Sam Saperstein:

Investment and insurance products are not FDIC-insured, not insured by any government agency, not a deposit or other obligation of, or guaranteed by JP Morgan Chase Bank, N.A. or any of its affiliates. Subject to investment risks, including possible loss of the principal amount invested.

Jean Chatzky:

Managing your money is a matter of doing the same things over and over again. It's the shampoo, it's wash rinse, repeat.

Sam Saperstein:

Welcome to season five of the Women on the Move Podcast. I'm your host, Sam Saperstein. In this season we're giving our financial health a checkup with some phenomenal women giving us the prescription for financial wellness. We'll speak to experts on how to educate your children about money, how to address debt, and how to save for home ownership. It's a masterclass on understanding and managing your money.

                In this episode, I speak with CEO and co-founder of HerMoney, Jean Chatzky. Many of you know Jean from her 25 years as Financial Editor of NBC Today. In addition to her long career as a financial literacy expert, she also recently founded HerMoney, which is a digital media company. I hope you enjoy our conversation about the work she does to help women improve their financial health. Jean, thank you so much for being here with us on our Women on the Move Podcast. It is great to see you again at least virtually and have you on.

Jean Chatzky:

Oh, thank you so much for having me. It's really nice to see you too in these surreal times.

Sam Saperstein:

They are indeed. So, surreal for many reasons but certainly managing your money is one key thing that's going on that I think is throwing a lot of people into some turmoil and anxiety. So you being the expert for so many years on personal finance, we're really happy to have you on here to talk to our listeners about getting through this time when it comes to their personal finances. So we'll get to your latest book Women With Money in a little while, but I'm wondering since you've written that book, what has changed since this time particularly in this environment? Have you noticed that people, women particularly are doing things differently or need new information right now?

Jean Chatzky:

Yeah, a lot has shifted. Actually, I wrote that book at a time full of optimism. When I looked at the statistics at the number of women graduating from college, the amount of wealth headed into the hands of women, the strides that we were making, I was just boiling over with optimism for all of this money that was going to flow into the hands of women and how we needed a plan to make the most of it in a way that works for us. Since then, of course, we have had this surreal COVID year that continues, and it has really walloped women so much more than it has impacted men.

                They are calling this a she session and there is every reason for that. If you just look at the number of women who have dropped out of the workforce it's four times the number of men. I was recently involved in a study that AARP did with S&P Global looking at the reasons for this and how employers were reacting. And one of the things that was just so clear is that when families have to hunker down, when families have to figure out how they're going to get everything done during the day, we tend perhaps unfortunately to revert to these traditional gender roles where women are the caretakers, women are getting the food on the table, women are running the households.

                And because we still are facing a sizeable wage gap, yes, more women are the primary breadwinners for our family than ever before, but we still only earn 79 to 81 cents on the dollar for every dollar that a man earns, depending on whose numbers you're looking at. For women of color, for black and Latinas it is far worse than that. And as a result when families have to figure out how to make a move in these times it's the woman who's leading the workforce.

Sam Saperstein:

And do you find then the conversations right now are about whether or not to stay in a job, how women can stay in the job while handling all these responsibilities at home?

Jean Chatzky:

Exactly. And I think one of the lessons that we've learned from years and years of caregiving and it's an important one is that the cost of leaving the workforce has to be considered in ways other than just your salary. When you leave a job, you are leaving the opportunity to earn additional seniority, you're leaving the opportunity to earn additional social security credits, and when you go back in you're often doing it at a level that is asking you to take a step back.

                And so whether we're a young parent who is thinking about, "Should I stay home for a few years to take care of my new child?" Or whether we're an older adult having a similar conversation in our heads because our aging parents need help, sometimes the right decision, if you can afford it and if it's safe to have somebody else in the home is to hire somebody to take care of those other people and preserve your opportunity to continue to earn seniority and make strides in the workforce. And of course it's a very personal decision and people take a step back for all sorts of reasons but I think we have to think about it in that way.

Sam Saperstein:

You've talked a lot about asking for your worth, making sure your salary, your compensation is what it should be. But right now I think many people are just lucky enough to have a job, feeling like they really can't ask for more in this particular environment. How should people be thinking about it now during the crisis and maybe when should that change? The crisis lists in the next six to nine months, what should they do differently?

