I hear a lot from my women clients about their fear of becoming a Bag Lady, so I thought I would talk a little about how women can overcome our money fears through Financial Coaching, make a plan to manage our wealth so that we can have financial independence, and save for our retirement.
But first, a little history: Women and the Term Bag Lady
In the early 1970s, a new term was thrown around by magazine and newspaper articles referring to Bag Ladies. This was something wealthy women knew well because they had an ingrained fear few were willing to talk about in public. Unfortunately, that same fear has remained strong in many women, creating a generational measurement of what success is and what would happen if we give up.
My goal has always been to uplift women, and to be clear, I find the term Bag Lady to be offensive as an idea. With the proper planning and some effort, women of all backgrounds can dig deep into that same well we have always relied upon to raise our families and create a future for ourselves. Let’s dispel some myths together and go over how to avoid the ever-dreaded bag lady syndrome.
What is Bag Lady Syndrome and What Does it Mean for Women?
The Bag Lady Syndrome is a severe condition that can affect your mental space and, eventually, your daily life. It is a fear that many women get at some point, but you don't need to be one of them!
Bag Lady Syndrome is way more common than you might think. Even those high-paid CEOs you imagine have everything perfectly held together can suffer from its effects. If left untreated, it can cause serious damage to your personal relationships and finances.
A bag lady is a woman who has lost control of her finances and is being taken advantage of by bad people who are either taking care of her and charging a lot for it, or taking money from her without giving anything in return. In short, she has become dependent on others.
It's easy to see how this relates to women's finances. Girls are raised with the expectation that they should take care of themselves, so when we start out with nothing (and most girls are pretty broke), we're supposed to be able to make our way up and get through life on our own. But sometimes, things happen that don't go according to plan. Maybe you've had an accident or illness, or perhaps someone stole your identity.
Whatever the case may be, there could come the point where your savings run out entirely, and suddenly, too much responsibility falls onto other people because they're willing to help out, but only as long as they get something out of it themselves.
A popular saying can still be heard today: “the best-dressed bag lady on the block.” Is it the stark fear that seeing a homeless woman carrying around bags of her belongings around is only one wrong decision or emergency away. That is why I got into personal finance for women to begin with, to help alleviate these fears with actionable steps towards a more supportive financial structure. How do you overcome this fear?
1. Women Can Develop Financial Goals & Plan to Make Change
Your goals should be specific, measurable, achievable, realistic, and timely (SMART). For example: If you want to take all your family to Disney World this year, you write down a goal of “I will save $10,000 to treat my entire family to a Disney vacation by next Fall.”
This is perfect. It is specific and clearly outlines where you want to go. It creates a measurable time frame for when you would like to make this trip. Using the SMART method is one of the best ways to outline your personal finance goals because it outlines the details of your next achievement.
Disney is only an example. For many women, their SMART goals may be something like:
- Have $5,000 in savings by the end of the year
- Turn my side hustle into a business that earns $12,000 per month within 6 months
- Contribute X amount of dollars every Y weeks towards my retirement account to cash in when I’m 65 years old.
It is all relevant to you, the individual woman. Once you've set up your short-term goals with SMART parameters in mind, move on to long-term ones. Then break those down into smaller steps that will move the needle closer toward achieving your ultimate goal of financial freedom!
2. Women Can Create a Budget with Fixed and Variable Costs
Understanding your monthly cash flow is the first step to avoiding the bag lady syndrome. To do this, you'll need to know what your fixed and variable costs (aka "outgo") are each month.
Fixed costs remain the same each month. These are items like rent, car payments, mortgage payments, or monthly contributions to other accounts. Variable expenses are different because they fluctuate from week to week. This would be things like groceries, electricity, or gas money.
Figure out how much money you have coming in each month by subtracting all of your recurring expenses from whatever income you receive. The result will be known as your disposable income or 'disposable' for short. This will be the amount of money you can use toward things that will support your future financial security and help you avoid going into debt.
3. For Women, It’s Important to Outline Your Debts and Assets
Part of my challenge in helping women with their personal finance is bringing all the details of their unique situations into the light. Many clients do not want to face the reality of their spending habits because they may have debt from things they would consider embarrassment. My place is not to judge. We have all been in bad situations before. My role is to empower!
By listing your assets and debts, you can determine how much money is coming in each month. Some people know their debts and assets very well, but if you don't see what you have, it will be difficult to manage it. If I was a bag lady who didn't take care of myself, I would have no idea whether or not my checking account had enough money to pay off all my credit card debt.
You need a clear understanding of how cash moves through your financial structure, and then you can begin to direct and create more opportunities for positive change.
4. Avoid Making New Regrets - Women Taking Action
We’ve all experienced that moment where we feel like we’re falling into a rut, or living out of our bags, as it were. Maybe it’s been years since you last took a trip outside the country, or perhaps you realized that your entire wardrobe consists of black jeans and hoodies.
This repeating voice loves to speak up inside our minds every time we do something from comfort. It is like taking an afternoon nap means we are someone less of a human being and more likely to be a bag lady.
Stop being so hard on yourself. Finding financial freedom requires work, but it doesn’t have to be a massive shift as quickly as possible. Anyone who climbs Mt. Everest spends months preparing and training and has a guide to finally make the accent to the tallest peak. Financial planning is the same. You develop small habits and build on them one day at a time.
That is why it is so essential to develop a community of like-minded people and maybe even hire a coach. If you lack any of the skills that will help you build a life you love, find someone who can help guide your journey. It could be a friend, family member, or even a professional like a lawyer or financial adviser like our team that will help you get started on the right path.
The best way to avoid being lonely is to invest in yourself by finding community or networking groups where people are working on similar goals as yours and share similar interests as yours. Having people in your corner who know what it's like is an incredible resource that cannot be underestimated. This is even truer for those individuals who also have expertise in areas where they can help guide their peers through different challenges.
This doesn't mean everyone has to become best friends overnight. It means having someone else who understands what it feels like to get up every morning feeling determined yet unsure about which steps might lead one closer to achieving personal dreams. No matter how much research one does beforehand (or reads on blogs), there will always be unknowns that emerge during the implementation phase(s).
Looking Towards the Future
Seeing a bag lady on the streets is a harsh preview of an intense fear I have seen in many of my clients. I’m here to tell you that it does not have to become a reality. My team at Meyers Financial Services is here to elevate your financial situation with workable solutions designed for your unique position.
We take the time to get to know you and help outline those habits that can have a significant change in your daily life. Our financial coaches work with women moving through all kinds of personal transitions, from divorce to sudden windfalls. We can help you understand and develop the skills necessary to push bag lady syndrome way out of your mind so you can get back to focusing on the things that make life so rewarding. Reach out today, and let’s schedule a consult!
Lillian Meyers CFP®, CDFA®, EA is a Financial Planner for Women in Sonoma, California helping clients live their best life through the use of financial planning, investment management, and other sophisticated financial options.