you down. Surround yourself with those who are happy and successful.
• Be mindful of your own internal dialog. Eliminate the words ‘but’, ‘try’, and ‘can’t’ from your personal vocabulary.

Get your dollars in a row:

• Starting a business is risky. As a rule of thumb, new businesses have a 50/50 chance of surviving for five years or more (source: Small Business Association). Don’t let statistics discourage you; just be properly prepared for success.
• Plan for the best AND have an exit plan in place.
• Start with sufficient capital and operating expenses. Establish an emergency savings account equal to at least one year of operating and living expenses.
• Cover your ass(ets). Obtain appropriate insurance policies to protect you from catastrophic events: medical, disability, liability.
• If money is tight, moonlight. Keep your day job and work your business between working hours. Cut back on your employed hours incrementally. Once your part-time business is earning enough money to replace your day job, quit.

Establish yourself as an authority in your niche:

• Volunteer
• Blog
• Write a book
• Teach
• Speak

Eliminate the need for costly advertising expenses. I’ve never spent a dime on advertising. Referrals and word of mouth come free.

• Seek symbiotic (mutually beneficial) relationships with existing, complementary businesses. For example, I offered on-location dog training classes for the clientele of participating veterinary hospitals.
• Allow potential referral sources to experience the value you provide firsthand by offering them free or discounted services. Example: I offered free dog training classes to veterinarians, groomers, kennel owners and their staff.
• Find relevant ways to help your community. Submit public service announcements to your local newspapers, radio and TV stations.

Fire!  (Step Three: Become the Boss of You)

(photo by - POD -)

First impressions can be a matter of life and death for your new business. Now that you know what you want to do and what you need to do, it is time to launch!

Focus. Keep your commitments. Don’t branch out in too many directions.

Prevent burnout. Assuming you plan to be your own boss for the long haul, it is imperative to keep your work and personal lives balanced:

• Take time off to play.
• Get adequate sleep.
• Hug your family.
• Be there for your friends.
• Eat your vegetables.
• Express your gratitude. Psychologists say that establishing a habit of gratitude plays a significant role in a person’s sense of well-being:

“The study required several hundred people in three different groups to keep daily diaries. The first group kept a diary of the events that occurred during the day, while the second group recorded their unpleasant experiences. The last group made a daily list of things for which they were grateful.

The results of the study indicated that daily gratitude exercises resulted in higher reported levels of alertness, enthusiasm, determination, optimism and energy. Additionally, the gratitude group experienced less depression and stress, was more likely to help others, exercised more regularly and made more progress toward personal goals. According to the findings, people who feel grateful are also more likely to feel loved. McCollough and Emmons also noted that gratitude encouraged a positive cycle of reciprocal kindness among people since one act of gratitude encourages another.”  (source)

• Be happy! Happy people make more money. Newsweek reports:

“although money doesn’t buy happiness, happiness can buy money. Young people who describe themselves as happy typically earn higher incomes, years later, than those who said they were unhappy. It seems that a sense of well-being can make you more productive and more likely to show initiative and other traits that lead to a higher income.”

Measure and evaluate your progress. Regular evaluations using analytical measures are important for keeping on track and staying in alignment with your vision. Identify what works, what doesn’t and what you want to accomplish next:

• Keep a journal.
• Maintain an accurate bookkeeping system and chart your financial progress.
• Track the ratio of repeat customers versus new ones.
• Ask for feedback from your customers, employees and referral sources.

Stay connected. Nurture professional relationships with people who have the potential to help you with contacts, information, referrals and advice. In turn, be authentic and mindful of how you can add value to their lives. Your professional community is a rewarding place to practice good karma.

• Send a periodic email that reads, “I’ve been thinking about you. We haven’t talked in a while — I’d love to meet up for coffee or tea sometime next week to catch up.”
• Build ‘virtual’ relationships via e-mail, conference calls, online courses, blogs, forums, chat rooms, and social networking sites like Twitter and Facebook.

