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In general, most schools do not teach about the importance of financial tips and investing, leaving it up to research and experience to find out what you need to know. Personal finances affect everyone, and for women, in particular, financial independence is a matter of necessity.
Gaining financial independence is a theme that can encourage women to be active and engaged within the finance and investing realms, to lead to a more equitable world hopefully.
Regardless of gender, taking control of your finances, having great financial, and investing to further expand your potential profits creates better opportunities for everyone and strengthens your community. Women generally live longer than men and earn less, making financial comprehension vital in order for us to succeed.
The following topics will hopefully help women in all types of situations to make smarter decisions about their finances, to create a better world for the next generations.
1. Make Retirement A Top Priority As Soon As Possible
Even though women spend around 80% of the household income for groceries, clothing, bills, etc. it’s traditionally been the man’s job to handle savings, investments, keeping financial tips, and retirement.
It’s important to learn that you don’t need to rely on a man to tell you how to save and invest your money, which is why we have made your retirement the first thing you need to start thinking about.
If you are currently employed, take complete control of your financial future and get involved with your company’s available retirement plans. You should aim to match the amount your company puts up for your retirement, and then some if possible.
While it may seem difficult to start thinking about your retirement if you are in your early twenties and thirties, it’s an absolute necessity in order to have financial security when you are older.
Ideally, it’s recommended to save about 10-15% of your annual salary between what you put in and what your employer contributes, just in your early twenties.
The older you get, the more the percentage will rise to ensure you have saved up enough to live off of comfortably, after retiring.
Most companies will offer you a 401K plan, which will allow you to set aside money from each of your paychecks and invest it in your personal retirement fund. You need to do this as early as possible if you want to enjoy the full benefits available from Compound Interest!
2- Women Should Use a Finance-Tracking App
We are all living busy lives, especially us women. So having a way to track your finances with great financial tips is one of the first steps you should take in regard to becoming financially responsible. There are many money managing apps available across all types of cell phones, so you are sure to find one that works perfectly for you.
Applications
Some applications, such as the Personal Capital and Mint App, even allow you to link your bank account directly from your app, so you can get notified and real-time updates when your finances change and additional financial tips. Also having direct access to all of your financial accounts right in your hand can come in handy when making important financial decisions. If you are looking to get a handle on budgeting your finances, there are apps for that too.
They can link to your credit and debit cards and automatically distinguish for you how much of your salary is used up by different aspects in your life. Understanding how much you spend on groceries for example, is crucial to being able to budget your money out each week.
Use these windows into your spending to compare how your spending stacks up against your financial goals you have already created for yourself and your family. If you have yet to devise a plan, utilizing apps to track, manage, and budget your finances is a great place to start.
3- Utilizing the 50-20-30 Rule Benefits Women Financially
The simplest method to follow in regards to your money is the 50-20-30 rule. Keep in mind that this should be used as a simple outline for your financial planning, and is not a necessity to strictly follow in order to become financially independent.
It does however provide a good system to better visualize what you should be spending, and how much of your income to allot to each aspect of your finances.
How does this Rule work?
The largest part of your spending, or the “50” first part of this rule, should go towards your needs. This can include your bills, groceries, housing, and anything else you need to continuously be spending towards. You can also include the minimum payments you make towards any debts, transportation, and work essential items.
Next, the “20” refers to the percentage you should be setting aside into your savings account for your future. Generically, this will probably be your savings, investments, and any debt payments that are above the bare minimum.
If you have a retirement fund, this is where you will add to it when breaking up your paychecks.
Finally, the remaining “30” will represent your wants and lifestyle budget. These are not technically considered necessities. Even though they may be things that you feel like are needed to live your life how you want. It can include shopping, traveling, and even a gym membership.
Monthly payments that are made for streaming services and Amazon orders can also fall into this category. As women who are supporting a family or busy lifestyle, your needs category may need to allow for more of your salary. There may be items that fall into a gray area between two categories. This is what makes it great. That you can create a plan specific for you, and no one can tell you any different.
The main takeaway in highlighting the importance of this plan is not necessary to structure your spending on this strict formula. But more of the importance of having a plan that you do follow each month.
The idea is to do whatever you can to keep all of your costs organized and under control. Make sure, whatever your spending habits look like, strive for that 20% for your future.
4. Automating Your Savings Financial Tips
Along the lines of using an app to track your spending, your savings can also benefit from this same style of automation.
