Women's History Month: Laurie Itkin
By: Laurie Itkin, financial advisor and certified divorce financial analyst
Like any typical child, my mother received an allowance from her father. But unlike a typical child, she received that allowance into her 60’s. He stopped writing her checks only when he died. My mother received financial support from her father because as a teacher and divorced mother of two, she could not make ends meet on her own. Her teacher’s salary alone didn’t cover the kind of lifestyle she wanted to live.
My mother divorced my father when I was four. Then my mother and stepfather divorced when I was 10. There was no man in the house for a few months and soon thereafter came the string of boyfriends.
Of all my mother’s boyfriends, I remember Robert the most. My mother seemed to feel proud and privileged to be his girlfriend. He was older and wealthier than any other man she had dated. Robert was a handsome, highly paid marketing executive with a major Pennsylvania department store who drank dry martinis, wore Italian sports coats and drove a Datsun 280zx. He was separated from his wife who lived in Florida.
My brother and I assumed he would eventually get a divorce and move in with us. But when Robert was diagnosed with cancer, he moved back to Florida with his wife and children to die. My mother told me after his death that he had “abandoned” her. I was only 14 and felt confused by the choice of words she used to describe her pain. She could have said she was “sad” or “lonely” but instead she used the word “abandon.” I looked the word up in the dictionary and it meant that Robert had “ceased to support” her. I decided that I would never put myself in such a vulnerable, helpless situation and from that point on, vowed to support myself (with or without a man).
My grandparents on my father’s side were poor. I was 24 when my paternal grandmother died, and she left me $1,600. Although I wanted to spend that windfall on things that most young women like to spend money on (such as clothes and shoes), I knew I needed to begin investing for my future. I was currently employed but had already been laid off twice and concluded that I couldn’t count on a man or a job to provide financial stability. I had to build a financial cushion myself.
In thinking about whether I would save or invest that $1,600, there was only one clear choice: invest in the stock market. I recalled an eye-opening chart presented by Wharton Professor Jeremy Siegel when I was studying finance that demonstrated that over the long run (despite its short term risk of going down) the stock market generated higher returns than other asset classes, such as bonds or certificates of deposit (CDs). Since I was in my mid-20′s, I had quite a long time horizon and knew that stocks were the place I wanted to invest my cash.
The decision I made to invest that $1,600 (not merely save it) was the most important wealth-building decision I made in my life. It is the reason I became a millionaire before I turned 40, a feat that would not have been possible had I chosen to keep that money in the bank.
Was it easy to go from $1,600 to $1 million in just 15 years? Did I get lucky on one stock pick that doubled in value every year? Of course not. I had to regularly add money I earned at work to my brokerage and retirement accounts. It wasn’t easy, but it also wasn’t as hard as you might think.
When I give speeches on investing in the stock market, I usually share my story of how I built my own wealth. Everyone always wants to know how I did it. They want to pick up tips and tactics to build their own wealth. Here are my top six:
Start investing in the stock market at a young age
Educate yourself by reading about investing, the economy and personal finance
Spend less than you earn by living below your means
Rent a small apartment you can afford rather than buying a home you cannot
Invest a portion of every paycheck
Max out on tax-deferred retirement vehicles such as a 401K and IRA
In my book, Every Woman Should Know Her Options: Invest Your Way to Financial Empowerment, I explain the decisions and trade-offs I made regarding spending, adopting a frugal lifestyle, forgoing graduate school (because I didn’t want to take on more student loan debt), renting instead of buying, and delaying marriage and family. The major benefit of the book is that women get the opportunity to learn from my two decades of investing experience in language and through examples that resonate with women.
The path to financial empowerment can be a long and bumpy road, but you can do it — with or without a husband or partner. There is no better time to start investing than the present, no matter what your age. And you don’t need lots of money to start. If you have an employer-sponsored retirement plan, contribute to it. If you don’t, open a self-directed IRA. Don’t let your fear of making poor decisions with your money stop you. When you invest, sometimes you make money and sometimes you lose it. But if you start early, make contributions a regular habit, and stay in it for the long term, you might just end up a millionaire.