Silence Your Inner Bag Lady

By Gail Harlow

Q. I have recurring nightmares of ending up a bag lady, even though I’m pretty responsible, have a good job, and don’t overspend. Where is this fear coming from, and what can I do about it?”

A. You’re not alone in having bag-lady nightmares. The rising cost of health care, uncertainty about the future of Social Security, and the changing job market are enough to make anyone wake up in the middle of the night, screaming. But women are especially vulnerable to fears of ending up destitute, and those fears are rooted in reality: 87% of the elderly poor are women, with 25% of unmarried women relying on Social Security checks as their only source of income. Pretty frightening! Studies also show that 38% of women 30 to 55 years old are worried that they will end up poor because they can’t save enough for retirement.

We tend to earn less, and consequently save less, than men do, but we live longer, and somehow we have to find a way to make our money last. (Talk about a Catch-22.) Unfortunately, when it comes to managing our money, many of us still buy into that outdated stereotype that money management is “a guy thing.” Don’t let that kind of thinking sabotage you.

If you’re feeling insecure about your money-management skills, gather some friends and form a women’s money club or investment club to educate yourself about the many ways you can make your money work for you. Visit for information to help you get started. Even a little bit of knowledge will empower you to make changes that will help you sleep better at night.

Since you don’t overspend, you’ve already proven that you have what it takes to send your inner bag lady packing. Use these five tips to give her an extreme makeover:

1. Save yourself. Think of your savings as a bill from your future self to your current self, and get in the habit of paying it first by having a certain amount automatically deducted from each paycheck. Make sure you have at least six months’ worth of living expenses socked away for emergencies in a savings account you can easily tap into. Then start investing in CD’s or mutual funds.

2. Get what you’re worth. Men are four times more likely than women to ask for a raise on their first job offer, according to Linda Babcock, author of “Women Don’t Ask.” Don’t be afraid to ask for what you think you’re worth on your first or any subsequent jobs as you climb the career ladder. The more you earn the more you can afford to save.

3. Don’t turn down free money. If your employer offers a tax-deferred retirement plan, max it out to take full advantage of matching contributions and tax breaks.

4. Take some healthy precautions. Invest in long-term care insurance so you don’t have to stay up late at night worrying about who will take care of you when you’re old and gray—or “bottle blonde.”

5. Buy a home. Don’t wait until you’re married to do so. Real estate is still one of the best investments a woman can make. You’ll never become a bag lady if you own the roof over your head.

Sleep tight …

Gail Harlow is the co-author of “Making Bread: The Ultimate Financial Guide for Women Who Need Dough” (Running Press) and the founder of

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