The Difference between Women and Men, Financially Speaking (Part 2)
7 Steps Women Can Take
In the past, women may have taken a less active role in household financial decision making. Those days are over. Today's women have more financial responsibility for themselves and their families. Therefore, it is critical that women know how to save, invest, and plan. Here are some things women can do:
- Take Control of your money. Know how much you spend monthly. Create a budget, manage debt and credit wisely, and set and prioritize financial goals. Direct discretionary money to implement a savings and investment strategy to meet those goals.
- Become a knowledgeable investor. Learn basic investing concepts, such as asset classes, loss tolerance, time horizon, diversification, and inflation, the role of various financial vehicles like 401(k), 403(b), and IRAs, and the role of income growth, and safety of investments in a portfolio. Have patience, ask questions, admit mistakes, and seek help when necessary.
- Plan for retirement. Have you ever heard of someone saving too much for retirement? Save as much as you can. Estimate how much money you'll need in retirement, and how much you can expect from your savings, Social Security, and/or an employer pension. Understand how your Social Security benefit amount will change depending on the age you retire, and also how your years spent out of the workforce might affect the amount you receive. Make sure you understand your retirement plan distribution options. Have you thought about the cost of health care (including long-term care) into your retirement planning? Do you understand the basic rules of Medicare?
- Advocate for yourself in the workplace. Have confidence in your ability at work and advocate for your worth in the workplace by researching salary ranges, negotiating your starting salary, seeking highly visible job assignments, networking, and asking for raises and promotions. Keep an eye out for new career opportunities, entrepreneurial ventures, and/or ways to grow your business.
- Seek help to balance work and family. If you work outside the home and have children, negotiate flexible work arrangements that allow you to keep working, and make sure your spouse is equally invested in household and child-related responsibilities. If you stay at home to care for children, keep your skills up-to-date in case you return to the workforce. Absolutely stay involved in household financial decision making. If you're caring for aging parents, ask adult siblings or family members for help. Seek outside services and support groups that offer you a respite and community to help you cope with stress.
- Protect your assets. Identify potential risk exposure and implement strategies to reduce that exposure. For example, life and disability insurance is vital to protect your ability to earn an income and/or care for your family in the event of disability or death. Have you considered an umbrella policy? In some cases, more sophisticated strategies, such as other legal entities or trusts, may be needed.
- Create an estate plan. To ensure that your personal and financial wishes will be carried out in the event of your incapacity or death consider executing basic estate planning documents, such as a will, trust, durable power of attorney, and health-care proxy. Have you identified a guardian for your children? Also review your beneficiary designations to make sure they are current.
A financial professional can help
You are the key to your own financial future- it is critical that women educate themselves about finances and be able to make financial decisions. Financial planning may not be easy or convenient. Decisions made in one area may impact another, such as tax planning or protection planning. In many cases, women can benefit greatly from working with an independent, fee-only financial planner who works as your fiduciary, similar to a CPA or an attorney. The planner can help you understand your options, provide clarity, and create an action plan that gives you confidence. The plan ultimately gives you the security and peace of mind to live a meaningful and fulfilling life. Let's get started now!