Jean Chatzky:

I agree with you that it is really important not to be tone-deaf to the financial situation of your company. And so you want to understand what's going on with the company's business. If they took a PPP loan and they're struggling just to keep you employed, yeah, you don't want to ask right now. But you do want to continue to keep a file on your desktop or on paper of all the accomplishments that you're racking up during this time so that when our fortunes turn, when the economy comes back, when your industry comes back, you've got a really great historical record of the value that you add. And you can use that not just to get a raise with your current company, you can use that to get a new job if you decide that getting a new job is something that you want to do.

Sam Saperstein:

Let's talk about your book, Women With Money, and the system that you really lay out in the book. You have a five-step money philosophy that you believe anyone can really adopt and follow, and they're critical steps and they're simple steps. Can you walk us through those steps and why they're so important?

Jean Chatzky:

Sure. I mean, I've been reporting on personal finance for almost 30 years. This came to me about halfway through but I've stuck with it because it hasn't changed. And it gets to the fact that managing your money is a matter of doing the same things over and over again, it's the shampoo it's wash, rinse, repeat. You got to earn money, that's the first step, you have to earn a decent living. And decent is not extravagant, decent is enough to stay on top of your fixed expenses, your rent, your mortgage, it's enough to enjoy yourself and it's enough to save something. And that's the second step which is living on less than you make on a consistent basis.

                But the reason that I think that decent living so important, especially right now when people are struggling is there is a ton of research out there about how once you've achieved this comfortable living, more money really doesn't buy more happiness. And so I think some of us strive and strive and strive for the money, and you may want to try to put that in a place where you can deal with it with a little more clarity, at least until this pandemic is over.

                Spending less than you make which is the second step is where a lot of people get messed up. And the problem with this five-step process is that if you get messed up on step two you can't get to three, four and five. So if you find that you are consistently spending less than you make, I think it is a call to track your spending consistently until you can start making the sorts of tweaks that you need to to bring your spending in line and save something, and I like to see people saving 15%. I know the bar used to be 10% but we're living a lot longer than we used to live especially women.

                And that 15% can include matching dollars if you're fortunate enough to get them from an employer. If you're not there you just want to nudge your way there. Don't go from 3% to 15%, that'll just crush you. Go from three to four and four to five and eventually you'll get to 15. And when you get a raise, bank the raises, that'll help you get there faster. Third step is using that money to make you more money, investing. And you and I both know that women need to really embrace our inner investor. I mean, we are great at it once we get going, but we leave far too much money sitting in safe havens. And when you look at the cash that women keep compared to the cash that men keep, it's a sizeable gap and money sitting in the bank right now is doing nothing for us.

                So if you've got money sitting in the bank that really should be working for you, working while you sleep, you want to figure out a way to put that into the market with a plan to get you to your goals, whether they're medium-term goals or longer-term goals. Fourth step is you have to figure out how to protect this financial world that you're building. That starts with having an emergency cushion which I think we've learned during COVID is not an option, it is a must. The statistic that I trotted out most before COVID hit was the large number of Americans, that half of Americans didn't have $400 to get them through an emergency. That has really proven to make life difficult, and thank goodness we got those initial stimulus dollars because there would have been a lot of people in a lot more trouble.

                Yes, I would like to see a fully-formed emergency cushion. And by fully-formed I do mean three to six months of living expenses. But if you're listening and you're thinking, "I'm not even there," then just focus on a couple thousand dollars. And once you've got a couple of thousand dollars then focus on the larger emergency cushion. The protection plan also has to include the right insurance, health insurance, disability insurance, life insurance, long-term care insurance if you need it, and it has to include an estate plan that makes sure that your assets will make it into the hands of the people that you want to get them if something would happen to you.

                And we've heard an awful lot again during this time about the necessity of a power of attorney, the necessity of healthcare proxies, and how important it is to just leave a roadmap for your family to be able to follow if something happened to you. Just a letter saying, "This is where the documents are. These are the important people, here's the master password," so that they're not crushed trying to deal with all of these things at the same time that they're grieving. And then finally, you've got to give something back, and you got to do it in a way that is meaningful to you because although more money doesn't bring more happiness, figuring out a way to give back that is meaningful to you just sends happiness off the charts and so I think that's really important.

Sam Saperstein:

Go back to the protection tip, stage four here, and the things that you need to do. First of all, I think it's very hard for people to just come to terms with mortality and having to be prepared for that. But beyond that how can they gather these documents, prepare themselves, get the right insurance and forms in an easy way so it doesn't feel so overwhelming?

