"90% of women at some point in their life will be solely responsible for their finances"
As women, being in control of our money is more important than ever. Why? Well, there are a number of factors that make it critical that we have a firm handle on our finances and they include:
1. Women are earning more money on average than ever before
Compared to previous generations, more women are in the workforce than ever before. Many of us are the heads of our households or if we are in relationships, many of us earn significantly more than our better halves. We are out there earning money and doing things for ourselves. The more reason why we need to manage the money we work so hard for.
2. However, women are still earning significantly less than their male counterparts
Despite more women earning more than ever before, we are paid significantly less for doing the same jobs as our male counterparts in nearly every single occupation and industry. On average as women, we earn ~20% less than men and if we were to break it down even further by demographic, the numbers are even more discouraging - black women earn ~35% less and Hispanic women earn almost 50% less.
3. Women, live longer than men and take more time off from the workforce
We are living longer than men by an average of 5 to 10 years which means we need more money for our financial well being in retirement than men will.
In addition to being paid less, many of us will take time away from the workforce and away from pursuing career paths temporarily or permanently to have and raise children which reduces our lifetime earnings even further.
4. Women are more emotional about finances than men are
According to a survey done by Fidelity*, women have more stress than men when it comes to being in debt. And this stress ties into worse sleep, weight gain and impacts our overall financial confidence, making it really clear that women are more uncomfortable having debt.
5. 90% of women at some point in their life will be solely responsible for their finances
And a major reason why financial wellness is more important than ever for women is the fact that a lot of women despite being on top of things in another aspect of our lives e.g. managing our household, taking care of our children etc, many of us take a back seat when it comes to managing our finances.
However, getting the education and support we need to put ourselves in the drivers' seat when it comes to our finances is critical because at some point in our lives, 90% of us will be solely responsible for our finances either from staying single, divorce or living longer.
So what first steps can women take to get on top of things when it comes to their finances?
1. Get organized and budget
Getting your finances organized and planning out your spending, saving and investing (aka budgeting) is one of the first steps to achieving financial wellness. You may not love it at first but it's all about finding a style and system that works well for you and that you like. Practice makes perfect.
2. Create specific and measurable goals
The goals you create should be for the short term (the next year), mid-term (1 to 5 years) and for the long-term (5 years plus). It's not about trying to predict the future; Instead look at it this way - Goal setting and long-term planning are a work in progress and you can adjust things as your life situation changes but it's better to have clear goals in place for your life and finances than none at all. It will help you get clear on what you really want to accomplish with your finances.
3. Automate your finances and start investing
It's common knowledge that people who automate their finances are more likely to save more money than people who don't. One reason why? They don't get a chance to see the money before they save it which makes them less likely to spend it - There's no chance for mental debates or self-negotiation.
You can automate everything from your bill payments to your savings and investments. If you are not comfortable with automating, start with one or two parts of your finances and see how you feel.
When it comes to investing you are basically putting your money to work for you and investing is how you will ultimately build wealth but you have to take advantage of the time you have now to realize growth. Before you invest, however, (e.g. in your employer's retirement plan, in an IRA, in non-retirement accounts, in a business or in real estate etc) it's important to do your research, set clear objectives and understand your risk tolerance so you have a general idea what to expect.
4. Check in on your finances frequently
The same way you have annual doctor or dental visits to make sure everything with your health is in order and you keep yourself in good health in between visits e.g. eating well, brushing your teeth etc is the same way you want to think about checking in on your finances.
Put time on your schedule to check in on your finances from week to week, month to month and year to year to make sure everything is in order with your financial plans.
As women. we owe it to our current and future selves to have a firm handle on our finances and we are more than capable of attaining financial wellness despite any odds that might exist. Let's do this ladies!
*Fidelity survey source: https://www.fidelity.com/viewpoints/personal-finance/women-manage-money