In her best-seller, Own It: The Power of Women at Work (New York: Crown, 2017), author Sallie Krawcheck directly addresses The Best Career Advice No One Is Talking About in Chapter 9. If you missed my synopsis of that book, it is available to you at 15MinuteBusinessBooks.com.
Here are some of the key points she makes for women about money, finance, and investments:
(1) Invest money, rather than holding it in cash
“Women report that money is their number one source of stress, and so we avoid dealing with it….In fact, the stress is so significant that research shows it can cost us two weeks of productivity annually at work., Even more money left on the table!” (p. 127).
“Just as we can take control over our career in the workplace by giving ourselves permission to play the success game our way, so, too, can we take control of our money by giving ourselves permission to approach investing our way” (p. 131).
(2) Myths: (pp. 132-134)
- Women are not ‘as good at math’ – and mathlike things – as men.
- Women need more financial education to invest.
- Men are better investors than women.
- Women are too risk averse to invest.
- Women need more hand holding to invest.
- Women just aren’t that interested in investing.
(3) Financial mistakes women make (pp. 135-137)
- Letting your husband or partner manage the money without your involvement.
- Signing your joint income tax return without reading it.
- Using your husband’s or partner’s financial provider, even if you don’t know or can’t stand him.
- Not asking for jargon to be explained.
- Not taking into account your greater longevity in your investing plan.
- Not buying long-term care insurance.
- Not taking enough smart investing risks.
- Waiting until a less risky time to invest…or procrastinating.
(4) The basics: (pp. 137-139)
- Pay of your high interest debt, such as credit card debt.
- Make sure you have an emergency fund in place.
- Once the emergency fund is built, save. Save as much as you can. The guideline that has been shown to work best is to save 20 percent of your salary.
- Target saving 11 to 15 times your salary for retirement.
- Buy insurance.
- Put together a will.
- Don’t just hope for – plan for – the things you want in life.
“Huge numbers of Harvard grads poured into finance during the 1990’s and early 2000’s, but all that’s changing now…”
Richard Florida, The Great Reset
I have commented often that there are some rather obvious themes that crop up, often enough, from enough divergent voices, that one begins to think that they represent truth. In Womenomics: Write Your Own Rules for Success, Claire Shipman and Katty Kay, two journalists, confirm this idea with the language of their discipline. They are writing specifically about the rise of “Womenomics,” but the underlying truth is “pay attention to rising themes shared by many.” Here’s the quote:
As journalists, when we start to read successive reports that come up with similar conclusions, we call it a story. When the results are this conclusive and this notable we may even call it a headline.
So – here is the theme that I am now ready to put in the category of “this really is a story!” We have too many college graduates, and other workers, choosing disciplines that do not build our “Real Economy.”
I posted about this a while back with The Rise and Fall of Finance and the End of the Society of Organizations (a little “serious reading”), quoting from The Rise and Fall of Finance and the End of the Society of Organizations by Gerald F. Davis; and recently with “Traders” vs. “Builders” – the “Fantasy Economy” vs. the “Real Economy.” And the theme is cropping up seemingly everywhere. For example, here are some excerpts from a recent column by David Brooks, The Genteel Nation:
After decades of affluence, the U.S. has drifted away from the hardheaded practical mentality that built the nation’s wealth in the first place.
The shift is evident at all levels of society. First, the elites. America’s brightest minds have been abandoning industry and technical enterprise in favor of more prestigious but less productive fields like law, finance, consulting and nonprofit activism.
It would be embarrassing or at least countercultural for an Ivy League grad to go to Akron and work for a small manufacturing company. By contrast, in 2007, 58 percent of male Harvard graduates and 43 percent of female graduates went into finance and consulting.
Then there’s the middle class. The emergence of a service economy created a large population of junior and midlevel office workers. These white-collar workers absorbed their lifestyle standards from the Huxtable family of “The Cosby Show,” not the Kramden family of “The Honeymooners.” As these information workers tried to build lifestyles that fit their station, consumption and debt levels soared. The trade deficit exploded. The economy adjusted to meet their demand — underinvesting in manufacturing and tradable goods and overinvesting in retail and housing.
These office workers did not want their children regressing back to the working class, so you saw an explosion of communications majors and a shortage of high-skill technical workers. One of the perversities of this recession is that as the unemployment rate has risen, the job vacancy rate has risen, too. Manufacturing firms can’t find skilled machinists. Narayana Kocherlakota of the Minneapolis Federal Reserve Bank calculates that if we had a normal match between the skills workers possess and the skills employers require, then the unemployment rate would be 6.5 percent, not 9.6 percent.
