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    Conquer Your "Bag-Lady" Fears in Three Steps

    By | Work + Money – Mon, Apr 19, 2010 7:53 PM EDT

    According to Beth Kobliner, author of the New York Times best seller Get a Financial Life, nearly half of women suffer from what's called "bag-lady syndrome" - a none-too-PC term for the fear of finding yourself suddenly destitute. Women earn 77 cents for each dollar men earn and live, on average, five years longer than men do, so are more likely to find themselves with dwindling resources as they age. But believing that we're a few twists of fate away from becoming penniless is as self-defeating as believing that some Prince Charming will come to our financial rescue. And the danger of financial fantasizing - and catastrophizing - is that it's an easy excuse to assume everything's out of our control, and simply be "bad with money." But there is a lot you can do to plan for the future. And it's not that hard. Or scary.

    Trick yourself into saving money

    Here are three key steps you need to take now:

    1. Build an emergency fund
    A recent poll found that 61 percent of people don't have a three- to six-month safety cushion, though they claim it's their number-one financial goal. Even just thinking about saving up such a large amount can be daunting, so do it gradually. Have $50 or $100 automatically withdrawn each month from your checking account and plopped into a savings account. And remind yourself frequently to curb spending so that you can feed your savings. One trick: Stick a Post-it that reminds you to save instead of spend right on your credit card. Next time you reach for the plastic, this visual trigger will help you just say no; then, leave the store empty-handed, head to an ATM, and transfer the amount of that foregone purchase from checking into savings instead. You'll be surprised at how easy it is to live well on less.

    Try this to get new clothes without spending a cent

    2. Embrace the magic of compound interest
    If you start putting away $1,000 a year at age 30 and earn a modest 5 percent interest per year, you'll have $126,840 at age 70. So you've technically only invested $40,000, but you've managed to triple your total. Begin at 35, and you'll have $94,836. Even if you wait until 40, you'll have almost $70,000. No matter your age, you need to start socking the cash away now. A company-offered 401(k) with matching - meaning for every dollar you put in, your company adds 50 cents or even another dollar - is your best option, if it's available to you. If not, open a Roth Individual Retirement Account (IRA). You can have $100 a month - think of it as a tad more than $3 a day - siphoned out of your paycheck and automatically funneled into a Roth IRA.

    Tame your credit card debt

    3. Get health insurance
    The number-one reason people go bankrupt is an unexpected medical emergency that racks up the medical bills. If you're insured at work and get laid off, under the law known as COBRA, you're legally entitled to keep your current coverage for 18 months - but you'll probably have to pay for it. (If you lost your job before March 31, 2010, the government may pay for up to 65 percent of your COBRA premiums for up to 15 months. Get details at dol.gov/cobra). If you're not employed or don't have health benefits, look for low-cost catastrophic coverage from ehealthinsurance.com. And if you truly can't afford to insure yourself, you may at least be able to get coverage for your kids at insurekidsnow.gov. Protecting your family the best you can adds up to a healthy bottom line.

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