Money Savin' Mama: Discussing finance instead of hand bagsAt a garage sale this month, several of my friends were inspecting a purse, trying to determine if it was “real.”
By: Sherri Richards, INFORUM
At a garage sale this month, several of my friends were inspecting a purse, trying to determine if it was “real.”
Well, it really is a purse, I mused to myself, not a figment of our imaginations.
No surprise, I don’t own a designer bag. Nor do I want one, because I’d rather have the money to go inside a “fake” bag. (I do have a thrift store-purchased purse imprinted with the word Prada. I pronounce it Pray-day.)
Some of my friends, however, do have Coach or Louis Vuitton bags. They talked about tell-tale signs of their authenticity while inspecting the real/not real garage sale bag.
Later, I started to wonder whether, in addition to real designer bags, these women also have fully funded retirement accounts.
Of course I don’t dare ask, or tell them about my own accounts. Because while it’s fine to talk about your $300 (or $700 or $2,000) handbag, it’s impolite or awkward to talk about the money you haven’t spent.
Why is this?
As a society, we’ve seen taboo subjects become table talk. Sex, politics and religion are all over my Facebook wall.
Money? Noooo. We don’t talk about our income, debt and savings. Even I don’t go into the specifics of what my family earns and has amassed.
But what if we started?
What if money became the new “stuff”? That instead of coveting our neighbor’s handbag, we were inspired to match her 401(k) balance? What if mutual funds were the new Marc Jacobs?
Could we create a new culture of financial freedom, where saving is admired more than spending, if we just opened up about it?
So to start, here’s a little bit of my truth: On a five-figure annual household income, my husband and I each automatically invest about $460 every month into our Roth IRAs. (*see note below)
When we retire 30 years from now, each one of these monthly contributions will be worth about $5,030, assuming an 8 percent rate of return.
I don’t share this to brag or boast. I’m just trying to turn the conversation away from Kate Spade and toward financial security. To show you it’s possible. To encourage you to plan for your future.
It’s a common fallacy that people who have expensive things have a lot of money. They might. Or they might have a lot of debt.
There is nothing wrong with buying designer bags (or high-tech toys or lux home furnishings), as long as you’re financially secure. That is, your debt is paid off, an emergency fund stashed, and you’re saving 10 percent to 15 percent of income or more for retirement.
But if you’re forgoing future savings for a Fendi, ask yourself: Which would I rather have when I’m 60?
And considering how hard a time people have telling “real” bags from “fake,” what’s it really worth?
*Note: The annual maximum contribution limit for an individual retirement account (IRA) in 2013 is $5,500, $6,500 if you’re age 50 or older.
Sherri Richards is a thrifty mom of two and reporter for The Forum. She blogs at http://topmom.areavoices.com