Roth IRA’s have long offered investors a great opportunity to grow their wealth in a tax free environment.  But, because Roth IRA contributions are subject to strict income limitations, not everyone gets to benefit from its features.  Investors with traditional IRA’s have also historically been constrained to income limits when converting their IRA into a Roth.  The good news is, as of January 2010, there will no longer be income limitations on eligibility for converting a traditional IRA to a Roth IRA.  Should you consider this, and if so why?

Background

As a refresher, traditional IRAs are funded with pre-tax dollars and defer taxes on investment gains until the day you withdraw the funds. When funds are withdrawn from the traditional IRA, they are taxed as ordinary income (your highest tax bracket). Conversely, Roth IRAs, are funded with post-tax dollars but all of the investment earnings grow tax free and avoid taxes when they are withdrawn (assuming it’s a qualified distribution).  Roth IRAs can’t be opened by taxpayers
making more than $176,000 (joint returns) and $120,000 for single taxpayers. Furthermore, conversions of traditional retirement funds into Roth IRAs have not been permitted for households with annual incomes above $100,000.

The Conversion Process

A Roth Conversion is a distribution of assets out of a tax-deferred IRA, such as a Traditional or Rollover IRA, which is transferred into a Roth IRA.  If the converted assets are held in the Roth for the five-year holding period, qualified withdrawals are tax-free. The conversion from the traditional IRA into the Roth IRA is considered a taxable event, and the account holder will generally owe taxes on the distribution in the current year. However, in 2010 only, IRA account holders have the option of applying 50% of the conversion amount to the 2011 tax year and 50% to the 2012 tax year, or applying 100% of the conversion amount to the 2010 tax year. Steep investment losses in many retirement accounts may make that tax hit easier to take, and will guarantee that any market rebound in investment values will never be taxed if funds are switched into a Roth account. Finally, conversions must be fully completed by December 31st to qualify for current year
tax treatment.

Why Bother?

So, what makes a Roth IRA so great?  If you believe that your tax rates will be higher in retirement than they are now, Roth IRA’s can save you loads of future taxes—that can translate into greater wealth for you.  
Let’s use the following example.  You are age 40 and have a $200,000 traditional IRA.  Your plan is to retire at 65.  Your current tax bracket is 25% and you anticipate that you will be in (at least) a 30% tax bracket upon retirement.  We suppose that the tax due upon the Roth conversion is $50,000, is paid with funds available outside of the IRA being converted. Let us also assume an investment tax rate of 15% capital gains rate now and in the future.  Using an 8% expected return on your investments, the after tax net return from your Traditional IRA (with tax savings) would be worth $1,186,411, while the after tax net return from your Roth IRA would be $1,369,695.  That’s a difference of $183,284 by converting to the Roth.

Other Considerations
       
It is always wise to check with your tax or financial advisor before making a conversion.  This is particularly true because executing a conversion may actually bump you into a higher tax bracket.  Because converted assets will be considered taxable income, perhaps a partial conversion may be the answer. Converting only a portion of the assets may allow you to stay in a lower tax bracket, allowing you the flexibility to convert additional assets in future years. Ideally, individuals considering a Roth conversion should have the cash on hand to pay the income tax on converted assets. A partial conversion could help limit the conversion taxes to an amount your client can pay without dipping into IRA assets.
      
Does a Conversion Make Sense for You?

Clearly, everyone’s circumstances are unique and there is no one-size-fits-all answer here.  After all, the decision to convert to a Roth can be influenced by a number of factors including:

•        Your age and longevity
•        Your income tax bracket now and in the future
•        Your expected rate of return
•        Your investment tax rate (ie. capital gains rate)

The decision to convert can be complicated.  If you want to learn more, Morningstar, has written an informative overview of the conversion decision, and also provides a useful conversion calculator to help determine if conversion makes sense.   For many, there is no better moment to consider this.  The time is right for a Roth conversion.  

