Friday, October 1, 2010

Stop ... Put Down Those Manolos!

As some of you may know, I recently took on a wonderful new associate. She is beautiful, bright, hardworking, professional, elegant and … fresh out of college. As I talk with her, I can’t help but look at her as a beautiful blank slate fifteen years my junior with her whole future ahead of her. Recently, we got onto the topic of finances and I shared with her advice – a warning, really - I truly wish someone had imparted to me when I was her age. As I think it is wisdom all fashion-loving, stylish, NYC PYTs could benefit from, I share it here:

Ladies, if you are spending your whole paycheck on stylish clothes, expensive shoes and trendy restaurants, you may just be spending your way out of a future relationship.

Ok, ok, I know – there are likely at least a few angry readers exclaiming what about the men? Many of them have financial issues too!! I know the same advice I am offering could easily be directed at the guys – possible blog title: Put Down That 52” Flat Screen! - but I am focusing on the women for today’s blog because research shows that:

  • While U.S. consumers in their 20s and 30s as a whole suffer from debt that can have a far-reaching impact on their lives, young women appear to be under the greatest pressure. Experts note that females between the ages of 18 and 34 may be experiencing the heaviest debt load, with credit cards often a contributing factor.[1]

  • Statistics show that men and women handle money differently. While there are exceptions to every rule, men generally are better prepared for retirement, are more willing to put money into savings, pay off credit card balances in full and are more educated about investing.[2]

  • …[s]ingle women 25-34 seek credit help in greater numbers than single men in the same demographic group. A further look at the records shows that one of the reasons for the disparity is the amount women spend on clothing and personal care items.[3]

I actually just watched a story last week on one of the morning shows about a woman whose fiancĂ©e broke up with her when he learned about her massive credit card debt. Now I know some of you are thinking, well they obviously didn’t have a marriage-worthy relationship in the first place and that is probably true (apparently his issue was that she had grossly understated her debt while they were dating and when he learned the real number as they prepared for the wedding he felt he had been lied to and could not trust her) but there is a bigger point here. If you are spending away and racking up credit card debt like there’s no tomorrow (at the potential expense of paying off student loans), you may find yourself in ten years down the road with a financial albatross tied around your neck. And it could very well become a real problem in your love life.

Indeed, I’m not sure if my polished Cavalli-clad female readers are aware of just how unsexy significant credit card debt is to most men – it’s like being a closet smoker. And it scares them. Upon hearing about financial mismanagement, most guys immediately wonder:

“Is she going to be spending all of the money I make?”

“Can I provide the lifestyle for her that she is providing for herself?”

“Does she exercise good judgment or is she buying a pair of Jimmy Choos over investing in her 401K?”

“Is all of
my hard earned money going to go to paying off her debt?”

“Is she going to ruin my credit?”

Now, trust me, I know how easy it is for a girl to get caught up in spending in this city – the minute you walk out the door you are surrounded with beautiful, tantalizing items that would all look so fantastic on you. NY is a tricky place - it’s not like the rest of the country where you have to go out of your way to go shopping (I lived in Atlanta for a few years where, if you wanted to buy something, you had to get in your car and proactively drive to the mall) … in NY, shopping comes to you. Virtually every city street is lined with enticing boutiques so that you can’t even go to work – or the bank to make a deposit - without temptation staring you in the face. How is one supposed to resist - it’s entrapment, really (anyone want to start a class action against the city?!).

And of course, there is the pressure to look great when everyone around you is wearing the latest fashion trend and looking like a model straight out of Lucky Magazine. But the point here is to STOP and THINK before you SPEND. Discipline and responsibility are not just words – but major lifelong assets. You don’t want to be dependant on your guy, you don’t want to be embarrassed by your financial situation and you don’t want to be in a position where money is causing an awkward dynamic between the two of you (such as a creditor/debtor feeling).
[4] It is far better for you and your relationship to come in financially savvy, self sufficient and operating from a position of strength and pride.

Ok, that’s my public service announcement for the day – please stay tuned for the next blog as I take on the phenomenon of the Manhattan Man-Boy (but for a few extra grey hairs on his head and more expensive toys, nothing else has changed in his life since 1998…).

[4] Research shows that as both genders age they tend to save more and that after 50 the women catch up with the men. But the reasons for the disparity in the 20s and 30s is interesting. Unfortunately, it is still the case that boys are often are raised to be savers whereas not as many mothers or fathers focus on giving their daughters financial advice. Also, there is no question women have more pressure when they are younger to look good and spend their money on nice clothes, hair and makeup, etc. I would also speculate that the belief/hope that some younger women have that they are eventually going to meet their knight in shining armor who is going to take care of all of their financial issues probably also affects some women’s spending decisions and attitude towards their debt. My friend’s cousin actually started a company called Learnvest ( focused on helping women learn how to take control of their finances. Now that’s a Fan Page to like on Facebook!