A recent TD survey says women are lagging behind men in financial literacy. Ingrid Macintosh, Executive Sponsor of TD’s Women and Wealth initiative, and Jessica Moorhouse, a millennial money expert, talk about four ways women can build confidence and hone their financial skills.
- A recent TD survey says half of men polled don't know the difference between a mutual fund and an ETF. But for women, it's 2/3. The poll says women are consistently lagging behind men in financial literacy.
So with International Women's Day coming up, we're talking about women's confidence around money. Joining me are two very accomplished and confident women in the money business. Ingrid Macintosh, Vice President of TD Wealth and Executive Sponsor of TD's Women and Wealth Initiative. And also here, Jessica Morehouse. She's a millennial money expert, speaker, blogger, and educator extraordinaire. It is nice to have you both here.
- We're delighted to be here.
- Let me start off with, I want to get your personal stories. Because it's funny. You would think both of you should be like, oh, you know, overcome or brimming with confidence on things. That's not always the case. What's your story around confidence?
- I think it's remarkable. Thanks. We talk about knowledge breeds confidence and confidence breeds action. And one of the things I'm learning as I've been talking to women and talking to advisors about financial competence is it doesn't just follow that way. You know, I've worked in the industry for 30 years. My mother was in the industry as well. And yet she didn't build a successful financial plan, and I was abdicating some of that responsibility in my household.
So some of the things I'm coaching women about, about taking responsibility, I realized that despite my knowledge, I wasn't doing it myself.
- It's like the mechanic with the bad car sometimes.
- That's right. We know that. Jessica, how about you?
- Yeah. So I did not start off in the financial services. I have a film degree. I had a very windy path to where I am right now. And because of that, I was so not confident when it came to money. It was only, honestly, I'd say in the last five years, I started becoming confident about talking about investing in public.
And I think part of that was because I didn't have that formal training right at the beginning. But then I also, now as a podcaster and speaker, I talk to a lot of people, a lot of young people, confidence is a huge issue, not just with women, also with men. But I would say, particularly it's a big issue with women.
- Part of then confidence is-- and not all of it-- I think part of confidence comes from doing. We know that. But part of confidence is I think is knowledge. And what I love about both of you is you guys are going to give some real world, I'll say, insight onto some specific things people need to think about when they're building up their confidence.
Ingrid, I'll start with you. And yours is very much about setting a goal. And also, I think part of that goal is understanding your net worth.
- Right. So I think coming back to the statement, knowledge and confidence go hand in hand. And women think they don't understand investing, they don't understand these things. And it's this huge nefarious thing they can't understand. You've got to start with the simple concepts, like what is my net worth? How much will I need in retirement?
And if you actually build a goal around building knowledge, the confidence will come. And then with the confidence comes the action. And then the journey really moves along.
- And net worth means-- just for people who may not even, if they're watching right now, is just what you actually have.
- Yeah. People think it's just the money you have in an investment account. But what is your home worth? Do you have a pension? Do you have a cash flow? What is the big picture? And I think once people start having that conversation and really taking a step back, they start to feel a little bit better about the scenario and maybe feel a bit more financially confident.
- That's great. Number two, for you, that you talk about is an emergency fund.
- Emergency fund. And also, like going back to financial confidence, one great way to build that is to have that money in the bank in case something happens. Because something always happens. Something always happens. And I know too many people just rely on their credit card or a line of credit to take care of that. But you still need cash to pay back that debt.
And so making it a priority with your budget to save three, six, or nine months. For me, I'm self-employed. I have like 12 months saved up. Because you never know what's going to happen.
KIM PARLEE: You are not normal. You know that, right?
- I'm not normal. But I can sleep well at night. Because I know if something happens, I have the cash to pay for it. I don't have to go into debt because of it.
- The sleep well at night is really interesting, because I think that dovetails very nicely into what you want to talk about. And that is about financial risk. And I think the issue for a lot of women is don't be conservative. Because women want to sleep well at night. But sometimes you have to understand, they may even sleep worse at night if they knew that being conservative was bad for them.