Cathy Pareto, MBA, CFP®, AIF® is the Founder and President of Cathy Pareto & Associates, Inc. For over twelve years, Cathy has been helping financial consumers and professionals understand the world of investments and finance with a sound, but down to earth money management approach. For over a decade Cathy was a Senior Financial Advisor for another Miami based investment advisory firm, where she managed over $200 million in assets for high net worth clients and retirement plans. She has extensive experience in retirement issues, asset allocation, investment selection, investment management, education planning, estate planning coordination, and asset protection strategies. Additionally, she was an Adjunct Professor and Faculty Coordinator for the CFP® Program at Florida International University’s College of Business.

The third Real Life Retirement quarterly pulse survey by Charles Schwab shows the recent economic downturn has not spurred Americans to change behaviors regarding retirement preparation. Almost four in 10 Americans (39 percent) are not currently saving for retirement and, despite market losses, six in 10 Americans (62 percent) have not adjusted their thinking about what age they will retire – nearly unchanged from the first pulse survey in September 2008, months before the recession was officially declared.

“Americans may be feeling a lack of control over their retirement which has led to inaction, when in fact this is an ideal time to act,” said Mark Jamison, vice president at Charles Schwab. “Now is the time to reevaluate your financial circumstances. Whether that means delaying retirement or adjusting how much you save for retirement, making changes now can lead to a significant difference in the future.”

Survey respondents estimate they will need just over $1.2 million to comfortably retire, yet those currently saving for retirement have put away an average of $194,000. Despite this awareness, 41 percent of Americans feel positively about their retirement preparedness and another 22 percent feel indifferent.

For More Information

Do you know if you are on track for retirement? Are you aware of how expensive funding your retirement can actually be? To learn more, click on this recent article on our website.

Cathy Pareto, MBA, CFP®, AIF® is the Founder and President of Cathy Pareto & Associates, Inc. For over twelve years, Cathy has been helping financial consumers and professionals understand the world of investments and finance with a sound, but down to earth money management approach. For over a decade Cathy was a Senior Financial Advisor for another Miami based investment advisory firm, where she managed over $200 million in assets for high net worth clients and retirement plans. She has extensive experience in retirement issues, asset allocation, investment selection, investment management, education planning, estate planning coordination, and asset protection strategies. Additionally, she was an Adjunct Professor and Faculty Coordinator for the CFP® Program at Florida International University’s College of Business.

As I began preparing for my upcoming Earn What you Deserve workshop, I began reflecting back to when I began my journey towards earning a 6-figure income in corporate America. I remember spending  a lot of time in blame mode.   First, I blamed the system for not paying teachers enough. When I left teaching to join the dark side of the corporate world, I blamed my job for not paying me enough money and my boss for not offering me a raise when I was clearly performing above and beyond expectations.

Chances are if you’re dissatisfied with your income you’ve played the blame game, perhaps with different contestants  like your spouse, family, education, background, the economy, or whatever else comes to mind. Regardless of what or who you have been blaming, the truth is you have more control than you think when it comes to what you earn. And more importantly you have exclusive control over how to make what you earn work for you instead of against you.

If you are stuck in a place of consistently underearning, being paid less than what you are worth from an employer or client here are three reasons you are not having the financial success you desire (and deserve):

1. You base your salary requirements on your current expenses instead of what your skills and experiences are worth. How do you answer the question, “What kind of salary are you looking for?” What are you you using to come up with that number. Just because your budget only requires $40, 000 a year, doesn’t mean that should be the limit for your salary.

2. You have no clearly defined financial plan. Wanting to make more money so you can have more things is not a financial plan. When people don’t have a clearly defined plan, it usually means that their job is their only source of short term and long term income. Your plan should provide for your needs, wants, and goals for now and for the future) and include means for investing on others.

3. You are in conflict how what you feel about money and wealth. If you grew up in a home where there was myth and misinformation about how to acquire, manage and grow money, it can be a challenge to develop the habits or mind and wallet that lead to financial wealth. Until you address negative associations you have about money you will always find a way to sabotage the progress you make towards successfully reaching your financial goals. This includes any judgments you have about wealthy people as well.

4. You question your value. The issue of not asking for a raise has less to do with how your boss thinks about you and more to do with how you think about you. It’s the same thing if you are an entrepreneur or business owner:  it’s not that your people can’t afford your services – you don’t have the confidence to go after customers who will pay what you deserve for your product or service.

Ready to get out of this rut? Join me for  the next Earn What You Deserve workshop where you can learn 5 steps to overcome your fears about money and earn what you deserve. Click here for registration details.

