How does anyone learn about money?
For me, learning about money was a slow and sometimes painful job. No one is born with a mind for personal finance. Some lucky people have a natural talent for math but that’s not me (my lips move whenever I have to add or subtract). I came from a family that handled money prudently, but I understood that only in retrospect. We generally didn’t talk about it. Everything I learned, I learned by watching, reading, doing, and—yes—making some awful mistakes.
I’d love to tell you that I embraced my mistakes because they taught me so much but I’d be lying. I hated making those mistakes! Still do. The only upside is that, by having gone wrong myself, I know how easy it is to get off track—especially when money is short or when financial salespeople are whispering in your ear. I also learned, through trial and error, what the better choices are and how to pull your finances back together.
I grew up in Niagara Falls, New York, the oldest of five children. Back then, it was a prosperous small city—a wonderful place to be young. Lately, it has fallen on the same hard times that are hurting America’s whole industrial belt. But the Falls are as gorgeous as ever and I still love my home town. Taking the boat, the Maid of the Mist, right up to the edge of the waterfall still gives me a thrill.
I started out fine as a money manager, teenage division. On my 16th birthday, I took the bus to City Hall to apply for working papers. That afternoon, I interviewed with the head of the public library. She not only hired me for after-school work but gave me my favorite job title ever: I was a “page” in a building full of books. I spent some of my earnings (not a lot; we weren’t big spenders at Niagara Falls High School) and put the rest in a savings account to help pay for college.
At Middlebury College, I got a check from my parents to supplement what I’d saved. I watched my pennies and balanced my checkbook (with the occasional subtraction error). In those days we couldn’t get credit cards, so I wasn’t put to the plastic test. Summers, I clerked in a grocery store and waitressed at Howard Johnson’s. (I never learned the trick of balancing a fully loaded serving tray on one hand, held above my head. I was always terrified that I’d drop four hamburger specials with cokes and fries down the customers’ necks.)
Finally, I got the summer job of my dreams: Reporting stories for the Niagara Falls Gazette. I wasn’t on the front page. It was more like, “Jane, go to the Friday greenmarket and update the table of vegetable prices.” But I was a reporter. I had a desk, phone, and ID card to prove it.
My financial oops moments started when I got out of college and went to work at a consumer newsletter in New York City. For one thing, I didn’t save. I spent every dime and never looked ahead. One year when I unexpectedly had extra income taxes to pay, I had to take out a loan. I lived the paycheck-to-paycheck life.
Lucky for me, a colleague at work dropped by one day to tell me I was an idiot (his word!) not to have joined the company automatic-savings plan. “I can’t afford it,” I whined. “Yes you can,” he said. “Have 5 percent taken out of your pay, automatically, and you’ll never notice.” I did, and he was right. I was still living paycheck-to-paycheck but, suddenly, saving money along the way. The money wasn’t much (I wasn’t earning much), but I’m grateful to this day for his having taken the time to tell me I was being dumb. I’ve been devoted to automatic savings plans every since.
I didn’t have a lot of other financial options during my 20s. I married young, had a beautiful baby right away, and money was tight. It got tighter at 25, when I found myself broke, divorced, and struggling to pay rent in a city that isn’t for sissies. Young journalists didn’t earn much, especially if you were of the female persuasion. In those bad old days, there was something called the “female discount.” If a man and a woman held the same type of job in the company, the woman was paid 30 percent less—and it was legal. At my job interview, the discount was figured out right in front of me, on an adding machine. Total humiliation, but I was stuck. Thank goodness for the feminist movement, which eventually put an end to overt wage discrimination—although not in time to help me with the rent.
I survived by pleading for discounts on nursery school fees (the wonderful headmaster said yes; thank you, thank you again) and scrambling for free-lance jobs I could work on after putting my son to bed. Those were tears-in-the-pillow years, and bills I didn’t open because I knew I couldn’t pay them right away. It’s the only time I’ve ever run up credit card debt and haven’t forgotten the scare. To this day, I pay my bills, in full, on the day they arrive.
But except for my checkbook worries, life was great. My son was growing. At work, I was learning how to report and write, and starting to specialize in personal finance. The more I interviewed financial people, the wider my eyes grew. I realized that I could learn this stuff. It wasn’t magic, it was all based on simple common sense. I’d had no idea.
Fast forward in time. I got better jobs and earned more money. I married again, which brought three wonderful stepchildren into my life. I had a second son. We rented a house for a while and finally found the resources to build our own. I felt back on track.
With some money to spare, I ventured into investing and that’s when the oopses really started. I opened an account with a stockbroker and asked for advice. He called me every couple of weeks with new stocks to buy. After a year, he started suggesting that I sell the old ones and buy something else. Pretty soon it hit me that he was raking in commissions while my pile wasn’t growing much at all, so I took the money back. At about that time, another broker put an important chunk of my husband’s savings into a single can’t-lose stock. You know the rest of that story! We were stupid and inexperienced, what can I say?
By then, my reading and reporting had led me to low-cost index mutual funds. Whew, just in time. I’ve kept them to this day and they’ve rewarded me handsomely. (You can read about them in “What Jane Says About Investing.”)
