Women, are you ready to achieve your financial goals? These tips for saving more money, spending less, and investing wisely are from an experienced finance expert. Financial planning doesn’t have to be dry or boring — but it does have to be done!
“Women face different financial challenges than men do. For one thing, women on average earn nearly 35 percent less than men in similar positions,” says Brad Stroh, of Bills.com. “For another, women may be more inclined to make life choices that can have a huge impact on finances — from taking time off to raise children to losing work hours caring for elderly parents. Those decisions have ramifications for Social Security income and retirement savings.”
For more info on earning money, retiring early, saving more money, creating a budget, and investing wisely, read Suze Orman’s Women & Money: Owning the Power to Control Your Destiny. And, read on for Stroh’s money tips for women…
Women and Money – 7 Ways to Save More, Spend Less, and Invest Wisely
1. Understand your finances: earnings, spending habits, etc. More and more women are financially savvy, and a large number of women manage their household’s money. But, Stroh says, it is critical for both partners in a household to understand their financial situation, to create a budget outlining all income and expenses, to know how to pay bills and plan for the future, and to agree on a set of financial priorities. Both men and women should understand how to save more money and invest wisely.
2. Prepare early for retirement. Many financial planners believe a woman’s biggest challenge is preparing for retirement. “No matter what women earn, they should put aside a portion of their savings for retirement,” Stroh says. “Invest the maximum in a company 401(k) plan, and save more in an Individual Retirement Account (IRA) if possible. If there is the unfortunate possibility of a divorce, understand your state’s laws when it comes to dividing retirement accounts.” Don’t rely on your partner’s retirement plans — read Tips for Maximizing Your Retirement Income.
3. Make money decisions carefully. Every family must decide if a parent will stay home with children, and that affects more than earning and saving money. Many women overlook the impact of leaving work on Social Security income, health insurance costs and other financial factors. “Consider not only the income, but the value of benefits and the psychological impact of returning to the workforce when deciding which parent — if either — will leave the workforce to care for children or others,” Stroh suggests.
4. Choose — and change — careers thoughtfully. While common wisdom is that men earn more than women, there are some careers in which women earn the same or more than men, according to Why Men Earn More: The Startling Truth Behind the Pay Gap – and What Women Can Do About It by Warren Farrell (click on the cover for more info). And, a recent study found that young women working in big cities earn more money — sometimes significantly more — than their male peers. The more money a woman earns, the more she needs to understand how to spend less and invest wisely.
5. Make wise marriage/money decisions. “Women should not hand over all financial decision-making to a partner, and they should know about (and share) their credit history with a prospective spouse,” says Stroh. Married women should keep a credit card in their own name, and maintain a good history on that card. Some happily married spouses recommend maintaining three bank accounts: a joint account for household bills, and one account for each partner. And, women might benefit from investing their own money in their own stocks, mutual funds, etc.
6. Be honest about spending habits. This money tip for women involves not hiding your spending or saving habits. “More than anything, be honest with your partner and urge the same so that you can address any money problems head on,” Stroh cautions. “Do not hide purchases or debt problems. If you do, you’re just digging yourself a deeper hole.”
7. Learn about investing money wisely. Even today, many women are not taught about money and investing. “Educate yourself by reading, reviewing reputable personal finance education websites, and watching TV programs or speakers about investing,” says Stroh. Here’s a great place to start: Overcoming Fears of Investing Money for Women.
If you have any questions or thoughts on women and money, please comment below.
Bills.com is a free one-stop portal where consumers can educate themselves about complex personal finance issues, including credit cards, debt relief assistance, insurance, mortgages, and other loans.