As “The Career Makeover Coach”, Tai Goodwin is on a mission to help ambitious individuals reinvent their professional lives by centering on their passion and purpose. Holding as a core belief that we are all called to divine purpose and gifted with a unique passion, Tai uses a results driven, spiritually grounded approach to help clients create career paths to support the lifestyle they desire. Whether it’s helping people go from embittered to empowered professionals or making the transition from employee to entrepreneur, Tai is committed to helping clients tap into their own potential for brilliance. Tai has been empowering others through teaching and coaching for over 14 years. A gifted and insightful communicator, Tai holds a Bachelor of Science in Elementary Education from Drexel University and a Master of Science in Education from Capella University. She has completed ASTD’s (American Society for Training and Development) Coaching Certificate program and is pursuing professional coaching certification through the International Coach Academy. Originally from Philadelphia, Tai currently lives in Delaware with her daughter. She is currently working on her first book: Reclaiming Your Brilliance: Seven Ways to Take Your Life from Bright to Brilliant.

Web site: http://www.careermakeovercoach.com

BY NIRVI SHAH
nshah@MiamiHerald.com

Laptops ready? Take notes: Congress wants it to be harder for the under-21 set to accrue a mountain of credit card debt.

A new federal law affects credit card holders — and those who want cards — of all ages. But because several provisions don’t take effect until February, this could be the last semester of truly easy credit for many college students.

“I don’t want to say credit cards are evil,” said Cathy Pareto, a certified financial planner in Coral Gables. “But targeting that demographic has long been an abusive practice. [Credit card companies] take advantage of the naïvete of teenagers.”

Read the whole article here.

Cathy Pareto, MBA, CFP®, AIF® is the Founder and President of Cathy Pareto & Associates, Inc. For over twelve years, Cathy has been helping financial consumers and professionals understand the world of investments and finance with a sound, but down to earth money management approach. For over a decade Cathy was a Senior Financial Advisor for another Miami based investment advisory firm, where she managed over $200 million in assets for high net worth clients and retirement plans. She has extensive experience in retirement issues, asset allocation, investment selection, investment management, education planning, estate planning coordination, and asset protection strategies. Additionally, she was an Adjunct Professor and Faculty Coordinator for the CFP® Program at Florida International University’s College of Business.

By Jacqueline Marcell
(Impressive Press, April 2001) $17.96

I grew up with a “Jekyll & Hyde” father who was wonderful most of the time, but when he’d get mad he’d explode in a screaming, pounding-his-fist rage. It was never directed at me, I was the golden child, but I watched his temperament change like a light-switch as he’d yell at my mother and brother. We would cower and walk on eggshells trying not to upset him. After my parents retired, my mother had a heart attack and he took care of her for 11 years, refusing all help, despite my constant efforts to hire caregivers who he would throw out. When my mother nearly died from an infection caused by her own waste because he had not kept her clean and taken her to the doctor, I had to step in despite his loud protests.

I started to experience his rages at a heightened level over things that seemed so illogical and irrational. When he took two filthy hand towels out of the trash and threw them at me, accusing me of throwing out all their things, I was stunned and sobbed my heart out to have him turn on me. I thought it was just more of his bad behavior of a lifetime, getting intensified by my mother’s near-death illness and the stress of caring for her for so long without help.

I reported his illogical behavior to the doctor but whenever she saw him, he’d act so normal, so darling, so in control, I couldn’t get help with medications. He was able to act completely sane when he needed to. I didn’t find out until much later that he had told the doctor that I was just after his money and that she shouldn’t pay any attention to me. She knew him for twenty years and didn’t know me very well, as I lived four hundred miles away.

It took me a year to solve it on my own, riding a roller coaster of emotions as some days he’d be my loving dad and so normal, and then all of a sudden something would set him off and he’d go into a screaming tirade calling me every nasty name he could think of. As I tried to make safety changes to my parents home and help them, he threw me out and even choked me over adding HBO to his television for a caregiver who had requested it, even though he had previously given his permission. The police were called and he was 5150′d to a psychiatric hospital for a 72-hour observation.