If you are not made aware of how much you are spending, you will not be able to properly set a savings goal. We recommend with each of your checks, to transfer a portion of around 15-20% to your savings.
Most banks have a feature within your app where as soon as a direct deposit is made available. It will automatically put a previously decided on percentage from that check into your savings account. If this is not available with your bank, there are many finance apps that will do this for you.
Apps like Digit are synched with your accounts, and not only organize your spending habits onto an easy to read screen. But will also automatically pull money directly to your savings accounts.
5. Different Levels of Emergency Funds
Rainy Day Funds Financial Tips
Emergencies happen to all of us, and usually without warning. Since we never know when one can strike us, it’s a good strategy to have an emergency or “rainy day fund” for times like those. Rainy day funds should be saved for smaller expenses and one-time inconveniences that abruptly affect your daily lives.
Typically, rainy day funds usually range between $500 and $1000 dollars, but this of course will look different to everyone. In short, you can view your rainy day funds as a way to get you through until your next paycheck, just in case anything happens.
Walk Away Funds
Women especially, are also saving money in what they call a “walk away fund.” For the rare instances that you would have to quit your job, move homes, and even leave your partner, having a walk away fund keeps you in a position of power.
Saving up around $1,500 for these types of instances puts you in a safe space to face any potentials that may arise. These situations are not ideal, and they aren’t really things we particularly plan for, but it’s good to know you can depend on it if you ever need it.
Emergency Funds
For the biggest disruptions in our lives, it’s good to have some money set aside for any potential emergencies. A good rule of thumb when deciding how much to put away, is the total amount of your monthly expenses, multiplied by three or six.
Again, this will look different for everyone, and may need to be adjusted if you have kids that will also need to be financially supported.
6. All Women Should Know Their Credit Score
Do you know your credit score? Odds are, unless you are enrolled in one of the three bureau’s systems, your credit score has probably changed since the last time you looked at it. Besides simply being aware of your credit, knowing the number will also provide useful in case there are any discrepancies in your report.
If you find that your score is unfavorable, the first step you should look into is paying off your debts, even if it’s only $50 a month. Each little bit, definitely adds up over time and can prove beneficial to your overall credit score.
You can also keep improving your score by staying on top of your payment deadlines, and never being late or missing one. Of course life happens, so if you do happen to miss a deadline, it might be worth it to reach out to your creditor and ask to have the late fees removed.
There is a bunch that goes into your credit score, so it’s important to stay on top of it.
7. Invest In Your Kid’s Future With a 529 Plan
Depending on where you are geographically, up to 40% of children are raised by a single mother. First of all, thank you to all single mothers out there that are working hard for themselves and their families.
Secondly, as the sole provider it’s your job to plan for your child’s future., which can seem scary, but there are plans in place to help ease that burden.
A 529 Plan helps you in saving for one of the largest aspects of your child’s future, their college education. 529 plans is further divided into two different types of plans. Plans to even further help moms figure out the plan that makes the most sense in saving for their child’s education.
You have your choice between savings plans that are tax-deferred allowing for tax-free withdrawals if used for education purposes.
On the other hand are prepaid tuition plans that allow you to lock in the current tuition rate for particular colleges within your state. Since college tuition rates consistently rise, it’s a great tax advantage option. Each state offers different programs for each college. And there are even some that work with people who are not state residents. Saving for higher education can be overwhelming. But saving up a little bit over time can help lessen that financial blow when your babies turn 18.
8. Women Need To Know About Investing
Part of the preparation for your future to make the most of your money is investing. While we completely understand being cautious about investing your own money, not investing can mean you may miss out on long-term gains that can help you financially later on.
Team Up With an Advisor
Investing and managing your money can seem daunting. If this is your first time really taking control of your finances, you may feel overwhelmed. That’s why we recommend working with an advisor that you trust. He will help you make important decisions for your financial future. Think of a financial advisor as a personal trainer, who keeps you inspired and moving forward, even when you see no progress.
Advisors are great at being able to focus on the big picture of your money, where you might only be able to see what is right in front of you. They can also bring major peace of mind. Especially when you find one that you can relate to and communicate with easily.
Interaction with your financial advisor is completely up to you. Whether you are interested in a one-time consultation or will prefer periodic check-ins, just like you are in complete control of your future. You are in complete control of who you allow to help you with your finances.
The Stock Market Isn’t Scary and It’s Not Just for Men!