There are several factors contributing to this mismatch (people are finding it hard to sell their homes and move to new opportunities), but one problem is that we have too many mortgage brokers and not enough mechanics.
Where people work really matters. Not the company, but the industry — the end product. When our smartest people built things that were tangible, usable, exportable, it really mattered. And it can again.
We’ve got a story here (to use the language of the journalists). And the bad news is that we can’t fix this by tomorrow afternoon. It will take a while. We have to champion and applaud jobs that represent and build the real economy. We have to reward people who go into such work. And it will take a few years of graduates shifting their plans and dreams to pull this off.
The Brooks article, and the Florida book, reveal that the movement away from “finance” has already started. But it has not yet created movement into the jobs that build the “real economy.”
I’ll end with this, another cautionary paragraph from Brooks:
The shift away from commercial values has been expressed well by Michelle Obama in a series of speeches. “Don’t go into corporate America,” she told a group of women in Ohio. “You know, become teachers. Work for the community. Be social workers. Be a nurse. … Make that choice, as we did, to move out of the money-making industry into the helping industry.” As talented people adopt those priorities, America may become more humane, but it will be less prosperous.
Here’s a serious reading suggestion for a snowy Sunday afternoon. (yes – we got three inches of snow in Richardson, Texas, on a cold March 21 Sunday. Amazing!)
Bob Morris, our fellow blogger and book reviewer extraordinaire, likes to remind that there are some great books that never make it to best-seller status, and there are some best-sellers that are not necessarily worthy of their over-hyped reputation. I know that he is right about this, but I, like so many, become too easily enamored by the hype and buzz. Here’s a blog post in agreement with his premise.
I apologize that I do not remember which site/blog pointed me in the direction of this article. It is an excerpt of a book that is not a best seller, but one that I suspect would be worth a careful read. The article is: The Rise and Fall of Finance and the End of the Society of Organizations by Gerald F. Davis. This article is largely based on his book Managed by the Markets: How Finance Reshaped America. Oxford, U.K.: Oxford University Press, 2009.
This is an interesting and important book to me because it deals with an issue that I am slowly becoming obsessed by, and have written about frequently on this blog: where will the jobs be? In the article, the author includes a chart showing the decline of manufacturing jobs and the flat (almost no) growth of retail jobs. There is also a table that shows the ten largest employers from 1960, 1980, and 2009. It provides quite a contrast.
This is an academic article – what I call “serious reading” — the kind that requires a little undivided attention, and your thinking hat to be firmly on your head. But I commend it to you. I am including a few paragraphs here, but still just a teaser.
Here is the executive overview, and a few excerpts:
Large corporations were a dominant force in American society for generations through their employment practices, expansion choices, and community connections. As the United States has shifted to a postindustrial economy, however, finance has increasingly taken center stage. This article documents shifts in corporate employment, institutional investment, corporate organization, financial services, governments, and household ties to financial markets over the past three decades. I argue that all these shifts can be seen as part of an interconnected movement toward a finance-centered economy, and that the recent economic downturn can be viewed as one outcome of this broader movement.
The global economic downturn that closed the first decade of the 21st century revealed the centrality of finance to American society. Problems with arcane securities traded by obscure financial institutions rapidly spun out of control, potentially putting global capitalism itself at risk. Like a loose thread that manages to unweave an entire sweater, the mortgage crisis evolved into a credit crisis and ultimately into an economic crisis that is rivaling the Great Depression of the 1930s. The economic crisis in turn has forced us to grapple with the fact that the United States is now a fully postindustrial economy. By March 2009, more Americans were unemployed than were employed in manufacturing, and all signs pointed to further displacement in the goods-producing sector.
The argument is as follows. As manufacturing employment gave way to services and the largest employers shifted from firms such as GM to those such as Wal-Mart, the nature of the employment relation changed: The long-term mutual obligations of old were replaced by expectations of more temporary attachments.
By the end of the decade, any lingering doubt about the purpose of the corporation, or its commitment to various stakeholders, had been resolved. The corporation existed to create share-holder value; other commitments were means to that end.
The argument of this paper has had many moving parts, but the underlying theme is that finance shaped the transition from an industrial to a postindustrial society in the United States over the past three decades. From a society of organizations, in which corporations were essential building blocks that shaped the daily lives of their members, we evolved into a portfolio society in which household welfare was increasingly tied to the vagaries of the financial markets.
… states are more business service providers than sovereign nations.