When he got to the psych unit, he was so adorable, so normal, they released him, telling me they couldn’t find anything wrong with him. After four episodes of violence, and 40 caregivers later, I had to threaten the psychiatrist with a lawsuit if they released him and he came home and hurt anyone. They finally held him 2 weeks (called a “5250″)and reported that he couldn’t learn very well and that his memory was slipping. It was so intermittent, he was able to act normal most of the time, and was still able to hide his life-long temper tantrums.

I finally found help when I got him to the Alzheimer’s Association’s best recommendation for a geriatric dementia specialist who did extensive neurological tests and CAT scans and found that my father had the beginning of multi-infarct vascular dementia and that he’d had numerous tiny strokes and a possible secondary dementia: Alzheimer’s. Once I found doctors who understood the complexity of his brain chemistry, we were able to manage it with medications for the dementia (Aricept and later Exelon), aggression (Risperdal), and depression (Zoloft).

After much experimentation with combinations and dosages, the brain chemistry was properly balanced, without having to zombie him out. Then I started behavior modification on my eight-five year old father. By using “tough love” and “reward and consequences”, he learned how to behave and control his temper most of the time, even with the onset of dementia. When he is on good behavior he gets rewards of praise, affection, attention, and extra dessert works good too. When he is asserting his life-long need to control and boss people around, he gets negative consequences: no dessert, minimal communication, no attention, no affection. He has finally learned that there is no “pay-off” for pounding his fists and screaming and yelling. He will not get his way… period, and no one cowers. We walk away 100% of the time.

The next piece of the puzzle was to get him busy by going to Adult Day Care with my mother. By having daily mental stimulation, physical exercise, proper nutrition and social interaction, he finally had a reason to get up in the morning. Now instead of being a “sundowner” and up all night reeking havoc, he is tired out all day with fun activities and will sleep through the night, which allows everyone else to sleep also.

After turning around a seemingly impossible situation, I decided to write a book about it to help others who are trying to manage “challenging” elders. The result: Elder Rage or, Take My Father… Please! How to Survive Caring For Aging Parents.” Written with a humors tone, people learn to identify the earliest warning signs of dementia, which are very intermittent. Life-long behavior patterns start to get distorted.

I stress that the use of medications can slow the dementia down from progressing as fast as it would otherwise, keeping a loved one in Stage One an extra 2-4 years. Statistically families wait four years before reaching out for help, usually after a crisis, but by then the loved one is already in Stage Two, which requires full-time care. This is going to cost a lot of money and heartache.

Having Long-Term Care Insurance is the answer for the financial impact of caring for someone with dementia. Once there is a record of “memory loss” in a person’s medical chart, Long-Term Care Insurance will be denied.

By being sensitive to the early warning signs, getting to the right doctors, getting the right combination of medications and understanding that demented does not means stupid, many of these disruptive behaviors can be managed. The bottom line message is that there can still be a good life after a diagnosis of dementia if it is properly managed medically and behaviorally.

Ten Warning Signs of Alzheimer’s Disease
Reprinted with permission of the Alzheimer’s Association of Orange County.

1. Recent memory loss that affects job skills.
   It’s normal to occasionally forget assignments, colleagues’ names, or a business associate’s telephone number and remember them later. Those with dementia, such a Alzheimer’s disease, may forget things more often, and not remember them later.
2. Difficulty performing familiar tasks.
   Busy people can be so distracted from time to time that they may leave the carrots on the stove and only remember to serve them at the end of the meal. People with Alzheimer’s disease could prepare a meal and not only forget to serve it, but also forget they made it.
3. Problems with language.
   Everyone has trouble finding the right word sometimes, but a person with Alzheimer’s disease may forget simple words or substitute inappropriate words, making his or her sentence incomprehensible.
4. Disorientation of time and place.
   It’s normal to forget the day of the week or your destination for a moment. But people with Alzheimer’s disease can become lost on their own street, not knowing where they are, how they got there or how to get back home.
5. Poor or decreased judgment.
   People can become so immersed in an activity that they temporarily forget the child they’re watching. People with Alzheimer’s disease could forget entirely the child under their care. They may also dress inappropriately, wearing several shirts or blouses.
6. Problems with abstract thinking.
   Balancing a checkbook may be disconcerting when the task is more complicated than usual. Someone with Alzheimer’s disease could forget completely what the numbers are and what needs to be done with them.
7. Misplacing things.
   Anyone can temporarily misplace a wallet or keys. A person with Alzheimer’s disease may put things in inappropriate places: an iron in the freezer, or a wristwatch in the sugar bowl.
8. Changes in mood or behavior.
   Everyone becomes sad or moody from time to time. Someone with Alzheimer’s disease can exhibit rapid mood swings from calm to tears to anger for no apparent reason.
9. Changes in personality.
   People’s personalities ordinarily change somewhat with age. But a person with Alzheimer’s disease can change drastically, becoming extremely confused, suspicious, or fearful.
10. Loss of initiative.
    It’s normal to tire of housework, business activities, or social obligations, but most people regain their initiative. The person with Alzheimer’s disease may become very passive and require cues and prompting to become involved.

