Money is something that we think and talk about every day. For many women, thinking about money can be stressful. Very stressful. There are monthly bills to pay, there is debt to pay off, there are savings accounts to build, children to take care of, life to live. Not only that, a lot of times, women are doing this on their own being single or as single mothers, divorced, as breadwinners, taking care of dependents.
In addition, the following stats add to the financial strain many women experience:
1. More women are becoming the financial heads of their households
This includes single mothers and married women who are bearing the financial burden of earning the income to support not only themselves but their families in addition to also maintaining a household.
2. Women get paid less than men on average for the same job functions
For every dollar, a man makes, a woman makes 79 cents. In addition, over their lifetimes, women lose more working income than men via unpaid or minimally paid maternity leaves, by taking time off to raise children which in turn halts or pauses their career progression and in turn impacts their earning potential.
3. Women generally live longer than men
This means that women need more money to support themselves in retirement especially, single women as they don't have the benefit of a dual retirement income, social security or pension benefits.
4. Women give more of themselves emotionally AND financially by nature
Women are more emotional beings by design. It's in our DNA. This makes us as women more giving and less likely to say no even at our own expense. For these reasons (and many others), it is of utmost importance that women make their financial success a priority and this means creating a plan.
Some key ingredients to creating a solid financial plan include:
- Building up an emergency fund
Start with 3 months, and plan to grow it to 6 months and then 12 months. This is basically your backup plan in the event that an emergency or unplanned life event happens, this way you don't have to leverage debt to get through the situation.
- Eliminating debt
Debt is expensive. The longer you stay in debt the more interest you'll pay. The longer you continue to accumulate debt the less you can save. Start by aggressively attacking your high-interest credit card debt and then student loans. Once you can get rid of your debt you can free up money that can go towards your savings goals.
- Saving for their short-term goals
This would be putting money aside for things like a down payment to purchase a home, taking a family vacation, buying a car etc basically goals you'd like to accomplish in the next 1 to 5 years.
- Planning for children's college education
It's a good idea to start saving for your children's college education as early as you can to minimize the cost of sending them to college and to help them avoid being straddled with student loan debt. This in conjunction with teaching your children good money habits will set them up for their own financial success too.
- Contributing to retirement savings
This is your nest egg - The funds that will support your lifestyle in retirement. You definitely want to determine how much it is that you will need to retire (click HERE for my blog post on how to determine your retirement amount) and then start saving accordingly either in work sponsored retirement accounts or IRAs to take advantage of pre-tax savings benefits.
- Having the right type of insurance
Not having the right type of insurance coverage can pretty much derail any financial goals you might have. While auto, health and home insurance are most common you definitely want to consider other types of insurance like disability, life, renter's, personal property and pet insurance depending on your current life situation.
If you don't have a plan or if your plan is lacking, it's time to create a solid plan for your financial future and put in the work to turn those plans into reality.