“I’m not afraid of storms, for I’m learning how to sail my ship.”
~ Louisa May Alcott
I recently read Barbara Stanny’s brilliant book, Prince Charming Isn’t Coming: How Women Get Smart About Money, which focuses on the importance of women taking ownership of their financial lives. She shares some sobering statistics, gathered from surveys conducted by financial services companies:
- 47% of women reported not being knowledgeable about investing
- 57% of women found “entrusting their retirement savings to the stock market” frightening
- 48% of women lack the knowledge and skills to handle investments
- 62% of women graded themselves a “C” or lower in financial knowledge, with only 1% giving themselves an “A”
And sadly, 7 out of 10 women are not able to retire because they cannot afford to. Ladies, we need to work on this! Unfortunately we continue to earn less than our male counterparts and we live longer…this is NOT a good combination!
Many smart and savvy women feel ‘money stupid’. As Stanny says, “we zone out, fog up, or shut down” when it comes to financial matters. And to be honest, I found my own money fog rolling in at certain points as I was reading her book. It’s easy for this to happen…to feel like a stranger in a strange land [and without GPS!]. Learning about this stuff takes time, patience, and perseverance for sure. But what I found especially helpful is that Stanny reminds us that all “learning follows a logical and predictable progress.”
She has mapped out the following four sequential stages of the learning curve when it comes to financial competency:
Stage 1: Unconscious Incompetence
This is the ‘ignorance is bliss’ stage. We don’t even know what we don’t know, and are quite happy about this! There is a tremendous temptation to stay at this stage and unfortunately it is often a crisis of some sort that jarringly knocks us out of it. Although kudos to women who are able to self-motivate themselves out of it, perhaps with some sense that it is in their best interest for their financial future.
Stage 2: Conscious Incompetence
This phase starts the moment we take action, be it to glance curiously at the financial tables in the newspaper, watch the nightly business news, or pick up a book on investing for example. Once the door is open we begin to realize how much we don’t know, which can be disturbing, disarming, and disheartening. The bubble of denial has officially popped! Stanny explains that this is the stage most women are most eager to flee from. So, it’s extra important to be gentle and patient with ourselves here, knowing and trusting that we are beginning to lay the foundation for financial competence.
Stage 3: Unconscious Competence
In this stage, we’ve begun to absorb the financial information we are learning–but like freshly poured concrete–it has not yet ‘set.’ It’s an incubation period of sorts, with things being integrated ‘behind the curtain.’ Although we may experience fleeting moments of ‘knowing,’ we actually don’t realize how much progress we are making. This stage is often marked with self-doubt, frustration, and a sense of overwhelm. Hold tight girlfriend because relief is right around the corner!
Stage 4: Conscious Competence
Aaahhh…things are starting to make sense! The pieces of the financial puzzle do fit!
In this final stage–which can feel like a dramatic shift or emerge gradually–we realize and truly own our knowledge and competence. We can speak coherently about finance and make sound investment decisions. And, we start to feel in control of our financial future. Bonus!
Stanny notes that how quickly we move through the stages depends on our level of motivation, our prior education, and the amount of time we are able to devote to this endeavor. It is important to know the stages of the learning curve, so we can anticipate them, plan for them, tolerate them, and reach the finish line of Conscious Competence!
Take some time to think about how you have learned and mastered other knowledge throughout your life, especially any subjects that have engendered fear or anxiety. Reflect on what this process was like for you. Do you remember following a similar learning curve? Leverage this self-awareness to inform your own path towards financial competency.
Another self-exploration that can be helpful is to identify what your particular ‘learning style’ is, and adjust your learning plan accordingly. There are three main types of learners: visual, auditory, and tactile/kinesthetic. Take this quick and easy online quiz to assess your learning style and get some helpful tips on how to capitalize on your particular style.
