Education is the answer: How to avoid the midlife financial crisis
Readers talk back
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Yesterday Sara Lucas shed light on the ugly, and often unspoken, reality of rebuilding financial security after losing it all. Today she shares the stories of two women who have been forced to start over, in the hope that educating and sharing will help other women avoid the pitfalls of financial strife.
Part two of The midlife financial crisis: Women forced to rebuild, from absolutely nothing is down to two women:
Melissa and Lisa.* Here are their stories of rebuilding, un-engineered and verbatim. You draw your own conclusions, my reader. I firmly believe that we women know the answers ourselves, if we'd only talk more openly and listen.
I ask you though, please do not judge these women, we cannot know what is real for them until we have walked in their shoes.
Melissa: For a start, I'd advocate no joint accounts. Or at least, I would have kept one for myself. He cleared 'our' (my) business account out not once, but twice before I could get a lawyer to stop that. For A$1,000 an hour thank you, Mr Lawyer.
Lisa: Equally, no joint credit cards...
Melissa: I had no idea how much money we actually had, he had all the documents when he left the marriage and he left the country. I had no idea about our insurances or investments as I had left that up to him. I walked away with a suitcase and a tonne of guilt.
He constantly cried poor and I believed him; as he went on holiday after holiday and retreat after retreat to 'find himself', so I paid for everything our three children needed - that guilt being so very useful- until I slowly worked out that I was STILL being manipulated and controlled by him emotionally, and more significantly in the end, financially.
I will NEVER make the mistake of handing over financial control again. He is older than me so convinced myself that he knew more. Now five years later I see that I am in fact better with money than he is, and that if I had have been pro-active and less stupid from the start, I would have saved myself a HUGE amount of stress and heart ache and that I would have not had to start again now at the age of 39.
Lisa: Before we married, I lived well within my means; had savings, property, superannuation, knew the status of everything and had "play" money. On marrying, I abdicated so much of the responsibility, so I could focus on earning the money while husband went to play at his latest sliced-bread idea. His "eyes were bigger than his stomach" when it came to lifestyle and "joint" decisions were made without me taking the time to educating myself on the implications.
To another woman I'd say,
- Don't take any large financial decisions unless you are really clear of the short and long-term benefits and pitfalls. [They are very] easy to shortcut when life gets in the way, but so worth the time.
- Marriage is a contract, a financial contract as much as anything else. Don't let being blinded by love come in the way of getting the practical contract, rules and agreement nutted out from the start.
- If you can help it, never be part of a couple where both are start-up entrepreneurs at the same time, one of you needs to have a stable income and cashflow.
- Clearly understand the implications and rules relating to your Superannuation – what it allows and what it doesn't allow. I had no idea that I would be so severely penalised for taking funds out early.
- Take active steps to take control and get yourself interested in your personal finance. It needs to be presented in a much sexier, more compelling way than it currently is, if it had been so, I might have paid more attention.
- Starting from scratch, mid-life with nothing but your smarts and two young children – is a hell of a way for the kids to learn a life lesson about finances.
I have an inheritance coming, which will just about meet my liabilities. How bittersweet. Most other women in my situation would not be so fortunate and I couldn't even imagine how difficult it must be for them. I can barely get my head around my own situation.
Sara: where to from here for you?
Lisa: I worry that I will get into the trap of spending so much time focused on making the money back through working, that I won't pay enough attention to making smart big decisions and the overall planning when it comes to creating and managing assets.
Should I, could I buy a property again? (which I'd love to do); should I set up a Trust for the boys?; How do I make sure there's enough put aside for the boys' education? What happens to them if something happens to me??
Whilst I like nice things like dinners, wine and travel, I really live a pretty frugal life; I don't enjoy shopping; rarely wear jewellery, and for someone with some background in the fashion industry I am a remarkably low-maintenance female.
Any money I have will typically go towards the boys or to something very practical. So while I'm waiting to pay the remainder of Jack's term of piano, and hoping like hell the next tranche of freelance work comes through so I can pay the rent, my ex continues to not pay a bean towards our new existence, and is off at computer stores buying crap and going out and getting physio and massages on a daily basis.
Sara: You're afraid to rock the boat for fear of penalising your boys and dragging them into a conflict.
Lisa: yes that's exactly it.
Education is the answer. I'm working on it for women like Melissa and Lisa, this column is the start.
I hope you have drawn some wisdom from these stories and those in the brutally raw comments below, thank you so much for sharing your stories, they break my heart, each one. It's no easy journey but can we at least start the generational shift by educating ourselves? It's the next most important education piece after health. Truly.
*names and a few identifying details have been changed
I don't manage money for anyone except my family, nor do I give financial advice, and my opinions are my own unless stated otherwise. My writing should not be construed as general or personal advice. You should consider obtaining independent advice before making any financial decisions.
The purpose of the honesty in this discussion is to help encourage other women who might experiencing hell. Continue the journey on Sara's blog.