When it comes to personal finance and managing your money, there aren’t different rules for men and women. However, there are some challenges that women encounter throughout their lives that men simply don’t. Being aware of these differences can help women plan effective strategies for reaching successful, financial goals.
Fact: In 2013 a survey found that 53% of women were the primary income earners. But, only 23% of those women believed they had enough knowledge to make financial decisions.
Taking into account that over half of women are primary breadwinners, we’ve created a valuable, easy to use, set of guidelines for women and their finances. By explaining the challenges that women may face at every stage of their lives, we can help women around the world not only be informed but also equipped to deal with these challenges. By planning to make smooth transitions from one stage to the next, you can be organized and ready to maintain a healthy finance life for yourself and your family.
Financial Life Stage 1: Preparing to Pay for School
Going away for school is usually the first time you experience financial independence. Whether or not your parents provide you with the necessary funds, you will still gain financial freedom and be in charge of your daily finances. You will also receive credit card offers, and may sign up for one on your own. However, be sure to use this credit card maturely and avoid debt, as your parents may not be able to bail you out of this one. You will be responsible for the debt you incur, and your financial history will suffer.
Fact: In 2012, 71.3% of female high school graduates attended college , that’s 10% more than their male counterparts.
The following tips can help you manage your money effectively, while you’re in school:
- Create a budget. Even though you’re only responsible for a few bills and minor expenses, making a budget can help you visualize where your money is going. Helping you stay in control of your finances, a budget guarantees financial success.
- Use on-campus meal plans. Instead of running to different restaurants every day, multiple times a day, save money on food by using campus meal plans. Since the cost of most meal plans is pre-set, you’ll know how much to budget ahead of time.
- Don’t be tempted with high-interest store cards. Retail stores frequently target young female shoppers with in-store credit card offers. But do not be fooled, as these cards can cause problems with debt even more often than traditional credit cards.
- Don’t procrastinate on bill payments. Late credit card payments will get you in trouble with service providers and lead to collection problems. Late debt payments will be reported on your credit report and will lower your credit score.
- Don’t go overboard with brand name & specialty shopping. Shopping for brand names and treating yourself with expensive gifts is fine if you have the money for it. But, if you’re in school, you should be sticking to a budget and saving up for success.
Financial Life Stage 2: Preparing for your first job post school
Entering the workforce is really where you establish your own financial identity and set the foundation for your future. This stage is critical, as you are fully responsible for your own credit, debt, and financial fate.
Here are some tips to help you establish an effective outlook:
Fact: Women are significantly less likely, than men, to ask for a pay increase. With 20% of women never asking at all.
- Always negotiate with your employer. Statistics show that women rarely negotiate on salary, which may contribute to statistically lower pay rates. Know your own value and negotiate for a higher rate. This will help you gain confidence, respect, and ultimately more money.
- Set up retirement savings early. Don’t wait to start saving long-term, especially if your job offers a 401(k) program. If not, consider opening an IRA or Roth IRA account and set up automatic monthly contributions that work for your salary. This can amount to a large number in the long run.
- Check your credit… often. As you open more lines of credit (credit cards, loans, etc.), you have more to manage, quickly changing your credit profile. Check your credit report at least once a year, and/or sign up for a credit monitoring service. Knowing where you stand is important in order to know where you want to go.
- Don’t carry a lot of debt. Just because credit cards ask for a minimum payment amount, it doesn’t mean that you can’t pay more. The minimum amount is required, but paying more will show banks and lending institutions that you’re responsible and credit worthy. Your credit score will also increase significantly. Determine how much you can comfortably devote to debt payments and pay it off as quickly as possible. The sooner it’s paid off, the sooner you can work on fixing your credit score.
- Look into student loan debt relief if you don’t get the right salary right out of school. Student loans can be difficult to pay back if you have problems finding a job or don’t make enough salary on your first job. Look into student loan consolidation and determine whether their rates are worth it.
Financial Life Stage 3: Merging your money and starting a family
Whenever your household grows, whether it’s through marriage or having children, your financial approach will have to change in order to meet the needs of everyone in the home. With major changes in your expenses and different goals in mind, you will have to adapt your strategy to account for these changes. The biggest issue during this time is mixing your own financial perspectives with somebody else’s. Modifying your usual financial habits is important if you want a successful financial future with your partner.
- Talk about your finances as early as possible. Discuss with your partner, as early as possible, when and how you want to pay bills, what kind of budget you’d like to follow, and how much money is appropriate to spend on various needs and interests. This will avoid major future problems.
- Check your credit before you tie the knot. It may be harder to reach your financial goals, as a couple, if one partner has bad credit habits and a poor credit score. Check your credit reports consistently, with your partner, and discuss how you can improve your score. If bad credit is an issue for either of you, make sure to start working on it immediately, as it will only get worse with time.
- Define your long-term financial goals. Discussing your long-term financial goals with your partner is crucial. You want to be in agreement when it comes to raising a family, saving for retirement, buying homes and cars, and even deciding on winter vacations.
Financial Life Stage 4: Retirement
American workers, all across the country, are having trouble saving enough for retirement. Often times saving for retirement can fall by the wayside, especially when there are dozens of other expenses that need to be dealt with in the present. If you want to retire successfully, without having to worry about finances, plan ahead. You need to begin to make decisions about and contributions to your retirement as soon as you possibly can.
Here are some tips to help guide you through a successful retirement:
- Don’t rely on social security. Programs are not guaranteed, as anything can happen in the future. Benefits could be the same, more, or less once you retire.
- Use your company’s 401(k) if it’s offered. Putting a small amount of money from each paycheck into your company’s 401(k) as soon as possible will grow significantly by the time you’re ready to retire.
- Supplement with an IRA. Use your 401(k) first, if your company offers some kind of dollar-for-dollar match program. You should also put extra contributions into your own account.
- Pay off your mortgage before you retire. Once you’re retired, the last thing you want on a fixed income is the massive expense of a mortgage. Pay off your mortgage as soon as possible, especially before retirement. One less bill makes a difference.
- Don’t try to support your grown children. Now that you’re enjoying your well-earned retirement, do not do anything to jeopardize your financial freedom. Do not cosign, give loans, or support anyone, as this will put you at risk.
Dealing With a Financial Setback
Divorce can often be a serious financial setback, whether it goes smoothly or not. Thus, it’s vital to understand these changes and know what to expect if you and your partner face divorce. This way, you can plan ahead and make certain changes to ensure you don’t get yourself into a bad financial situation that you can’t resolve.
Fact: According to the census, after divorce, a woman’s household income can decrease upwards 37%.
The following tips can help you manage your money during divorce:
- Know what accounts and assets you share. Ensure you have documentation of balances and all other details of your accounts, joint and separate.
- Check your credit reports once accounts are closed. Make sure that all joint accounts have been closed. You want to make sure that you aren’t linked to your ex-partner in any way, credit-wise.
- Don’t hesitate to file for support – especially for kids. Do not let your pride get in the way of your children’s lives. They deserve to grow up with every advantage and opportunity possible.
The most important advice you can take away from all this is that no matter who you are, your financial future is in your hands. It’s up to you to create a plan, get on a budget, and save for the future you want.