What’s Your Money Personality? (Umm …)
The internet loves many things. Among them: taking quizzes and patronizing women when it comes to money. (OK, also pictures of cats. But I’m with the internet on that one.)
This has led to a plethora of ridiculous “What’s your money personality?” quizzes. I took one just for grins and apparently, I’m “a financially conservative saver who would rather hide away your funds than get that gel manicure.” (Are those my only choices?)
So we made you a different kind of money quiz. One that won’t spit out whether you’re a “Carrie” or a “Miranda.”
You walk into a bank and say, “One savings account, please.” What’s the average interest rate they’d offer you?
- After accounting for inflation, you actually lose money
Answer: All of the above
The national average interest rate on a savings account is 0.09%, which is pretty close to rounding to 0%. Oh, and btw, inflation is about 2%. Here’s a fancy infographic that shows some pretty compelling math behind why you should start investing literally right now.
Meanwhile, what’s been the average annual return from the stock market over the past 91 years?
- Not much. All the market’s ups and downs more or less even out, don’t they?
- A bit more than a savings account, right?
That’s quite a difference. So … potentially … how much money could I make to retire with over the course of my career by investing my money instead of saving it?
- Exactly 9.5% more than saving it (because see above)
- Nobody can say
- Hundreds of thousands of dollars, if not millions
Yup. And this is not idle speculation. We did the math using a Monte Carlo simulation — a forward-looking, computer-based calculation in which we run investment portfolios and savings rates through hundreds of different economic scenarios to determine a range of possible outcomes. Not investing can cost you hundreds of thousands — and for some people, millions — of dollars over your careers.*
Holy kamoley. That’s a lot of money. That’s …
- Leave-my-dead-end job money
- Travel-the-world money
- Be-the-badass-I-was-born-to-be money
Answer: All of the above
You know it.
Yes, but aren’t women … you know … deficient vs the guys when it comes to
- Our need for financial education?
- Investing returns?
Answer: None of the above
Hell, no. Girls’ math grades are as good as the boys’ are (though teachers give worse grades when they know they’re grading girls, arrrgh). As for financial education — there are only a few things you need to know to start investing. (Here they are.) And guess what: Women investors actually outperform men.
OK, interesting. But before I get started, don’t I need to pay off my student loans before I invest?
- Yes. All debt is the devil. Obviously.
- Only certain student loans
- No way — student loans are “good debt,” so I can just pay the minimums and not worry about it
Good question. Not all debt is bad debt (here’s why). So the answer depends on the interest rate on those loans. If it’s high, you want to pay it off. But if the interest rate is low enough, it’s often better to invest instead (at least, it has been historically).
Here’s what you need to know about that whole “pay off debt or invest” decision.
The worst financial advice we’ve heard lately is:
- You can wait to invest later, when you have more money
- Bitcoin anyone?
- Want to retire a millionaire? Just give up your daily latte!
Answer: All of the above
In order for my latte habit to translate into $1 million when I retire, the actual number of lattes I would have to be drinking a day is:
- No freaking clue
- It doesn’t matter, since I’ll never let you pry my latte out of my cold under-caffeinated hand
- You’re kidding with this whole latte thing, right? What are you, monsters??
Answer: Yeah, we’re kidding
It’s not about the latte. And, in fact, “give up the latte” is bad advice. For one thing, nobody tells cis men to skip lattes (and I don’t know about you, but there are always people of all gender identities in my coffee lines). That’s important — because our culture tells women to skip, scrimp, and save while telling men how to build wealth. And for another thing: Nobody drinks that much coffee.
Who said, “We will not solve the feminization of power until we solve the masculinity of wealth”?
- Mitch McConnell
- The Wall Street Journal OpEd page
- Gloria Steinem
But I quote it a lot.
Read more here.
CO-FOUNDER & CEO, ELLEVEST
Have more questions? Follow up with the expert herself.
Sallie Krawcheck’s professional mission is to help women reach their financial and professional goals (or, put more bluntly, to get more money into the hands of women), thus enabling them to live better lives and unleashing a positive ripple effect for our families, our communities and our economy. To that end, Krawcheck is the Chair of the Ellevate Network, a 135K-strong global professional women’s network; she is also the CEO and co-founder of Ellevest, a... Continue Reading
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