Just Hoarding Money Won’t Save You From Poverty in Old Age. Here’s What the Best People With Money Do
Here is a sad story to read
She was living on only $900 a month in Porto, Portugal.
She had a 9-year-old daughter to support and care for. She should be studying, but her mind keeps wandering to something embarrassing.
When she finishes work, she goes to play volleyball, meets her friends, or goes to work. She works behind the counter of a bar two nights a week, in addition to her full-time job.
She works to supplement her salary and “not because it is fun to work”. Overtime is the norm here rather than the exception. She is making $310 working two nights a week at the bar.
Let’s dig deeper into this story.
She needs to pay the rent of $480 per month. Her 9-year-old daughter goes to two schools. A private German school, and so that her mother doesn’t spend too much money, the little girl has asked her mother to go to a public school.
Time to take care of herself she doesn’t have. 24 hours a day is not enough for a single mother with two jobs and a 9-year-old daughter to take care of. Gym and volleyball? forget it, no time.
The salary is not enough to live on
Salary is for survival.
My clients overstep the limits, but I have to pretend that nothing is going on — she said. Because before me there was a 24-year-old girl who was fired on her second day of work because she slapped the face of a drunk client who asked her out on a romantic date.
But since her salary is not enough for life in the big city of Porto, she drives two days a week after work to her part-time job as a bar attendant and works another six hours.
In the social sector, people don’t pay as much, and if you have a desire and need every penny, then you have to endure horrible things.
I made a very big mistake in thinking at first, she said.
And I thought I could wait with my old age provision because I’m not making enough money anyway and it’s only worth it if you also have a lot of money to save.
There are mistakes that many women make that I see over and over again. I have made some of these myself.
Here are the top 3 mistakes women make when it comes to retirement planning.
And in fact still the financial mistake I regret the most to this day. Because of course, it is worth starting small.
Confusing the word risk with losing money
According to a JP Morgan survey, 55% of women consider it more important to preserve their capital than to invest it. They are just afraid to take risks. When I read this while writing this story, I thought it was so bad that I didn’t even know where to start.
So, first of all, you don’t get the capital by not investing your money. The number stays the same, but the value decreases with high inflation. You lose purchasing power.
It doesn’t matter whether I leave my money under my pillow or in my savings account, where it seems safer.
The biggest risk in investing is doing nothing. All other risks can be calculated.
To go into detail here would take me more than 5 hours to write.
There are ways to know when a risk is a risk. And before you invest you need to know what your risk profile can handle.
Getting lost in the information
There are three stages in planning money for old age.
The first is knowing that the word retirement exists.
Or you have known for a long time that you need to take care of your own savings and simply prefer to put off this topic once and for all.
At some point, these money problems in old age usually cross your path and you finally know that the threat is there and it is real.
The second phase is the information-seeking phase.
You go out into the world and look for information in newsletters, podcasts, books, and blogs.
Full of enthusiasm for doing so, you get lost in the wild and sometimes very contradictory financial life:
“Investing in ETFs is enough for your retirement”.
“Save your retirement with stock hedge funds”.
“Stock prices are falling non-stop”.
“ETFs are extremely dangerous” and so on.
So many give up and then prefer to leave their money in their pillow like the Irish mob or in their savings account, where it slowly shrinks until it’s almost worthless. Because of high inflation.
It’s okay if you want to feel safe before you start investing. You don’t learn to swim or play tennis by studying just a lot of books.
At some point, you just have to jump into the water. Starting in the pool of course.
Trust yourself more. And if you don’t trust yourself and are too afraid of making mistakes, find someone who can help you.
Fear is something temporary, while regret is for a lifetime.
In any case, doing nothing is not a smart choice.
This article is for informational purposes only. It should not be considered Financial or Legal Advice. Not all information will be accurate. Consult a financial professional before making any major financial decisions.