Bag Lady Fears: Rational and Persistent

Men, whether successful or not, don’t seem to worry about becoming destitute in their old age, invisible, unloved, roaming the streets, scrounging in garbage cans for food. But irrational as it may seem, successful women also suffer from bag lady fears.

Katie Couric, Gloria Steinem and Lily Tomlin admit to sharing this fear of becoming a bag lady. So did 48 percent of the 1,938 high earning women polled by Allianz Life Insurance in a 2006 poll. A stunning 90 percent of these high earners admitted to feeling financially insecure.

Many married women don’t have a history of understanding or managing money. They're not used to seeing the bigger picture. They think their husband is better at making the ‘really big’ money decisions. While they balance the household budget and decide what to buy, he handles the investments. If the marriage ends, they don't understand what he was doing financially. Often they find themselves responsible for financial decisions he made without their knowledge or participation.

The bottom line? Wives' financial decisions revolve around money spent and gone, not invested for growth.

Bag lady fears may be emotionally irrational for financially secure Katie, Gloria and Lily. Their fears relate to being out of control, of feeling weak and fearful that they can't make it on their own. For them, these are childhood tapes and no longer based on reality.

But for millions of women, divorce or widowhood is the wake-up call that they have to start thinking differently about money. Four in 10 marriages end before the 30th wedding anniversary. Only 16% of married women have a financial “Plan B” in case of divorce. The average age a woman is widowed is 56. Her average longevity is 84.

Every woman who isn't in charge of her financial life is at risk of being a bag lady if someone is planning her future. That makes the bag lady syndrome a rational fear which requires paying attention to now.

Before You Sign the Tax Return

Filling out your tax return is like looking at your complexion in a magnifying mirror. You get to see things that are not obvious unless you're taking a closer look.

Divorce Isn't Always Personal

It started three years ago when Inge told her husband she planned a face lift and he told her they couldn’t afford it. She thought they could. She asked Harry to show her the books.   He got angry, called her a shrew, a nag, and an ungrateful bitch of a wife, then stormed out of the room, slamming the door behind him.

I met Inge when she attended my seminar a few weeks after that incident. Recently, I saw her again on the walking trail. Animated and radiant, she looked years younger than I remembered her. She brought me up to date.

“After your seminar, I realized I had a legal right to know all about our marital finances,” she said. “At dinner that night, I told Harry that I wanted to participate and understand our marital finances. He gave me the same old stuff, told me not to worry, not to nag, just to trust him, blah, blah, blah.

“For the first time, I really lost it. I told Harry that since he wouldn’t share information, I was going to get it some other way. He didn’t believe me. He called me crazy, menopausal, said I needed a shrink. I threatened divorce, figuring that was the only way I was going to learn anything about our finances. Harry warned me that I didn’t have any money to pay for a lawyer.

“I searched until I found a lawyer who was willing to delay payment until after the divorce. He got a forensic accountant who dug back two decades for information about Harry’s business and investments, most of which I knew nothing about. By the time the accountant was done, Harry was pleading with me not to go through with the divorce. I told him it was nothing personal, but at that point, I wasn’t going back.”

Inge’s eyes sparkled as she continued.

“The divorce was final a year ago. For the first time in my life, I had money of my own. After paying the lawyer, the first thing I did was have that face lift.  I’ve also signed up for some business and investing classes.”

“ How is Harry doing with all this?” I asked.

“Well, I was mad at him, but still loved him. He’s a great-looking sexy man, we have the three children and we had a good life,” Inge said. “I just didn’t like how he lorded it over me about money. After the face lift, Harry kept telling me how beautiful I am, just like the girl he married, that he could never love another woman and would I consider getting together with him again. I said I’d consider it, but not without a prenup.”

Update? They remarried, with a prenup.