Your salary shouldn’t be your only source of income

Make that money.
Make that money.
Image: Reuters/Gary Cameron
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Millions of words are written everyday about personal finance. Most of these are sensible, but lack the psychological and behavioral aspects that help people break bad financial habits. In the meantime, the advertising world bombards you with great ways to separate you from your money, by blurring the line between “need” and “want.”

For women, the impact of this double bind is most pronounced. While women are said to drive the majority of consumer spending in the United States, they also feel less confident about their retirement than men.

The key to breaking that cycle is to abandon the old advice of “spend less, and save more.” To really make money for the future, women have to make a concerted effort to reprogram themselves from a consumption lifestyle to an active investment mindset. In other words, make hustling your default and risk your friend.

Everyone needs a side hustle

You can earn more money by spending less. But you should also ask for that raise—and get a side hustle. It’s extra income, but more than that, it extends your marketability by demonstrating initiative and ensuring you have skills outside of your day job.

Whether it’s learning to code and helping small businesses with their digital presence, or starting your own small business on the side, everyone needs multiple ways to earn money. The days of companies taking care of you are long gone.

Then, learn to take risks. The perfect hustle/risk combination is investing. The majority of US women feel averse to discussing financial planning and investments with others, according to a 2015 study by Fidelity, but that doesn’t mean they’re not interested—three out of four American women would also like to learn more about investing.

And once they take on risk and get into the market, women have been proven to be better investors as they make more considered risks, and have a higher propensity to be patient.

Take risks, but ask questions

So how do you start?

The best way is to take an amount of money that you’re comfortable potentially losing, and do it yourself. While there are an awful lot of options if you wish to outsource your investing decisions, these professional services come at varying degrees of cost, with widely varying returns. And regardless of how you invest, the critical thing is that you learn while doing it.

One of the biggest obstacles to investing can be language, which is why it’s important to make sure you understand what’s going on and why decisions are made, instead of just trusting someone else. Make sure you know enough of the language of investing before handing your precious savings over to someone else. Ask yourself or your investment professional: “How much am I paying in fees and expenses?” “How well has my portfolio performed vs. the market?” And for people giving advice, ask “Are you a fiduciary or a salesperson?”

If they make you feel stupid for asking questions, think twice about using them. No question is dumb. You need to know what an ETF is and what happens when the market goes down. Once you know what some of the key investment terms mean, you’ll be empowered to ask tougher questions.

Plan for the life you want

Being an active investor will help you look at life differently. Frame your goals as funding options for your life. What do you want to do in the future? Do you want to go to back to school? Buy a second property? Take extended maternity? Retire early and try to become a writer?

Every time you see an ad that asks “How much do you need to retire?” respond, “No one knows!”

Life is not a straight line, and expecting people to know their retirement “number” is an exercise in guilt.

If you’re smart enough to amass a pile, you’re smart enough to grow it to fund the sort of life you want, versus squirreling it away until you’re old and can sit on a beach. Use those obnoxious retirement ads as a cue to mentally review the progress you’ve made, and think about your own strategies for your money.