HOW IS ALZHEIMER’S DIAGNOSED?

There is no single diagnostic test for Alzheimer’s Disease. Instead, AD is diagnosed by comparing a series of test results and exams including: a thorough medical history, assessment of mental status, physical exam, neurological exam, lab tests including an EEG and brain scan, such as a CT, MRI, PET, or SPECT, psychiatric and other exams. A diagnosis of Alzheimer’s disease through this evaluation is considered 80-90% accurate. The only way to be absolutely certain is through an autopsy.

By Kara Stefan

Who thinks the average American woman is the chief financial officer of her household? The auto industry for starters. According to J.D. Powers and Associates, women make more than half the car buying decisions in the U.S.

And the Recording Industry Association of America weighs in with this statistic: women account for more than half the music sales in the country. There’s more: women comprise 44% of motorcycle owners, 51% of convertible owners, and 48% of truck or SUV owners. Guess it’s no longer a man’s world.

What this proves is that women, traditionally the purveyors of clothes, cosmetics, and groceries, have now taken the reins when it comes to nearly all of the purchasing decisions in most households. Not only that, but 80% of women will be responsible for their own finances at some point in their lives, says Mary Farrell, managing director of Paine Webber and author of Mary Farrell’s Beyond the Basics.

The Survey Says
In May of this year, research from the Wingspan Bank Financial Index confirmed that women, on average, hold the primary responsibility for managing the majority of financial activities for their households. In fact, 83 million women are responsible for creating their household budgets, managing the checking account, and reviewing and paying bills.

Now if that doesn’t qualify you for a CFO title, I don’t know what does. So whether you’re a business owner (38% of all firms in the U.S. are women-owned), or a soccer mom whose days are filled with carpools and home-baked cookies, you have the same genetic make-up that empowers you to learn, manage, and excel at finances.

Moms Rule
It may be particularly intimidating for stay-at-home moms to serve as the financial taskmaster of the house. After all, it’s your spouse who’s bringing home the dough.

However, a study conducted by Edelman Financial Services concluded that moms are worth more than $570,000 per year in today’s job market–a decent salary for any CFO.

Says Chairman Ric Edelman, “Since a mother wears many hats and is on duty 24-hours a day, we decided that the typical mother deserves a full-time yearly salary for 17 different occupational positions”–ranging from executive chef and animal caretaker to computer systems analyst and property manager.

Just in case you still doubt your ability to manage money effectively, rest assured it’s not as hard as the myriad tasks you juggle each day. For example, check out the following “job” qualifications for being a Mom, as compiled by a fellow household CFO:

Position: MOM

• Must reconcile petty cash disbursements and be proficient in managing budgets and resources fairly unless you want to hear “He got more than me!” for the rest of your life.
• Must have strong skills in negotiating, conflict resolution, and crisis management.
• Must be willing to withstand criticism, such as “You don’t know anything.”
• Must be able to think out of the box but not lose track of the box because you most likely will need it for a school project.
• Must screen phone calls, maintain calendars, and coordinate production of multiple homework projects.
• Must be willing to be indispensable one minute and an embarrassment the next.
• Must possess a highly energetic, entrepreneurial spirit, because fund-raiser will be your middle name.
• Must have a diverse knowledge base in order to answer questions such as “What makes the wind move?” or “Why can’t they just go in and shoot Saddam Hussein?” on the fly.

