It appears (knock on wood) this brutal recession may finally be coming to an end.  As we let out a collective sigh of relief, many people are starting to poke their heads up and ask, “Am I on Financial Track?”  Here are some rough rules of thumb that you can use to benchmark your progress as you move through life’s decades.

IN YOUR 20s: Your key challenge is to learn to live within your means. Steps to take include:  Avoid credit card debt like the plague. Make at least the minimum monthly payments on your students loans, on time, every month. Build a starter emergency fund of at least $2,000, and start contributing your employer 401k/403b.

IN YOUR 30s:  Your key challenge is to build a solid financial foundation. Save for a home down payment – but don’t bite off more house than you can chew. Build that emergency fund up to at least 3 and ideally 6 months of living expenses. If you have children make sure you have term life insurance equal to 10x to 15x your income and a Will naming a guardian.

IN YOUR 40s:  Your key challenge, as you enter into your peak earning years, is to avoid lifestyle creep. If you have not been saving at least 10% of your gross income in your 20s & 30s for your retirement, it’s time to kick it into high gear by committing to save at least 15%. If you have kids and want to help them pay for college, it’s time to open a 529 plan account (if you haven’t already). Resist the urge to splurge, these are your peak earning years… and they should also be your peak saving years.

IN YOUR 50s:  Your key challenge is to resist the temptation to make up for lost time by swinging for the financial fences. Check your asset allocation in your retirement plan – this is the time to start easing up on stocks. “100 minus your age” is good rule of thumb for the maximum percentage of your portfolio to have in stocks at this stage if you are a man. “110 minus your age” is a good rule of thumb if you are woman. Consider long-term care insurance. Make sure your Will & related documents (medical & durable power of attorney) are updated for any life changes since original creation.

IN YOUR 60s & 70s: Your key challenge is to not over-nibble on your nest egg. Think long and hard about spending more than 4% of your savings annually once you are in retirement. If you have not amassed your desired savings nest egg, it’s time to think about working longer or part-time. Talk to your children about your estate planning wishes.

IN YOUR 80s & beyond:  Enjoy, you’ve earned it! (and share that hard-won wisdom, it would be an honor to learn from you.)

Are there any additional tips you think should be added to this list?  If so, I’d love to hear…

American society is systematically encouraging women to give up financial control.

Now that I have your attention, let me share the evidence…

Exhibit A:  The Princess Problem – you are what you get

USA Today Contributor Laura Vanderkam recently wrote a must-read Op-Ed entitled “The Princess Problem.” The crux of Laura’s argument is that there is a big disconnect between the reality of many women’s financial lives (being the breadwinner) and what they are brought up to expect (getting the glass slipper).  Here are my favorite excerpts:

• Some moms worry that princesses make girls obsessed with beauty. But I think the problem is that the popular princesses lack what psychologists call an ‘internal locus of control.’  This is the belief that you are responsible for making your way in the world.

• In one study of negotiations, 85% of men had an internal locus of control. They determined their worth and said it was their responsibility to ensure their companies paid up. Only 17% of women felt that way. More than 80% of women felt that their worth was determined by what their companies chose to pay them, just as Cinderella is chosen by her prince.

Exhibit B:  50% of Americans think women should be FORCED to take their husbands’ last names:

Per Feminsting.com, a study presented at the annual meeting of the American Sociological Association indicated that roughly 70% of Americans think a woman should take her husband’s last name upon marriage and a whopping 50% think women should be legally mandated to do so.  If your blood is boiling… wait, there’s more. Feministing.com goes on to report that when pressed for a reason why women should change their last names respondents said, “Women should lose their own identity when they marry and become a part of the man and his family.” Against this kind of backdrop is it any wonder that Secretary of State Clinton was more than a little miffed at being asked for her husband’s view on foreign policy matters?

Exhibit C:  Paula Abdul says “bye-bye” to being paid significantly less (over 50% less!!) than American Idol co-hosts Ryan Seacrest and  Simon Cowell… and not many eyebrows are raised

Leaving aside the larger issue of how much anyone should be paid for hosting a reality TV show, I was blown away to learn how much less Paula Abdul was reportedly making relative to her male co-stars.  Apparently, Paula was pulling in roughly $3.5 million a year as compared to Ryan’s $10 million, and Simon’s $30 million plus.  These are unconfirmed numbers, but even if they are off by half, the pay disparity is still staggering.

So what’s the point of these three seemingly disparate examples?  The future of our society.

As Judith Warner said recently in the NYT, “Women’s issues are being framed by this administration in terms of realpolitik: U.S. security depends on women’s empowerment. Global economic growth depends on women’s participation.”  Judith’s wonderful piece is a call-to-action to stop the trivialization of all things Hillary Clinton.  I’d argue that the rallying cry should be extended to all women.  Whether by design or by default – our society continues to encourage women to give up financial control and condone pay inequality.  As Season Three of the hit series Mad Men takes to the airwaves, perhaps it’s time for some Mad Women to take to the streets.

While reading a recent Washington Times article I was struck by this quote:

“Americans were more traumatized by this recession than any in the past 80 years,” said Bernard Baumohl, chief global economist at the Economic Outlook Group. “They suffered historic losses in personal wealth and watched helplessly as employers were firing workers at a pace not seen since the Great Depression.”

About the same time a savvy journalist asked me the following two questions:

1. Do you think the spending less/saving more trend will really linger over the next several years? Or will it be like post-9/11 America, where everyone suddenly took stock of what was most important in life for a year and then went back to their old ways?

I believe it will linger – if for no other reason than current market forces will prevent us from returning immediately to our consumptive ways. Over the past 10 to 15 years we Americans lived well beyond our means.  We spent more than we earned year after year, using home equity loans and credit cards to make up the difference.  We deluded ourselves into thinking we didn’t need to increase our personal savings rate because our homes and stock portfolios were appreciating at such a rapid clip that we were “sure” those investments would feed us in our golden years. With the tightening up of the credit markets we will be FORCED to save whether we want to or not. Personally I think this is a good thing. In the go-go years there were too many of us working at jobs we didn’t like to make money for things that didn’t bring us happiness.  My hope is that this downturn will enable us as a society to rethink what is the right balance between work/life/money for each of us.

2. How about credit card abuse and taking on mortgages we can’t possible afford? Have we learned our lesson, or will people continue to rack up debt they can’t handle well into the next decade?

Credit card abuse and mortgage mania is on the downturn – if for no other reason than access is being denied.  What I worry about now is the next financial bubble. Will it be student loans, annuities, or long-term care? In the new world order many decisions that used to be made by government or employers (e.g. health care and retirement savings) will be made by individuals.  If we don’t choose wisely going forward, we may step in new financial potholes. The Obama administration has proposed a consumer protective agency that would increase disclosure for financial products.  But we individuals have to pick up the ball as well.  We all need to commit to self-educating more about our money.  Financial literacy is a must for our free market economy to function efficiently going forward.

What do you think the new American consumer will look like – have we been permanently traumatized or positively tamed?