Consider expansion carefully. Remember your priorities and do the math. For example, my husband and I considered expanding our small construction business to include a staff of workers. Here are the two options we considered:

Option A = Continue to manage a small in-home business:

1 full-time tradesman (my husband; 35 hours per week)
1 part-time apprentice (20 hours per week)
1 part-time bookkeeper (me; 15 hours per week)
Total employees = 3 (1 full-time, 2 part-time)
Total labor hours per week = 70

Gross annual revenue = $250,000

Net profit = 50%
Low overhead expenses (work from home, one truck, one set of tools) means a higher percentage of revenue remains as profit.

or…

Option B = Expand our business to include 5 tradesmen:

5 full-time tradesmen (5 x 40 hours = 200 hours per week)
5 part-time apprentices (5 x 20 hours = 100 hours per week)
2 full-time bookkeepers (5 x 15 hours = 75 hours per week)
1 full-time manager (40 hours per week)
Total employees = 13 (8 full-time, 5 part-time)
Total labor hours per week = 415

Gross annual revenue = $1,250,000

Net profit = 10%
Higher overhead expenses (leased storefront location, five trucks, five sets of tools, increased salaries and administration costs) means a lower percentage of revenue remains as profit.

Which business would you rather operate? At first glance, many would likely say, “I’ll take Option B and make one-and-a-quarter million dollars each year!”

Whoa now, let’s slow down and finish the math:

Option A = $250,000 gross annual revenue x 50% net profit = $125,000.

Option B = $1,250,000 gross annual revenue x 10% net profit = $125,000.

That’s right — both options provide $125,000 in annual net profit. Now that we’ve completed the math, which would you choose?

Option A comes with less expenditures of time, energy and capital.
Option A reduces risk.
Option A requires very little initial capital investment.
Option A allows us to work from home.
Option A puts the same amount of dollars in our pocket as Option B.

We chose Option A. Every business is different, of course, so run your own numbers.

Pay yourself first and invest for a lifetime of freedom:

• Be a tightwad. Thomas Stanley, coauthor of the bestseller, The Millionaire Next Door: The Surprising Secrets of America’s Wealthy, found that the prototypical millionaire told him, “I am my favorite charity.”
• As your profits grow, be watchful of lifestyle inflation.
• As a rule of thumb, put at least 15% of your net profits into a diversified retirement account.

Once you achieve financial independence, give back and help other get started:

• Be a mentor
• Teach
• Volunteer
• Donate or lend start-up capital to others

ooOOOoo

Note: All told, this post took me more than 8 hours to put together (and over twenty years to learn!). If you found it useful, please share it with your friends, bookmark it, Stumble it, Tweet it, link to it from your blog, etc. For your convenience, there is a “Share This Post” link in the footer of this post. Thanks!

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Related posts:

1. How I Became A Millionaire (Part 2: Early Adulthood)
2. How I Became A Millionaire (Part 4: My Thirties)
3. How I Became A Millionaire (Part 3: My Twenties)

With 13.2 million people currently unemployed in the United States, ABC’s television program, The View, aired a themed show this week on jobs: where to find one, how to get one, what to do if you become unemployed, job ideas for stay-at-home moms, and how to start a “job club”.

Because this is such a timely topic (everyone knows at least one person who has lost a job during this recession), I took notes to share with you. Please share this post with the people in your life who are needing some encouraging, constructive support right now. This post is LOADED with helpful links and resources!

Andrew Serwer, managing editor of Fortune magazine, reports that the lowest unemployment rates are in the farming and ranching industries, ranking states like Wyoming and South Dakota lowest in unemployment.

Ah, but you’re not a farmer or a cowboy? Serwer reports that the following industries are also fairing relatively well right now:

• retail trade
• health care
• finance, insurance
• professional and business services
• state and local government
• accommodations and food services

Jobs that should grow with the President’s stimulus programs include:

• technology
• education

What industries are NOT likely to be hiring now?

• construction
• manufacturing
• mining
• real estate
• arts, entertainment
• transportation
• warehousing
• utilities

Here are two specific companies that ARE hiring today:

• Wal-Mart is opening 150 new stores across the country and is hiring store managers, human resource personnel, sales clerks, and more. They are willing to train people who have a strong work ethic.
• HCA Healthcare reports 9,000 available job openings for nursing, x-ray technicians, physical therapists, secretaries, administrative and more.

Marcus Buckingham, career expert and author of The Truth About You: Your Secret to Success, reports that it is taking 120 days on average to land a job. He offers his top ten things to do if you become unemployed:

1) Financial assessment: Do a thorough review of your current financial situation. What costs can you eliminate or reduce starting today? Cancel your cable package, eat at home, stop buying things — or buy them used. Hoard your cash.

