Manisha Thakor routinely blogs and speaks about personal finance and is coauthor of two books on the topic: On My Own Two Feet and Get Financially Naked. Thakor’s Santa Fe, New Mexico–based MoneyZen Wealth Management is a boutique firm advising high-net-worth female investors with $1 million or more in assets, but she is passionate about helping others increase their financial acumen regardless of income, life stage, or gender.
In this interview, Thakor notes the subtle differences between men and women in their attitudes about money and simplifies the steps all must take on the path to financial security.
What drew you to a career aimed at demystifying personal finance?
My parents shaped my interest in this from a young age. When I was 11 my dad showed me how to use his HP 12C calculator to figure out how much my babysitting and lawn-mowing money would grow at 7 percent by the time I retired. That early lesson shaped the way I thought about money and saving. My mom, who is an ardent feminist, encouraged me to believe that I could do anything, including pursuing a career in financial services.
Why is financial planning intimidating for so many of us?
While many people under the age of 35 recognize that saving for retirement is important, they often feel burdened by other financial priorities, including paying off student loan debt. Meanwhile, many boomers are worried about making their nest egg last, as they perhaps find themselves in a caregiver role for an elderly spouse or parents.
Even for those who have made a commitment to save, men and women of all ages are largely confused about investing, in part because of increasingly volatile markets and the proliferation of financial products available. A lackluster economy and tenuous job prospects have likewise increased the anxiety people feel about getting financial decision making right. While the steps involved in good financial planning are simple in nature, they are not easy for most of us to apply.
What do you mean that financial planning is simple, but not easy?
Financial planning involves simple math. For instance, the formulas for calculating savings are straightforward. It’s also simple math to spend less. You decide how much you need to cut.
What’s not so easy is to figure out which things to eliminate. Saving more or spending less might require you to say no to some things, yet we live in a culture that encourages us to say yes to everything consumptive. Even if you manage to avoid excessive spending and build up some savings, the sheer volume of investment options can create a state of analysis paralysis. When the brain can’t process all those choices, it moves on—often without making any decision.
What led you to focus on helping women in particular achieve their financial goals?
My education was definitely a catalyst. Attending Wellesley College as an undergraduate played a huge role, because when you’re attending a women’s college, where essentially every aspect of the campus is run by women, you suddenly realize women can do anything—reinforcing what my mother taught me as a young girl.
Another reason I am passionate about working with this demographic is that women on average still earn only 77 cents on the dollar compared to men. Add to that the fact that, on average, women spend 11 more years out of the paid workforce than do men—typically during a vital stage in their career—to care for children or elderly parents. What this means is that the retirement nest egg for a man is likely to be twice as large as a woman’s simply as a result of those two factors.
What key differences have you observed in the investment behaviors of men and women?
I have noticed that men have a greater propensity to want to beat the market. The question that typically drives a woman’s decisions is: “How will this help me meet my goals?”
Recent conversations I had at a neighborhood barbecue highlight how men and women tend to frame financial discussions differently. After finding out what I do for a living, a man I was talking to asked for my hot investment picks. When I explained that I don’t believe in hot picks, he asked what areas of market opportunities I thought were poised to take off.
A conversation I had with a woman took another direction. She was trying to figure out how much she would need to save before it was safe for her to retire. Both individuals wanted the assurance of having enough money to feel financially secure, but the two lines of questioning were dramatically different.
This difference is one reason I am so passionate about teaming up with TIAA-CREF and its Woman to Woman Financial Empowerment Series workshops. These workshops focus on what women are trying to achieve financially and the actions they can take to get there.
What results have you observed among workshop participants?
Of all the stats TIAA-CREF has collected in connection with the workshops, the one I am most excited about is that 73 percent of participants report having increased their retirement plan contributions. One thing I have observed in my own work and in connection with these workshops is that when women’s personal goals are considered within the total context of financial planning and investment management, they take action.
In running my firm, I have the capacity to impact maybe 100 to 150 women. The beauty of the TIAA-CREF workshops is that in the 160-plus events held since this program launched, we’ve reached more than 5,300 women. And if we’ve done our job right, every woman who attends a workshop is sharing what she has learned with another 5 to 10 women whom she is mentoring.
I don’t think the financial services industry fully appreciates the power of women as message disseminators. Women tend to share tips and advice and routinely refer professionals in all areas of their lives—whether it’s a recommendation for a dry cleaner, a doctor, or a financial planner—and so this has a cascading effect for encouraging other women to take action.
What has been the most surprising part of working with women on personal financial issues?
One surprise has been how starved many women are for this conversation and how excited they are when they have it. In the workshops you can see that light-bulb moment when participants recognize that their financial well-being is something they deserve to focus on in the same way they have learned it’s OK to focus on their physical, spiritual, or intellectual well-being.
And they realize this is about more than money. Participants come away with a greater understanding about where the choices they make will place them on the financial spectrum and their options for altering their position.
Why did you choose MoneyZen as the name for your Web site?
I have often reflected on how the financial services industry exists under this patina of complexity. If the purpose of life is to be happy, and if the purpose of working is to earn money to support lives that will make us happy, why don’t we feel more Zen about our money?
MoneyZen embodies my idea of financial nirvana, where people realize how their money can serve their deepest dreams and joys, and they feel like they have the right tools to optimize what they have no matter their income or stage in life, so they can feel a peace or Zen about their financial future.
What should individuals do to ramp up their retirement savings, regardless of their life stage?
No. 1 is to learn to live within your means. Until you acquire some savings, you can’t grow your assets. Second, you need to make the hard work of living within your means pay off. This requires getting quality professional guidance to create a holistic plan geared toward your personal or family needs. Many don’t realize how much of this information and assistance is already available through their employers. The third piece is understanding that this is not one time and you’re done. Personal finance entails lifelong learning. Committing to routine check-ins with a qualified financial adviser can make all the difference.
Something else worth emphasizing is for people not to fear asking questions. For men and women alike there is often a quiet shame that comes with admitting they don’t understand money matters. Yet, study after study shows that people who work with financial advisers and seek education on personal finance have better financial outcomes. Few of us received any kind of formal personal finance education when we were young. It’s OK to start at zero if you can end up at Zen.
MARTA PEREZ DRAKE is vice president of professional development for NACUBO.