Make the most of your money: Financial expert offers advice for plastic surgeons
Financial expert Manisha Thakor (pictured at right), founder and CEO of MoneyZen Wealth Management, will be speaking at the Women Plastic Surgeons Retreat Jan 26-27 in Las Vegas. Thakor recently spoke with PSN Extra about finance, including how women differ from men in their view of money, what young professionals are doing wrong – and why we should all talk about our money.
PSN: How will your presentation benefit plastic surgeons?
Thakor: My goal for this presentation is for every single attendee to come away feeling these three things: (1) Wow, personal finance is not that complex, (2) Cool, now I know what steps I need to take to improve my financial well-being, and (3) Yippee – I'm actually excited to get my financial house in order!
The personal finance landscape is littered with multi-syllabic words and cryptic acronyms. As a result, the handful of powerful, basic steps that we should all take to nurture our financial health too often get lost in the shuffle.
My intent with the presentation is to demystify money. For so many of us with advance degrees, we have deep knowledge in our areas of specialty – but in the area of money, an item that directly or indirectly flows through our lives every day – we received no formal education. After hearing this presentation, my hope is that attendees will feel they just experiences a delightful immersion into a world that once may have seemed murky and now feels empowering and exciting to think about and act on.
PSN: Why do you focus on discussing finances with women?
Thakor: I often get asked if I focus my financial work on women because women are "worse" with money. Far from it. The reason I focus on women is that, as things currently stand, we have stronger financial headwinds than men. Collectively we still earn $0.77 on the male $1.00. We spend an average of 11 more years out of the paid workforce than men – caring for children and / or elderly parents. Oh, and we live longer. So we earn less, for less time yet live longer so need more. On top of that I've also found that the default language of personal finance is often "male-speak," so many of the analogies and examples around how to manage your money are given in terms of "fighting, dominating, and beating the competition."
I've found that many women prefer to have a more holistic, goal-based approach to their finances. In other words, focusing on how to use your hard earned money to maximize the joy in your life rather than winning a nebulous race against a faceless competitor. Or said slightly differently, money is power. As such, I want personal finance to be women's language too.
PSN: What financial challenges to professional women face that are different for men?
Thakor: The two biggest challenges I see are what I call the "77/11 Effect" (earning less and spending more time out of the work force), which can in a perfect storm set of conditions result in women literally having half the size of a retirement nest egg than their male counterparts to sheer work/life exhaustion. Most professional women I know are juggling so many balls, that it becomes very easy to unwittingly or unintentionally drop your financial one. That's why a key focus of my presentation will be straight-forward, simple, effective steps that can be done without taking up undue amounts of your precious free time.
I also have noticed that men tend to "chit-chat" among each other more often about money and investing than women do, not that their financial chit-chat is necessary accurate just more frequent! But as a result of the increased tendency of men to talk money with each other, the topic of personal finance stays on their radar and thus on the margin can influence them to take more interest in or action on the subject, again, not because they are better with money, simply because they are talking about it more often.
PSN: What is the biggest financial faux pas young professionals make?
Thakor: The most common misstep I see young professionals make is not taking advantage of the biggest financial weapon they have...which is time. The earlier you start saving and investing for your future, the more time your money has to grow and compound. It's like rolling a snowball. The person who starts doing it earliest typically ends up with the biggest. And the amount of extra effort you have to take - if you are late to the snowball making or to investing for your future - to make up for that lost time is amazing. Making some basic assumptions for life expectancy and future investment returns, a dollar you save in your thirties can be five times more powerful than a dollar you save in your fifties.
To put some raw numbers around it, if you want to have $1 million at age 70 and you assume average investment returns of 7%, you'd need to save $7,000 a year if you started at age 35 or $40,000 a year if you wait until age 55. Another key area I see young professionals struggling with is trying to understand what "healthy spending" looks like, especially if they are grappling with student loan debt. Learning some rough rules of thumb about how much of your income should go to needs vs. wants vs. savings and debt pay-down can make all the difference in your ability to experience financial well-being over the long run.
PSN: One of your topics is how to talk finances with family members. What are some of the benefits of discussing finances with family?
Thakor: First and foremost, talking about money with your closest loved ones can (perhaps counter intuitively!) relieve stress. A very high percentage of fights in relationships and divorce are caused directly or indirectly by money. It's been said that "Truth is the best disinfectant," and I've seen time and again how very true that is around personal finance. For some reason most of us were not encourage to talk about personal finance with family or friends - money being a topic that was considered rude to discuss. And that carries over not just between two partners in a romantic relationship but intergenerationally as well, in both directions. Elder care and boomerang children are two very common sources of financial tension for many hard working folks these days. So learning how to talk money with your honey, so to speak, is a skill that can pay very rewarding dividends through less stress and increased transparency around this all too loaded of topics.
You can hear more of Thakor's money advice Jan. 26 - 27, in Las Vegas at the Women Plastic Surgeons Retreat: Making the Most of Your Money (immediately following Expanding Horizons). Register online at plasticsurgery.org/WPSretreat.