Decades ago, soon after I divorced my gambling husband, a friend of my father’s called. He told me about a Limited Partnership he was forming, TJ Cinnamons. A fast food place that made sticky buns. I had no idea what a limited partnership was, but this man was very wealthy, very smart, very successful, so it had to be a great thing, right?
I didn’t know that you can’t take your money out of a limited partnership because there’s no market for it. When TJ Cinnamons went under, I lost my investment. After royally screwing up my first investment, I made a decision. I vowed I’d never invest in anything I didn’t understand.
I’ve come to call this the First Law of Investing: Never put money in anything you don’t understand, whether it’s a stock, bond or exchange-traded fund. Not only do you not know what you’re buying, you can’t evaluate its performance relative to the stock market itself.
I knew I had to get smart, but how? I was a single, working mom, trying to have a life, juggling a gazillion different balls. I had no time to educate myself. So, out of desperation, I devised a three-step system.
That’s when I discovered it doesn’t take a lot of time to get smart.
I promise, if you consistently practice these three steps, you will be amazed at how much smarter you’ll be and how powerful you’ll feel. Because when you take control of your money you take control of your life.
1. Everyday, read something about money, even if it’s just for a minute or two, even if you only glance at the headlines of the business section of the newspaper, or flip through a money magazine while waiting in line at the grocery. Of course, reading DailyWorth every day is one solution. I call it the osmosis school of learning.
When I first subscribed to the Wall Street Journal, I didn’t understand all of it — interest rates, indexes, upside risk. But instead of letting the issues pile up, I’d pull out Section C, about investing, and lay it on the kitchen counter. Every day I’d walk by it, figuring by osmosis I’d pick something up. And I did. So much of getting smart or smarter about money is understanding the jargon, the current trends.
To this day, if I do nothing else, I’ll glance at the headlines in section C of the Wall Street Journal.
2. Every week, talk about money. Have a conversation with someone who knows more than you. I discovered this step when I started interviewing financially savvy women for my book Prince Charming Isn’t Coming: How Women Get Smart About Money. Just by talking to them, I began to understand investing.
It’s wonderful how willing most people are to discuss money, and how much you can learn from them. Anytime you meet someone who is financially knowledgeable, take advantage of the opportunity. Ask them how they got smart, the mistakes they made, and what they’d recommend.
3. Get Support. As I finally figured out, no one will do this for you, but you don’t have to do it alone. It’s tough to take the financial reins in isolation. We need to reach out for help. As one smart women I interviewed told me: “Success is a social activity.”
My goal is for you to get to the point where you’re saying what every woman says when she finally understands investing: “I feel so powerful.”
Join me and Amanda Steinberg, founder of DailyWorth, in Seattle this September 23rd-26th at my four day retreat, The Women’s Wealth Weekend: The Awakening. Amanda will be the keynote speaker!
Barbara Stanny, a leading expert on women and money, has helped women take control of their finances for two decades — and she knows there is much more to success than how much you earn. Learn more at barbarastanny.com.