- Yeah. This is something we see all the time is that concept of risk, right. So people who lack knowledge, they lack confidence, therefore they want to take less risk. So in the short run, people will say, well, I'll make investing decisions that don't bring risk to the portfolio or don't bring risk to my investments. I'll invest very conservatively. Fantastic. You're not going to have a bad short-term experience.
But the reality is, in the long run, that's your true risk, if you haven't saved enough or you haven't invested appropriately to make sure you've got that money in the long run. And that's something we see every day that we're really trying to help our advisors and our clients through.
- Really, it is. I mean, I'm probably kind of hammering down on this one, too. Because I think it's that risk aversion early on. But the risk is you could outlive your money. You will not have anything later on if you don't invest properly today.
- Exactly. And that's power of an advisor relationship, as well, really, is helping make meaning of that for people.
- Yeah. Debt.
- Debt. So when people come to me they're like, what should I do with my money? I have no idea where to start. We start with the emergency fund. Next is dealing with any kind of debt you have. And I personally don't include debts that are sometimes called good debt. I would like to call them more like necessary debt.
INGRID MACINTOSH: Just like good fats and healthy fats and bad fats.
- Yeah, exactly. Is it necessary? Is it not necessary? So a mortgage, you don't need to go crazy. I personally, in this low interest rate right now, I wouldn't go crazy on paying down the mortgage. But your consumer debt, your credit cards, your line of credit, your student loans, things that are charging you high interest, things that it would be really difficult to earn that type of interest if you were to invest wisely, that is what you should be focusing on.
And make a debt repayment plan. And that really means laying out all of your debts. What are their minimum payments, their interest rates, and what kind of debt repayment plan do you want to do? The snowball, the avalanche. There's a bunch of different ones that you can choose. And then make a plan and have deadlines for every one of them. And then start making auto contributions so you can get this debt paid off consistently and automatically.
- Let me ask, for someone who's watching, and I've got about a minute here, I want to just touch on like, if you're just don't know where to start. I mean, you've been talking to a lot of women. You talk to women all the time. But like how do you get it going? How do you kind of-- because I know women are great asking questions. But maybe they're afraid to look, people don't want to look dumb.
- Not just women.
- Well, that's why they don't ask questions is because they think their question is a dumb question. And I think, especially when you get women together in a room and you start asking questions and you start sharing your stories, women say, I didn't know that either. And they can refer each other to resources. Women are remarkable about building community, sharing information. But I promise you, if you think you don't know the answer, you're not alone. So start building the knowledge and building the confidence, like the rainy day fund, reduce your anxiety, build your confidence.
KIM PARLEE: Any kind of quick tips in terms of just how to get started in--
- One quick way--
KIM PARLEE: Quick. I know you got lots.
- Yeah. One great way is honestly listening to a podcast. That's how I learned so many different things. And no one needs to know you're listening at work. You can just put your headphone in and you can start building that knowledge. It becomes a habit and you start understanding the jargon and all that kind of stuff.
So I'd say, listening to podcasts, reading blogs, watching YouTube videos about personal finance, things that you can do alone. And then you'll be maybe a little bit more comfortable asking questions to someone.
KIM PARLEE: And you've got a number of resources, too.
- I know. Certainly, and Jessica and I have been talking about this. I think about within our own organization, weve got Web Broker, we have a whole learning center. And it's everything from the basics to the most advanced. But that's just one example of all the tremendous resources that are out there. Jessica's blog. There's something for everybody.
- Well, thanks to both of you. You've done a good service in terms of talking to us. And it's great to have you both here. Ingrid Macintosh, Vice President at TD Wealth and executive sponsor of TD Wealth and Women Initiative, and Jessica Morehouse, financial blogger and educator of, what's the podcast?
- The Mo' Money podcast.