Middle Age and the Money House is on Fire
By: Susan Kelley
Tags: Relationships, Financial Freedom, Investing, Women And Money

Middle Age and the Money House is on Fire

Wealth Accumulation for the Middle-Aged Single Mom

Photo by Jp Valery on Unsplash

I lived most of my adult life with a husband who was clueless about money, who made nonsensical purchases, knew nothing about budgeting, and worse yet — allowed me zero control of our finances. We bought a house we couldn’t afford, overextended our spending, and he never revealed to me how much he made (not enough) his ego got in the way of our spending habits, so nothing was realistic, and in the tsunami that was the 2008 housing crisis, we barely held on to our house through a chapter 13 bankruptcy. It was awful.

I was a stay at home mom at the time; I hadn’t finished my college degree (I changed that super fast and went back to college to help dig us out of our financial hole), and we started to turn the ship around, slowly, but it wasn’t enough to save both our financial ruin and our marriage.

I learned a lot — a whole lot. He never did gain any more financial savvy, and our marriage floundered, but I studied hard. Very hard. I was determined to never again face financial insecurity even though I was starting so late in life.

When I first launched my financial self, I was an insecure twentysomething with very little to rely on, a single mother with no appreciable skills, anchored to a financially unskilled guy who had a steady income but no wealth-building knowledge. Now, many years later, I am a late-40s woman with grown children, an impressive income, but no nest egg to speak of.

I set a distinct path with a few small, achievable goals at first. The first real chunk was moving toward good credit, which I did immediately after our bankruptcy was settled. My husband (now my ex, but he wasn’t at the time) and I disagreed about taking on any new debt. I had read volumes about establishing a new, clean, well-attended credit report, so I took out one of those credit cards specifically designed for repairing credit, with a low limit and low annual fee (but grossly high interest) and paid very close attention to making small purchases and paying them off immediately. I was vigilant.

Once I was divorced (at age 44), and my income was wholly my own, I set about planning a realistic payment plan for my student loans. They were by far the biggest impediment to establishing great credit longevity. I made extra principal payments whenever I could, chipping away at my debt but being realistic. I mean, keeping that account stellar was a good move, but then again, it’s within the federal government. No one can repossess my degree.

I knew it would be more important to look at future planning, to maintain free funds for the next 20 years, not the past 10. So I started socking away more and more into my company’s 401k, whatever they would match as much as I could. If the match was 6%, then I absolutely put in at least 6% and added a bit more here and there whenever I could.

My company offered a free investment advisor, so I scheduled a session right away. Thanks to the divorce, there would be a rollover coming my way in the form of a QDRO at some point, and I wanted to be sure I didn’t squander it. Again, my ex was never knowledgeable in this area, so I had little experience in this realm. It was time to learn. I soon found out that I could sock some money away, as little as $10 a week in an index fund, all robo-managed, giving it little thought, and knowing that I had some time on my hands (I wouldn’t need to dip into those funds next week or even next year), I could handle some volatility in the market. So I did.

If I were to put $10 a week into my savings account, at the end of the year, I would have just a teensy bit over $520. Umm…yawn. But year over year, a fund like Fidelity’s Index 500 comes close to yielding 10% over time, and while that is definitely not a guarantee, and some years it winds up in the negative, there is no savings account on the planet that is going to earn me 10% interest, not ever, not no how. So, I started putting upwards of $10 a week in my Index fund. I realized that I spend at least $6 a week on my little “guilty pleasure” — at least. I treat myself to a Venti Starbucks fancy-schmancy drink every Friday, so if I can do that, I can certainly treat myself to $10 in potential wealth growth, right?

(The answer is — right.)

So I set my money house on fire.

If I had invested $520 a year in the S&P’s Fidelity 500 Index Fund in 2019, the lowest-cost Index fund, I would have seen gains of 31%. That’s a lot of Starbucks fancy-schmancy.

At 50 years old, I figure investing $520 a year for the next ten years, that’s $5,200. Even if I estimate just a flat interest rate, no compounding or anything, so the leanest gains, and I shorten that to 10% — I’m up $500. But we all know I will put in more, the market will gain more, and I’ll be in a diversified spot. My 401k will grow, there will be other savings, the gains will compound with other gains, and the look of it will be substantially rosier. Because that $520 will buy $520 more, and $520 more.

If my $520 at the end of the year nets $52.00? Then next year, I’ll buy $572, and well, you can do the math.

The best part of leaving my husband (well, there are a LOT of best parts, but the best financial part) is that within just a couple of years, I figured out how to put aside enough money to buy a house, I figured out how to invest for my future, and even better, I’ve started to teach my kids how to build wealth for themselves.

So if you are nearing 50 years old, you are not too old to figure out how to set your financial house on fire, to begin to build a financial future and to bask in its glow. It feels great.