Transitioning Job Experience
Now that we know women are innately qualified to handle finances, here are several tips from financial expert and author Dr. Judith Briles on how to transition those skills into money management expertise:

1. Identify any fears and concerns you have about handling and managing your finances.
2. Identify how money is spent in your household by keeping a log for a month or two.
3. Take advantage of the Internet to learn about topics such as investing and credit management.
4. Assess your current financial situation by listing all income, assets, equity, fixed/flexible expenses, and discretionary income.
5. Identify your financial goals and create a written plan for college, family, and retirement.
6. Determine the types of investments most appropriate for your current situation and goals.
7. Determine how much money you can save and invest monthly.
8. Refer to experts, including financial planners and Web sites that offer sound advice.
9. Create a realistic financial plan.
10. Actively follow your plan, but allow for mistakes you’ll inevitably make in the process and learn from them.

Tiffany Bass Bukow is the CEO & Founder of the #1 Personal Finance Website for Women and Families – www.msmoney.com. My life mission is to help people and the world thrive through creating companies that provide money, career and life skills education.

For some of us, retirement may seem a long way off. But consider this: the steps you take now will have an enormous influence on the quality of your life 10, 20, 30 or 40 years from now. Whatever your age, the time to start planning your retirement is now. All it takes is five simple steps.

STEP1: Establish clear, simple, and memorable goals.
Ask yourself, “When do I want to retire?” and “How much money will I need to retire?” Check out our Visual Retirement Planner in our related tools to help you answer these questions.

STEP 2: Put yourself on track to meet your goals.
When you retire, you’ll want to have enough money to enjoy your free time and maintain your current lifestyle. The sooner you start putting money away, the more time it has to grow. Start a monthly transfer from your checking account to your investment account.

STEP 3: Make regular contributions to your company retirement plan.
If your employer offers a 401(k) or 403(b) plan, participate to the maximum. Your contributions are made with tax-deferred dollars so they may reduce your taxable salary, and both contributions and earnings can grow tax-deferred until they’re withdrawn. If your employer matches your contribution, you’re throwing away free money if you don’t participate.

STEP 4: Contribute regularly to an IRA.
If you’re not covered by a company retirement plan, make regular contributions to an IRA. Regardless of the type of IRA you qualify for – Traditional or Roth – your savings will grow tax-deferred. And even if you’re contributing to a plan at work, consider putting some additional money in an IRA. To get on the fast track to retirement, go to our products and services page to view Wells Fargo retirement accounts and the type of IRA that best suits your situation.

STEP 5: Review your goals and track your progress annually.
Read your retirement plan statements and continue to monitor your spending. Are you on target? Remember, you’re involved in a marathon, not a sprint: day-to-day fluctuations in the stock market will have little bearing on your long-term goals.

A rule of thumb
By the time you’re ready to retire, you probably won’t have the same expenses you do now. Some costs will decrease while others will increase. Many financial planning experts estimate that you may need as much as 60% to 80% of your current annual after-tax income to live on through your retirement to maintain your current lifestyle. Think about how you can trim expenses now in order to save more for the future. The sooner you start, the less painful it will be.

Tiffany Bass Bukow is the CEO & Founder of the #1 Personal Finance Website for Women and Families – www.msmoney.com. My life mission is to help people and the world thrive through creating companies that provide money, career and life skills education.

By Dr. Judith Briles

No one is born with a fear of or attitude towards money. Fears and attitudes–be they good, bad, or ugly–develop over time. No doubt, your upbringing is a major contributing factor. Past experiences–successes and failures–also play a critical role. Then there’s society–whether it comes through the media, common practices, your friends, family, or even the government.

In spite of a myriad of influences, however, let’s face it: you are the steward of your money–you are in charge of its destiny. So what are your fears? Being poor? Making mistakes? In my book, 10 Smart Money Moves for Women, I identify 10 financial fears, 5 of which I describe below. See where you fit in and read my next article which covers the other 5 fears.

The Fear of Being Poor
In 1985, one of USA Today’s headlines read, “Bag Lady Fears Drive Women to Stash Cash.” Not a lot has changed for many women since I clipped that gem for my “nudge” file. The #1 fear that women shared over the past year in my “$mart Money” workshops is becoming destitute when they are older.