2) Self-assessment: Re-evaluate what your strengths, interests and passions are and how you can best contribute to a company. Discuss your ideas with someone who is objective, such as an open-minded friend, a coach, or a counselor.

3) Update your resume: Customize it for each specific job that you are applying for. Keep it simple — filling your resume with irrelevant details is distracting. Highlight relevant experiences and describe your strengths using quantifiable verbs (“organized, saved”). Be specific about the results you have achieved and the contributions you have made to the business. Contact the people you intend to use as references. Only include those references you are confident will give you a favorable review.

4) Hire yourself as a headhunter: Treat FINDING a job AS a job, with a 9 to 5 structure. Establish daily and weekly goals. If you are rejected for a job position, ask the interviewer for feedback. Their feedback can help you improve your job hunting skills.

5) Network: Tell the people you know that you are looking for a new job. But phrase it in a positive way like, “I am looking for a career that will allow me to use my strengths to improve a business” rather than whining, “I lost my job. Do you know anyone who is hiring?” Stay in touch with colleagues (especially your previous manager) so you are on their mind if re-hire opportunities come up.

6) Get your mindset right: It isn’t just about thinking positively, it’s about acting positively. Tackle the things you’ve been putting off in other areas of your life. Act, feel productive, and your stress will be reduced.

7) Expand your skills: Finish your degree, apprentice, hone your strengths. This will make you more appealing to future employers.

8 ) Take a platform job: Go ahead a take a job that you are over-qualified for. Do what it takes to feed you and your family. Look at it not as a step down, but as an opportunity to network with new people while you continue to search for your ultimate job. Or wow your employer so much that they promote you.

9) Volunteer: Show future employers concrete activities you’ve performed during your lay-off that demonstrate initiative and skill-building. Be an awesome volunteer and you might impress someone at the organization so much that they will offer you a paying job. (Note: if you are receiving unemployment benefits, check to see whether volunteering impacts your eligibility.)

10) Start your business: Now that you have the time to investigate this option, utilize the many free resources available for those who are interested in starting a business.

Tory Johnson, CEO for Women For Hire and author of Will Work from Home: Earn the Cash–Without the Commute, shared her “job club” tips. A job club is a group that motivates one another, networks, supports, and helps each other keep accountable. Click here to learn more about forming a job club.

Johnson also suggests:

• expand your search – create different resumes targeting your different skills
• create a LinkedIn profile and ask people to write recommendations for you
• update your resume and make it look like you are doing things rather than waiting around for a job to come to you
• freelance

Resume Mistakes:

• One size fits all – you should customize for each job application
• rehashes your experience – highlight your successes instead
• outdated and overblown – your resume needs to be current and concise
• unexplained gaps – address employment gaps using volunteerism, education, etc.
• submit and wait – you need to submit and HUSTLE!

Johnson also discussed stay-at-home mom jobs that allow women to take care of their kids while earning an income. Here are some of the online resources she suggested:

Direct sales (through established companies, like Tupperware parties):

• Cooksey Keepsakes (photography parties)
• The Happy Gardener
• Stella and Dot Jewelry
• Wine Shop at Home
• Simply Fun (games)
• Directselling411.com

Promote your expertise:

Soft Skills / Care giving:

• childcare: Sittercity.com & care.com
• eldercare: HomeInstead.com & SeniorHelpers.com
• pet sitting: FetchPetCare.com

Hard Skills:

• technical: guru.com
• elance.com
• odesk.com
• writing: associatedcontent.com and helium.com
• advice: liveperson.com

Online Selling (convert your clutter like designer clothing, old cell phones, and movies into cash):

• ebay.com
• amazon.com
• craigslist.com

Craft sales:

• Creative Etsy.com users sell $12 million dollars worth of their hand-crafted products!

I hope you find my notes and these resources helpful. Please leave additional ideas in the comment section below. For more money making and saving ideas, please head on over to the recent Carnival of Personal Finance!

Related posts:

1. Why blogging should be on YOUR to-do list, especially during tough economic times
2. Will the Great Recession Trigger the End of Buy-and-Hold Investing?
3. Is The Recession Over? My Gut-Check Impressions on the Future of Our Economy.