But let’s face it, index funds get b-o-o-o-ring. A girl ought to own something interesting, right? Gotta make a killing. At that time, I was editing an investment newsletter and talking to Wall Street gurus all the time. They must know something special about making money. Otherwise, why was I interviewing them?
There’s no point going into all the sad details. Here’s what I got out of my super-guru advice: An oil well in Ohio that came up dry and a top-performing mutual fund that lost 80 percent of its value because it owned too many of that era’s hottest stocks. All the way down, the fund’s brainy manager urged me not to sell.
I even went local, in hopes of getting in on the ground floor of something big. A neighbor and former executive of a blue jeans company had a smart, new idea for making jeans that fit all figures. I was all-too-right about the ground floor. That’s where we started and that’s where we stayed, as the seed money dribbled away.
The plain fact is that, in my heart, I knew better than to write those checks. I’d reported extensively on oil-well partnerships and how the fees ate you up, even if you were lucky enough to hit some oil. But I was dazzled by the guru—a regular and accurate source for me—who touted the Ohio well as something special.
The mistaken mutual fund investment is even more embarrassing. I knew it owned high fliers but I was so impressed by the manager’s smarts (or what sounded like smarts at the time) that I figured he’d sell those zoomy stocks at their top and switch to the Next Great Investment when it came along.. Soooo wrong. As I’ve learned, almost no fund manager can do that successfully (and I should probably delete the word, “almost’).
About my neighbor, what can I say? It was a completely dumb move that my accountant advised against—but the jeans were so cool. (They ought to have been, considering what I paid!)
Did I mention that I bought some gold coins near the 1980 peak?
All my mistakes came from turning off my common sense and B.S. detector and letting a salesperson or silly enthusiasm run my mind. Fortunately, I never had too much money at stake, so I could ramp up my savings again. But, gee, I wish I’d kept it all in index funds.
By this time, I had left my job at the investment letter. I quit because I got a promotion but wasn’t given the same title held by the job’s previous occupant—a man. I got a lesser title, not to mention lesser pay. Sound familiar? Those were still the bad old days when women couldn’t catch an even break.
As it turned out, leaving that job was not one of my mistakes. In fact, it’s the best thing that every happened to me, professionally. To earn money, I wrote my first book on personal finance and a column for a women’s magazine. I started a syndicated newspaper column for the Washington Post, thanks to the head of the syndicate, Bill Dickinson, who was willing to gamble on an unknown. Bill’s belief in me changed my life. At first, it wasn’t clear that the column would succeed (Jane Bryant Quinn? the newspapers asked. Who’s that?). I still have in my files the names of the 19 papers and their open-minded editors who bought the new column and gave me my chance.
When the column caught on (250 papers eventually came on board), one thing led to another. I started a financial column for Newsweek magazine, added CBS television—first the morning news and then the evening news—and wrote the first edition of the book you’re reading now. But I’ve never forgotten the feeling of launching out on my own—the thrill of a high-wire act and the nail-biting wait to see if I’d make it to the other side.
Free-lancing taught me yet another money lesson. When you work for yourself, your investments ought to be more conservative. I wasn’t an employee with a pension and a 401(k). I had only what I saved and invested for myself. If I got hit by a truck, my personal savings would be my only safety net. So I had to invest more carefully. I’ve always held a higher percentage of bonds, compared with stocks, than I would have if a big company were funding my 401(k).
Fast forward again, to another hard-learned lesson—this one on long-term care insurance. When LTC policies were first introduced, many of them were poor. They low-balled their premiums, bumped up the price later, put unexpected limits on coverage, and sometimes used fine print to deny payments due. Then the products improved and my husband and I applied. By then, however, my husband had some serious health issues and was turned down. One day he had a big debilitating stroke and the cost was all mine. Would those earlier LTC products have paid? Maybe but maybe not; they were generally nursing-home contracts and I wanted to care for him at home. Still, it’s never a smart idea to put off buying life, health, disability, and long-term care insurance that you know you need. Buy it now, while your health is good. One bad diagnosis renders you uninsurable overnight.
When I became a widow, I bought a house in haste. That’s one of the things I’ve always told others not to do. It looked good at the time but turned out to be the wrong decision. Fortunately, I eventually sold it for only a small loss and found something perfect. And I had the joy of remarrying. Money matters in life, but what matters more is holding yourself open to happy surprise. My family has multiplied— to 16 in the picture below, and there are seven more.
After listing my financial crimes, you might wonder why I write personal finance books! First, because I’m a lot smarter now. I saved a lot of money and learned how to invest it well. Second, to show you that everyone makes mistakes. The trick is to learn from them, grow strong, and do better. And third, to abolish the myth that you have to be born with a math book in your mouth to be good at making decisions about your personal money.
Personal finance has nothing to do with math. It’s all about understanding simple principles (such as automatic savings), knowing where to find the advice and tools you need (I’ve rounded them up for you on this website and in my books), and choosing low-cost, plain-vanilla financial products (they’ve proven to be superior to everything else).
I’ve made mistakes in my time but in the end I got it right, and so will you. Every day, I’m cheering you along.