When beginning the journey of investing, a good rule of thumb is to invest less than 5% of your net worth. If you are financially stable to not need access to that money within the next 5 years. One of the best places to start out is investing in what is called an index fund.
Think of it as a collection of a bunch of different stocks. It can be a collection of the top 500 stocks, or it can be a collection of the best green-energy stocks.
Women Invest Differently
Generally, women don’t approach decision making and financial decisions in a completely different way than men do. Women take into consideration risks, far more than males, especially when investing. Even how we view risks is different. As we approach it with a less aggressive, and more thought through aspect of investing.
We also tend to focus more on our integrated financial goals. Goals like our careers, family, and taking care of ourselves, far more than beating a financial benchmark. In retrospect, this usually results in women investing. Investing in more meaningful financial tips that are specifically focusing on our life’s circumstances.
Not only for us but also our families and loved ones are on our minds when making financial investing decisions. We understand the value of family, and therefore make it a priority in every aspect of our lives, including finances.
Women and Money
Overall, women are more relational with their money in comparison to men. This simply means we do not necessarily grow by results and processes. But more so the outcome and how it will impact us and the ones we love.
This is an essential part of building an investment strategy. Because you need to be fully aware of how your money and investing. It will affect you not only right now, but also in the future. Investing is all about working towards your future. This is an area women excel in, because seeing the big picture and planning for it is just part of our natural repertoire.
Key Financial Tips to Note for Women Looking to Start Investing
In order for all women to be able to cash in on their investment opportunities, we have created a quick reference guide to keep in mind. Keep this guide in mind when working towards your investing goals.
The earlier you invest, the more money you can accumulate overtime. This is the essential point of compound interest. Compound interest is when your investments earn interest on not only the original amount you’ve invested, but on the interest you’ve earned.
You’re earning interest on your interest (remember the Compound Interest calculator from our 401K blurb at the beginning of the article?) Understanding compound interest and the time value of money is one of the most important things to remember when investing.
There are plenty of apps that are available specifically toward beginners. One of the most popular investing apps is Robin Hood. Here you can start dipping your toes into the stock market pool. You get to do so without paying any type of commissions or trading fees.
Another great app that seems to be popular among both women and beginners is the Acorns app. This even helps to automate your savings and allocate them directly towards your growing investments. Thus provide great financial tips!
Once you have found an investment strategy, commit to it. Whether you are working with financial advisors or are going in alone with your personal financial tips, make sure you are personalizing your portfolio. Also, make sure that you are developing a strategy that perfectly suits your financial situation.
Consider your personal goals, objectives to meet over time, your current tax bracket, and the time you can commit to managing your finances when creating your investing strategy.
Regardless of where your focus is investing can help you get there. Make sure you have a clear and viable path and plan in place. This will ensure you are constantly moving forward financially. Make sure you do your research, and most importantly trust your gut. Women can and have been successful investors in the past, it’s your time to shine now!
9. All Women Should Have a Financial Plan
A comprehensive financial plan goes beyond saving and investing with awsome financial tips. It gives you a better outlook of your finances as a whole. There are many moving parts of your financial life. Having a plan in place to stay on top of them is one of the best strategies. This is one of the best we can offer women out there looking to get control of their finances.
Your financial plan should review your income, expenses, and investments in a broad sense. This way you to get an overall outlook on your current financial situation. Then, you should dive into your retirement planning, income taxes, insurance, and estate planning need. This is a further trick to further comprehend the many aspects of your financial plan.
Financial Plan is Crucial For Your Family Well being
Keep in mind saving for your children’s education and other possible expenses. And your plan may even include a rainy day fund. Each woman’s financial plan will look different. Because we all live different lives, and there is no one correct way to plan your finances.
Women are serving even being the caretakers, and in some situations, the breadwinner for their families. In these situations, it might be too much for you to create your own plan. There are certified financial planners out there whose sole job is to create comprehensive financial plans specifically for you.
Whether your goals are to invest, set up a retirement, or just simply getting control of your money, having a financial plan is vital. It is vital regardless of who creates it.
Financial independence is so much more than having a certain amount of money. Like we’ve mentioned above, there are many aspects that can affect your finances, and they are all important. Finances and investing give us the ability to have confidence in making decisions that affect our lives and the lives of those we love.
Regardless of gender, we all need to take control of our financial lives. But women especially need to step up and represent other females in a typically male-dominated arena. In doing so, each woman can be a part of the drive for a truly gender-equal world.
