The inequalities between women and men might be disappearing in recent times but the same can’t be said when it comes to financial matters. Women even today face difficulties in managing their finances.
According to a study, women earn just 85% compared to their male counterparts. Even worse, women earn less, save less but live longer and have long-term, overall health care expenses.
Statistics project a very negative picture about women. However, there are ways to change it and enhance their financial well-being, ultimately building a stable future. Here are a few ways for women to turn the tables:
Strategies are crucial to build a strong financial foundation, take some time out to learn and understand about investing and money management.
It’s better to self-learn to overcome the discomfort related to financial matters. Seeking professional help is a good idea because it will stop you from wasting time on unnecessary strategies and will help you focus on improving your financial health.
Aim towards an emergency fund, managing your debts and saving for retirement as these form the pillars of learning how to keep your financial goals clear and productive.
Set Your Financial Goals
When you set goals, they have to be realistic and achievable for every area of your finances. Sometimes ambitious goals can result in average or disappointing results. It is always advisable to work towards a goal that is simple and result-oriented while you can always flesh out the necessary steps to make it a reality.
When setting financial goals, think about what encourages and excites you the most and then set targets that will keep motivating you even if the road gets a bit rocky.
It is essential to have a mix of short-term and long-term goals. Short-term goals are objectives that are easy to achieve within a year and that give you those little joys that propel you to move forward. Long-term goals, such as saving for retirement or building your child’s college fund, require more consistent efforts and could take several years to reach.
Be mindful that goals are not fixed and can sometimes change over time. Therefore, be sure to revisit your list of goals every now and then at least once each quarter and make necessary adjustments based on where you are in your goal and life with your finances.
Create a Budget
Budgeting is the key to savings. Your day-to-day expenses decide how good you are at saving and smart in spending. When making a budget, be stubborn and strict enough to follow it. The first step is to gather all your bills, then jot down your monthly income and your expenses. Break your expenses down into “needs” and “wants” because beyond this there is nothing more or tough for you to understand.
Subtract your expenses from your earnings if you have nothing left for savings goals. That way you will naturally focus on cutting down your expenses or finding ways to get extra sources of income.
Spending plans might be hard to follow or sometimes even seem restrictive, but those pave the way to achieve your financial goals in a timely manner.
Budgets always prioritize your monthly expenses by placing your needs before your wants so you won’t fall short of money each month and invite unnecessary debt. Just like keeping track of your list of financial goals, you want to visit your budget periodically to make adjustments.
Build An Emergency Fund
A rainy day fund or an emergency fund is an integral part of a healthy financial plan. It’s a handy tool to safeguard your finances against unexpected events, like a medical emergency or job loss.
However, many Americans still lack an emergency fund, especially women. And women are more likely to report that they could not afford to pay an emergency expense of $400 or would have to use some form of borrowing, according to the Federal Reserve.
If you don’t have enough funds for a rainy day, you should begin taking steps toward growing or building an emergency fund. A good rule of thumb is to save money every time you get a paycheck. Make it a priority to save some funds for you. If you need to, cut spending on unnecessary expenses. This way, you’ll be future-ready for that quite possible rainy day when it comes.
Save For Retirement
According to data from a 2012 US Government Accountability Office report, women’s annual contributions to retirement accounts were around 30% lower than men’s contributions.
Women, on an average, face a larger retirement savings gap than men and experience higher poverty rates later in life. In 2019, the national poverty rate for women aged 65 and older was 10.3%, compared to 7.2% for men in the same age group, and the gap continues as men and women grow old.
Throughout their lives, women are more likely to work in part-time jobs that don’t qualify for a retirement plan than men, and also take a break in their careers to take care of family responsibilities. Ultimately, fewer years of work means fewer retirement savings.
All of this only means there’s even more reason for women to prioritize retirement saving quite early in their professional lives. The earlier you start, the better it is for you to stay relaxed. Starting young also saves you the hassle of having to cover ground and make hefty contributions that stretch your budget in the end days.
Stay Away From Consumer Debt
Some debt like student loans and mortgages are fine to take on if they fit in with your overall budget. These kinds of debts are categorized as “good” debts because they’re investments. “Bad debts” are those that include high interest like credit card debt.
Credit cards are marketed as a convenient and safe way to pay for things (and possibly earn rewards for doing so), but people often fall prey since you have to pay off your balance every month in full. The use of credit cards has come down drastically after the pandemic as the true colors of using a credit card have been exposed.
In simple terms, avoid debts by creating a financial plan and stick to it.
Excessive debt can have serious implications on not just your financial health but mental and physical health as well. If you’re suffering from these, seek the help of a licensed professional.
Commit Mistakes To Learn And Grow
As the saying goes, experience is your best teacher. Instead of being ashamed of past financial mistakes, learn from them.
Everyone can only grow from their financial mistakes and not fall. List out all the errors you’ve made so far. Next, make a note of how you acted, what went wrong and what actions you can take to prevent these mistakes from repeating.
You have to do this exercise to know how to handle it better. Most of us might not be consistent or get dejected with our mistakes but that is the only way to learn as it stays registered in our minds.
Solutions are everywhere but how good we are at following them decides our smartness. Unlike men, women have always known to save some cash at times of need and this is what sets them apart in financial decisions.
With the booming gig economy following the Covid-19 crisis, women must soon adapt to the changing times and make the most of it if a long-term financial goal is part of your priority list.