Jean Chatzky:

Yes, so there aren't that many things that you need, but basically we're talking about a will. We're talking about a living will which tells a doctor in a hospital whether or not you'd want life support. We're talking about a durable power of attorney for finances which is a document that allows somebody else to make financial decisions on your behalf if you're not able and a healthcare proxy, or a durable power of attorney for healthcare which allows the person to do the same for your health, make decisions for you if you can't make them for yourself.

                If you go to an attorney you can get a whole package and it's not going to cost you a lot of money. But if you are hunkered down at home and you don't want to go to one attorney right now, you can do this on a site like LegalZoom, it works. I would say if you're going to do it on a site like LegalZoom I would eventually have an attorney look it over and just make sure that you did it right. I think that's a nice fail-safe, but you really don't have to stress about this, it's pretty easy.

                And then the other thing that I would say, and this is something that I took from my stepfather, he's a big fan of writing something that he calls a letter of instruction and suggestion. The instruction part is this is just a letter to your family. It basically lays out, "These are all my accounts, these are all my documents, these are where I'm keeping them. These are the passwords, this is who you call for X, Y, and Z." And then he likes suggestions because he likes to tell everybody what to do. My level doesn't really have a lot of suggestions but I did have a code that I wrote one a few years ago. I hadn't updated it in a while but I updated it during COVID just so that, God forbid, my husband has to go through the process of finding all of my passwords he's going to be a lot better off with this in one place.

Sam Saperstein:

That is great, that is a great suggestion. I will definitely pursue that too. When you wrote the book in 2019 you did so through a set of conversations with women, and I'm curious, what was it like to do this research with women? How did you get people to open up to you?

Jean Chatzky:

I had some conversations one-on-one but I had a lot of them in the form of what we call HerMoney Happy Hours. It's hard to get people to talk about money, it's hard to get women to talk about money because we don't do it. And so I created a party game, basically. I would invite women to sit down with me. I did it with groups of anywhere from half dozen women to a couple dozen women. When I traveled to different cities for speeches I would just put it out there that I was coming and gather a group. We'd open some wine because when you're going to talk about money wine definitely helps.

                And I created a deck of cards that have leading questions about money. And we have since created a HerMoney Happy Hour kit that if anybody wants to do this... It actually works pretty well on Zoom. I know a lot of financial advisors actually who have adopted this format and do it with their clients because it's a nice icebreaker. But women do this with their book groups and you just pull a card and it says something like, "What's the money secret you've been keeping?" And you have to answer that question and then other people can pile in with their money secrets.

                And generally you have the opportunity to go around with the cards once or twice. But we get to a lot of different topics about the kinds of things that we've been talking about today, about saving and investing but also about money and relationships, about shopping, about whether it's okay to hide money from your spouse or your partner in your underwear drawer. I mean, we get into it and people feel really empowered and liberated when they come out.

Sam Saperstein:

Did you find that many women just had so many similar themes from each other, that what they thought maybe was unique to them other people could really resonate with that and understood it?

Jean Chatzky:

Absolutely. I mean, debt is always a theme, divorce. When you're going through a divorce you feel like you're the only person in the universe going through a divorce, but inevitably somebody else has been through it and they have advice. What I love about these gatherings, and I also have found the same... We started a private Facebook group, HerMoney, and we've got 14,000 women there who are just, they just help each other. They don't judge, they don't get snippy or nasty, they're just in it to help other women and share their advice and share their stories and share their experiences and share their tips for making sure that things are going right. And it's so heartening to me, I mean, I go into the group and I chip in my own ideas but I love that we've got this community of women supporting other women.

Sam Saperstein:

So with your media company, HerMoney, the book that you wrote, obviously this is very focused on women, particularly. And I'm wondering how you give advice to women that would be different from what you would tell men.

Jean Chatzky:

I don't know that I give advice that would be different than I would tell men. I've thought a lot about this and we have these conversations on our podcast, HerMoney as well, all the time. And sometimes we have them with men and we know we have men who listen to the podcast because they send us letters and that first sentence is always an apology because we have a mailbag segment and it's always like, "I'm a guy, but I still have a question." And that's great, that's fine. But I have given hundreds of speeches and lectures over my life and sometimes I have a group that is entirely women, and sometimes I have a group that is men and women.

                And the atmospheres could not be more different. When I have a group that is all women, they can't wait to get up out of their seats and participate in the conversation. They can't wait to ask a question, they bring their friends. I'm never ever going to get a speech again for a mixed group after I say this, but it's nothing against a crowd that has both, it's just it's different.

