Do you spend more time thinking about a new pair of shoes than your financial future? Many women do. Our boutique firm specializes in financial planning and investment advising for women who find themselves “Suddenly Single” due to divorce or death of a spouse. Over the last several years working with women clients, we have collected a number of reasons why women aren’t planning for their future financially. Some of the more common excuses are:
- I don’t have enough money to save anything.
- My husband did all the finances.
- I don’t know how much I need for retirement.
- Retirement is too far away to be thinking about it now.
- I don’t know how to invest money or who to trust.
- I never thought I would be in this situation.
It is time that we, as women, get on the bandwagon and become financially savvy. It doesn’t mean that you need a PHD in finance, but it does mean that becoming financially literate and working with professionals who are knowledgeable and experienced in financial planning is essential. There are 3 main reasons that we need to get our acts together.
The first is women tend to live longer than men so women generally need more money to outlive their assets. Add the casualties of divorce or death of their spouse, a woman is likely to be a sole provider at some point in her long life. For many women an unanticipated event, a divorce or being widowed, creates a panic situation where they suddenly need to get educated. It becomes even more critical when the women have not been the partner responsible for the family finances. At minimum, spend time with your spouse and collect account numbers and passwords. A simple thing like that will save endless hours and great anxiety if an emergency happens and you end up responsible for the finances. Getting educated before something drastic happens, a life-changing event happens, is a priority.
A second, and equally important fact is that women typically have fewer years in the workforce. Women often spend 10 years or more out of the workforce raising their children or taking care of parents. If you’re out of workforce, you’re not earning money and you’re not saving for retirement. If you are not spending the time in the workforce, you’re not participating in your 401(k) or 403(b) or whatever employer retirement plan may be available to you. Do whatever you can to contribute so that you can collect an employer’s contribution to your retirement. It’s leaving money on the table if you don’t collect that part of your employment benefits.
A third characteristic of women is that women feel less confident about talking about their finances than their male counterparts. The more you know and are comfortable with why you should be saving, and how you should be utilizing the money, the easier it gets to manage. Find a qualified professional that you can talk to about your money fears, woes and worries. There is no need to lose sleep over something that can be fixed. Take little steps to financial security by incorporating the steps below. Some things will be easy and others will take a bit more time. As you become comfortable and educated these things will become second nature and you will feel your “financial confidence” soar.
Steps to financial security:
- Create a budget. Include your special treats like the caramel Frappuccino and the “must haves” not included in your daily expenses like that handbag that you can’t live without. We all have those items that we can easily justify but tend to throw the budget off significantly.
- Stop paying bank fees and late payment charges. The mentality of “giving money away” will prevent you from claiming it as your own.
- Have an emergency fund. Claim back those sleepless nights because you cannot figure out how you will pay an unexpected expense.
- Take advantage of free money. The obvious choices are employer matching contributions to retirement, but there are others if you look hard enough.
- If you ask a recently retired person, “what would you have done differently?”
The answer is almost always, “I would have started saving sooner.”
- Get a financial planner to set your goals. Most often, people use an investment advisor thinking that they will help put together a financial plan that will be successful. Most financial advisors are commissioned based and you may find that the only retirement that you are funding is theirs.
- When choosing investments, look at what you can gain and what you can lose. When the market goes down, and it will, if you are properly invested you will be patient and relaxed because you are protected on the downside. People who panic are usually not in the right investments for their risk tolerance.
Unexpected things happen in life. That is just the way it is. And the more prepared we are for them, the better able we are to deal with them. Make your financial literacy a part of your daily life and as the months and as years go by, you will be amazed at how much you know about something you never cared about before.