The Unnecessary Risk Too Many Women Take With Their Money

Are you worried about getting swindled out of your savings or losing everything in a crash? Alice Finn, the author of Smart Women Love Money, explains the simple ways to avoid those catastrophes—and warns us about a threat to our earnings one never seems to consider.

If I stopped a random woman on the street and asked her what she thought the biggest controllable risk to her long-term portfolio potential was, I can almost guarantee she wouldn’t guess the right answer. She might say it was the risk of being invested during a big market downturn, like the bursting of the dot-com bubble or the great recession of 2008. She might mention the possibility of being taken for a ride by a Ponzi schemer like Bernie Madoff, or investing in a fraudulent company or one that goes bankrupt. Perhaps she’d mention the risk of not investing at all—sitting on the sidelines and watching as the market goes up without her taking advantage and growing her assets.

Yes, market declines come and go, but if you remain invested in a diversified portfolio of low-cost index funds and regularly rebalance, you ensure you’ll always be in a position to profit from the upturns when they come. If you’re sticking to index funds, there is no risk you’ll end up in the clutches of a Bernie Madoff and his “proprietary” (in this case, downright illegal) investment strategies and products, because you’ll be buying plain vanilla funds that trade in the public markets. And of course, you’ll be staying invested at all times, because that’s the key to making money at all. As long as you invest, and stay invested, your returns keep compounding. The more time you have, the more you can reinvest those earnings and leverage the potential of your original assets.

But there is another risk, and it’s one that almost no one ever seems to consider. The one most of us forget about until it’s too late. It doesn’t grab headlines in the same way a market crash or a renegade money manager might. But it can wreak havoc on how much money you end up with when you have to look at how your nest egg will provide for you and your family.

Ask Brianna: How Can I Tackle My Finances?

“Ask Brianna” is a Q&A column for 20-somethings or anyone else starting out. I’m here to help you manage your money, find a job and pay off student loans — all the real-world stuff no one taught us how to do in college. Send your questions about postgrad life to

This week’s question:

“I feel overwhelmed by my student loan and credit card debt, and I have nothing saved. I don’t want to even look at my accounts. How can I get past my fear and tackle my finances?”

Repeat after me: It’s not too late.

You are not a bad person. You don’t have to fix everything at once. Asking this question means you’ve already taken a huge step. Plus, nearly everyone has felt anxious about money — they probably just didn’t tell you.

“It’s something that everyone has to deal with, but nobody really talks about,” says Kristy Archuleta, a program director and associate professor of personal financial planning at Kansas State University.

Money is so tied to emotion that Archuleta, a licensed marriage and family therapist, is part of a movement to develop the new field of financial therapy. She says financial therapists “help people think, feel and behave differently with money as a way to improve overall well-being.”

If you’re totally overwhelmed by your financial situation, taking the first step to look at your finances can be the hardest part. Start small and ask for help. When you set goals and use them to guide you, you’ll start a positive cycle of progress.

Picture financial freedom

To start, focus on what you want your life to look like, Archuleta says — the big, nebulous, existential stuff, not what’s possible with the money you have in the bank right now. How do you want to feel when you wake up in the morning? What activities and interests do you want to pursue? What kind of environment do you want to live in?
You may find it hard to imagine yourself sitting on the porch of your dream house in the country without the credit card debt that’s keeping you up at night now. But let the future motivate you to address your money concerns, instead of focusing on mistakes you made in the past.