All about the challenges of Midlife Finance

Bag Lady Syndrome – And How to Fight It

 bag lady

n. Slang

A homeless woman, especially one in a big city, who carries her possessions with her, as in a shopping bag. (American Heritage Dictionary)

 I called it “begging for nickels:”

      The nagging feeling that in spite of bills paid and money in the bank, we were going to be out on the curb with a tin cup, asking for handouts. (Our youngest daughter could look pathetic in an instant. We even joked out renting her out to ‘save the children’ organizations!)

      Husband thought I was being weirdbut the feeling persisted.

Little did I know that other women felt this way. In fact, it even has a name:

   “Bag lady” syndrome. 

“There is the greater fear… the terror that as the years go by the money will run out,” Anna Quindlen writes in her memoir Lots of Candles, Plenty of Cake. “Even prosperous women have it, and with good reason — a substantial percentage of those living below the poverty line are women in their later years.. With longer life comes the need for a larger safety net, and we fear the holes in that net.”

A survey of nearly 2,000 women conducted for Allianz AG, a banking firm, showed that 90% of women said they feel somewhat or not at all financially secure. Nearly half of those women said “they fear losing it all and becoming a ‘bag lady.'” Making a higher income didn’t change anything; even among those earning $100,000 or more, 48% still said “yes,” when asked if they worried about losing everything.

     Sadly, more than a few of those successful women found out the hard way, when Bernie Madoff was arrested in December 2008. By the time he marched off to spend his life in jail, prosecutors estimated he’d defrauded his firm’s investors of more than $64.8 billion. Madoff’s clients included many women who considered themselves wealthy. Several wrote books about their experiences, including Alexandra Penney, whose book (and columns),The Baglady Papers, asked the question:

     “Is it worse to have had money and lost it? Or it is worse to never have had money at all?”

The answer to that seems obvious — you only ask that kind of question if you’ve had money. If you’re homeless, and actually scraping for every meal, does it really matter?

There’s the irony. Nearly every woman who feels this way isn’t a bag lady — they only worry about becoming one. And it is a female trait, much more than a male one: one of the ways men and women really are different from each other.  

     (More than 1,200 men were also interviewed for the survey — but the men had a much higher percentage of saying they took the lead in studying investments and making decisions. Interestingly enough, they were also unaware of their partners’ secret money stashes — something 18% of the women admitted to.)

Some realities may be affecting Bag Lady Syndrome, says Mark Zesbaugh, CEO of Allianz Life Insurance Company of North America, including divorce rates, lack of financial education for women… and age. “People may live as much as one-third of their life in retirement,” he says.  “People can’t rely on Social Security anymore, male or female, but the fact that women outlive men exacerbates the level of financial insecurity for them.”

How can you fight Bag Lady Syndrome? 

One way, according to Jean Chatsky’s secrets of successful women: save a little bit (or a lot) of cash each week – no matter what happens during that period. Like determination and discipline, it eventually adds up.

     Another way: get the education you need. Many financial sites, like Scottrade and Ameritrade, give free classes, conference calls, webinars and other helpful info on a wide variety of investments, including index funds, futures and retirement strategies. Financial experts, including Dave Ramsey, Suze Orman and others, offer books and programs on setting up budgets, paying off debt and planning for the future. Even Jean Chatsky has her own Money School series. Some of these are free — if not, then they’re often modestly-priced. (Or look for their books and DVDs on Amazon or secondhand — you’ll be amazed at how often you can get them for dimes on the dollar.)

     Take a long hard look at your situation. Are you putting money aside regularly? A close look at your spending may (and should) reveal places you could save, like cable television and cellphone plans. Are you paying too much for housing, vehicles or insurance? Make a list — some research may well produce extra savings. (Which you then can save.)

     Finally, what do you really want? Some of your most rewarding experiences may well have nothing to do with money — but satisfaction. Are you working to liveor living to work, instead?

     Now take your newfound knowledge  — and do something about it.

I may watch bag ladies, and wonder how they got there. I often feel compassion for them.

 But I have no intention of becoming one.  

One Response to Bag Lady Syndrome – And How to Fight It

  1. […] posts lately for Midlife Finance. That’s fine, of course. There’s merit in discussing ladies bag, Warren Buffet and whether you can afford It. (Whatever ‘It‘ is.) But once in […]

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