Is being poor really a concern for today’s woman? You bet. Government statistics show that for every 100 women and men who reach 65, only two are financially independent.

How do the rest survive? By relying on relatives, the government, friends, or working until they die. What an unfortunate and seemingly unnecessary prospect for a modern society in the midst of a booming economy.

Women live longer than men. A fact that means that women are more likely to spend far more years just barely getting by than men if they don’t step into the money maze and learn how to navigate on their own. Forget about being rescued by a white knight. It’s nothing more than a media-driven myth.

The reality is that whether you are rich, poor, or in-between, the person that you are going to have to rely on the most to keep you from the poorhouse is you–your creativity, imagination, intuition, and smarts.

The Fear of Losing Money
At some point, everyone loses money–from a bad investment, inflation erosion, or a failure to act or make a decision.

Losing money is scary for anyone, but women are more fearful of losing money than men. Why? First, men typically earn more money than women do and therefore feel as if they have more to invest. Moreover, if men lose money in a bad investment, their reaction–that it can be replaced–differs from many women who may exaggerate the loss’ significance in their overall financial situation. Women are also less likely to take the more aggressive and riskier financial positions that men do. Risk-taking, in part, has to do with a man’s familiarity with money. Men, in contrast to women, are generally exposed to the subject of money early on and by the time they reach adulthood, the topic is no longer unfamiliar or intimidating.

Working with and investing money does not have to be a giant leap into the unknown. In fact, it’s wiser to start with small steps. Whether it’s putting money in a mutual fund (many funds allow you to start with as little as $100 if you commit to contributing a minimal amount on a monthly basis) or a fund for your children’s education, small amounts can build into fortunes.

The Fear of Looking Stupid
No one wants to appear or feel foolish. Yet, when it comes to money strategies and decisions, many women fear that the wrong move or outcome will serve to broadcast that they blew it and don’t know what they’re doing. Of course that doesn’t happen, but the fear can be inhibiting.

The good news about money mistakes is that they can be valuable learning opportunities after the crisis has passed. Once you become more confident in your decisions and accept that you will stumble once in a while, you will be able to assess your financial situation quickly and rationally and focus on finding solutions rather than dwelling on the mistakes.

The Fear of Talking About Money
Your upbringing will most likely play the largest role in shaping your money practices. It’s a broad generalization, but it’s also true: most women grew up in homes in which money discussions were avoided or restricted to parents only. Money may have been mentioned but rarely discussed in a positive and productive manner. As a result, women never received the necessary training and guidance about money and investing. And the practice that started within the family is then perpetuated by the woman herself: “If I don’t talk about money or acknowledge it, it won’t be a problem in my life.”

By talking about money and sharing your experiences and outcomes with other women and men, you will discover how much there is to learn and how much you have to contribute to the conversation.

The Fear of Making Mistakes and Failing
I wish I had $10 for every mistake I’ve made over the past 50 years. Although most women believe they’ve had their fair share in the mistake and failure departments, it doesn’t erase the stigma that mistakes and failures can bring.

The unsurprising truth is that mistakes happen. What you do about them is up to you: will they cripple and paralyze you? Or will you look on them as facts of life that provide learning and growth opportunities? Making money mistakes and experiencing failures won’t destroy you, but allowing yourself to get stuck mentally could cause more lasting damage. The key is to determine:

• What happened?
• What factors could you control, influence, or alter?
• What factors were out of your control?
• What did you learn from the experience, both bad and good?

For most of us, financial fears are both powerful and deep-seated. By recognizing your own fears and how they operate on you, you can begin to cut them down to size and use their force for something much more worthwhile–taking charge of your financial well-being.

Click here to read part two of Face Your Financial Fears!

Judith Briles, Ph.D. is a speaker, columnist, and award-winning author of 20 books including 10 Smart Money Moves for Women and Smart Money Moves for Kids. She can be reached at 303-627-9179 and e-mailed at DrJBriles@aol.com. Her Web site is www.briles.com.

Tiffany Bass Bukow is the CEO & Founder of the #1 Personal Finance Website for Women and Families – www.msmoney.com. My life mission is to help people and the world thrive through creating companies that provide money, career and life skills education.