3 Common Myths That Hold Women Back From Becoming Millionaires
Only about 15% of American millionaires are self-made women. What’s holding women entrepreneurs back from reaching rich-list parity?
By Priya Haji (CEO & Co-founder, SaveUp)
Focusing on big financial goals is something that more and more women are doing; I want to talk about the big one – becoming a millionaire. What are some of the common excuses or challenges that hold women back? And how can we break through them? A recent study from BMO Private Bank found that women make up only a third of the nation’s millionaires. About 15% of American millionaires are self-made women, BMO said, while the rest got their fortune from marriage or inheritance.
So what are some common myths that hold women back? Here are three.
“It’ll All Work Out in the End.”
Many women are raised with the Cinderella story in mind—that a prince will ride in and sweep them up to a castle where they’ll live happily ever after. The reality is that more women now are now the decision-makers for their households and define their family’s future in terms of finances and other important matters. So, if you are subconsciously or otherwise waiting around for your million dollars to ride up on a white horse or find you in some other magical way – break that framework and start leading the horse yourself!
“I Will Start Saving When I Am Older.”
Time is on your side if you start young! The power of compounding is that the longer the money compounds, the larger the asset value created by the time value of money. In other words, the earlier you start saving for retirement, the more time your money has to grow on itself. Read this post on the Rule of 72 for more details on compounding interest, and look at this simplified example: a person who saves $100 a month starting at age 25 and invests with an 8% return will have $223,000 at age 60. A person who starts saving at 45 and saves double the amount of $200 per month at 8% will only have $70,000 when they hit 60.
“Being an Entrepreneur Will Make me a Millionaire.”
According to 2010 census statistics, while women-owned businesses represented nearly 50% of privately held companies, only 1.8% of their businesses reported more than $1 million in revenue (the ratio for men is five times that). That means think big, work hard, and aim to break through. At the same time, make sure you set aside some savings every month so that your own personal assets are growing alongside your business. Many entrepreneurs put all their eggs into the company basket, but it makes sense to take some money out every month and put it into a retirement account like an IRA or 401(k) and also into a savings account to save for emergencies. Diversify your savings to protect your assets and create a financial safety net.
I hope that 2014 will be the year that you make the moves to get on the path to becoming a millionaire. Both your business and your personal financial choices will make the difference.
Want to hear more from Priya? She’s speaking at our conference.
About the guest blogger: Priya Haji is the CEO and co-founder of SaveUp, the first free online rewards program for saving money and paying off debt. Priya has a history of building companies that use technology to create positive social change. Before SaveUp, she co-founded World of Good, which became part of eBay in 2010.