                And so when I set out to create HerMoney I wanted to create a safe space. I wanted to create an environment where women feel like we can ask all of our questions because nobody's going to judge and we can put forward the things that we feel that we're doing wrong as well as the things that we feel that we're doing right and we can really dig in and help each other. The same stock is the same stock, is the same stock, and the same mutual fund is the same mutual fund, is the same mutual fund, but it was more about the environment than it was about the advice itself.

Sam Saperstein:

Yeah. It sounds like underneath it you wouldn't tell a man to do anything differently with their money, their investments, their insurance protecting it, but maybe women just need more of these forums to have the conversation where they feel like they can bring those questions and nothing is off-limits. You can open up and be emotional about money, which is a very emotional topic. And frankly, maybe there are men out there too who would like that kind of forum and openness, right?

Jean Chatzky:

I think, maybe. And I also think we do have to acknowledge the big differences are that women have less in the way of resources, back to that wage gap which drives lower 401(k) balances and more time out of the workforce. And then we live longer, so we got to take that smaller pool of money and we have to make it last a longer period of time. That is a challenge that does need to be continually addressed.

Sam Saperstein:

Let's go deeper on that one because when the crisis is over and we are back to negotiating as we all should in good times, talk about what women really need to do to negotiate their compensation fairly. And I love how you talk about not only asking for what you're worth but add the tax on. Add on the other things you need to be responsible for. Can you say more about that?

Jean Chatzky:

Sure. First you have to understand what your job should be paid. What is it that somebody's doing the work that you are doing should be paid? And we get held back for a lot of reasons. Loyalty sometimes holds us back. If we've been at the same company for a long time and somebody else is coming in at the same level there's a pretty good chance that they're making more than we are. If we took a step back and we had to get in again there is a good chance. But there's so much information out there about different levels of pay at different companies from sites like Glassdoor and PayScale and salary.com.

                But also from your own human resources department. I mean, there may be published levels of ranges of what people in your position earn. You should know those, they should be available to you if you ask for them and there is absolutely nothing wrong with asking for them. It's not about you needing more money, it's about you showing your company what give your company so that you stepping up and saying, "This is the value that I have brought to you. This is the money I have made you, this is the money I have saved you," and create a case for yourself. When you go into negotiate for additional money, whether that's at the end of a salary review or whether it's just because it hasn't happened in way too long.

Sam Saperstein:

You talked a lot about this underearning concept and I'd love for you to really explain that to the audience. What does that mean? When do you know you are underearning? Because we're talking now about trying to right that wrong, but how do you even find yourself thinking you're in that position?

Jean Chatzky:

Underearning is an interesting phenomenon. It's not finding yourself in a low-earning profession where you are fairly paid, it's being in a job where you know you should be paid more, or owning your own business and knowing that you should raise your rates but for some reason you're afraid to do that. And these are the kinds of things that you have to remedy. Underearning is a confidence problem, it's not feeling as if you're worth that amount of money. So you may have to before you can fix it go through the process of proving to yourself that you are worth it.

                And then I always think that it's important to practice your ask. You should practice it with a mirror, you should practice it with a friend, you can practice it on Zoom. You can record yourself, you can play it back. But you need to sound confident when you are delivering it and you can't be apologetic, you just have to put it out there. And that is hard, that is really, really hard. So go through it a few times, let somebody critique you, let somebody you love critique you and then do it again, and then do it again until you can deliver it like that third grade book report that you practiced so many times until you had it down.

Sam Saperstein:

We can all remember those times. Well, thank you, that's a great reminder and I really support that, so I hope listeners really do that. Jean, it so great to speak with you and hear about your tips on money particularly right now, but just really all you've learned from such a distinguished career so thank you so much for joining us.

Jean Chatzky:

Thank you so much for having me.

Sam Saperstein:

Thank you for joining this conversation with financial expert and journalist, Jean Chatzky. Jean, and I covered a lot of ground from how women are handling finances during COVID, to long-term strategies for making the most of your money. I hope you learned new ways to ensure that you are well-protected and are maximizing your net worth.

                The mission of Women on the Move is to help women in their professional and personal lives. Our goal is to introduce you to people with great ideas, inspiring stories, and a passion to make a difference. If you enjoyed this episode, please rate, review, and subscribe so you won't miss any others. For JP Morgan Chase's Women on the Move, I'm Sam Saperstein. Please refer to the podcast description for additional disclosures.