There are entire books — okay, an entire cottage industry — on how to ask for a raise. And yes, without one you could lose out on hundreds of thousands of dollars over the course of your career.
But it drives me nuts that so many personal finance writers imply a raise is the only thing that matters. For some women, what I call the “gender investing gap” (the fact that women are less likely to invest than men) may be costing us even more. That’s why I believe the best career advice is this: Invest your money. It may be the most important career move you ever make.
We women default to keeping some 68 percent of our savings in checking and savings accounts instead of in diversified investment portfolios that historically have higher yields over time. Why does that matter? Consider these numbers: Let’s say you are making $85,000 a year and setting aside 20 percent (good on you!), but putting it into a savings account rather than investing. Any guess what that costs you over a decade? It’s $100 a day!
If you had a hole in your purse, and $100 fell out of it every day, how long would it take you to fix it? Not a decade! But that’s basically what’s happening if you don’t invest. Need more convincing?
Own It: The Power of Women at Work by Sallie Krawcheck, $18.56, Amazon
1. It allows you to reinvent
Let me break it down: Money is power. It’s the power to negotiate with your boss with confidence, start your own business, invest in yourself. For example, if you feel yourself stagnating at work, it might be time to take a class in something you know nothing about or master a new technology you don’t even know how to pronounce. Your investments can help fund that.
2. It lets you take a career break
One huge perk of successful investment is the opportunity to fund a sabbatical—time out of the workplace to soul-search or care for an ailing relative. Sometimes this time off is not voluntary; people get laid off or even fired. But any break can advance your career if you use the time to go after new skills. I’ve taken three such breaks, and many of my lightning-bolt insights happened while I was out of the office. But career breaks can be expensive. Investing now can help you replace your salary for the time you are out of the workplace.
3. It protects you long-term
The retirement savings crisis — Americans don’t stash nearly enough money for their later years — is a women’s crisis. We retire with two-thirds the money that men do, but live five-plus years longer. That means we’re more likely to spend our final years scraping by. You could wait for changes to Social Security or the tax code, but the better bet is to invest now — start with an index fund or low-cost ETFs; a financial advisor or platform like Ellevest or Vanguard can help. It’ll make the difference between a 75th birthday spent redecorating vs. refinancing your mortgage.
One last thing: As a group, women control $5 trillion. Let’s say that instead of putting $1 trillion in savings accounts, we were to invest it in stocks and bonds that, on average, earn 5 percent a year. We’d earn $50 billion on those assets a year—$40 billion more than if we left it in cash. That’s serious collective power.
So yes, go get that raise. But also take ownership of your financial future. You’re already working hard to make more money at work, so why not make that money work hard for you?
The above is reprinted from Own It: The Power of Women at Work Copyright © 2017 by Sallie Krawcheck. Published by Crown Business, an imprint of Penguin Random House LLC.