September 2017 Monthly Insight: Five Financial Tips for Women

Posted By Kim Spencer, CFP®, CDFA® on Sep 6, 2017


You may wonder at the title of this section. Why are financial tips for women different from financial tips for men? Don’t we all need the same information? The answer is no. Women are different from men in many ways, including the ways in which they manage money and learn about finance. Eleanor Blayney in her book “Women’s Worth: Finding Your Financial Confidence” reveals that, for women, money is a source of both worry and reassurance. Women also see money as a finite resource; men see it as renewable. Women tend to feel that if they invest aggressively, the money can be lost with nothing to replace it, whereas men believe they’ll just earn more.

#1: Be Educated

It is a well-known fact that risk aversion, along with gender pay gaps and fewer wage-earning years, can result in a significantly lower balance in a women’s retirement savings. Unfortunately, our society holds on to the belief that “finance” is beyond a woman’s ability to understand and manage on her own. The first financial tip, therefore is to be educated. The time is long gone when women need to rely on someone else in their lives to manage their finances. The website Wife.org sells a bumper sticker that says “A man is not a financial plan,” and that’s never been truer than it is today. At some point in their lives, over 80 percent of women will be the financial head of their household.

#2: Begin at the Beginning

On to tip number two: Begin at the beginning. Sit down with all your financial statements and figure out where you are today. Look at both sides of the ledger, all of your assets and all of your debt. List your assets on one page and your debt or liabilities on another. Add them up and see where you are. You may need to pursue a debt repayment strategy, or move on to beefing up your savings.

#3: Examine Your Retirement Savings

Tip number three is to look at what you’re saving for retirement. Are you increasing the amounts that come out of your check each time you get a raise or a bonus? Are you contributing at least the amount of your company’s match? If you don’t have a retirement plan at work, are you contributing to an IRA each year? Retirement can seem a long way off with plenty of time to start saving, but starting now will make a large difference in how much you end up with when you are ready to retire. Check out our blog from February 2017 about exponential growth.

#4: Live by the 10/10/80 Rule

Tip number four is to live by the 10/10/80 rule. This rule states that you should give away the first 10 percent of your earnings, save the second 10 percent and live on the remaining 80 percent. You may have heard the expression, “spend less than you make” as the secret to financial success, and this is part of that. We live in a world that is focused on immediate gratification: conveniences like drive-thrus for just about everything you can think of, pre-made food at the grocery store, and a world of information and entertainment at our finger tips. Instant gratification is not, however, the way to financial success.

#5: Don’t Put Your Finances On Auto-Pilot

Tip number five is to not put your finances on auto-pilot. You must be involved in managing your financial life; it’s not something you can set and forget. Our lives are constantly changing and we may have to make adjustments as we go along. Check the investments in your retirement plan and rebalance at least once a year. If there has been significant growth in one area, your plan may be out of balance. It’s always hard to take from the winners and give to the losers in your investment account, but it will keep your account from taking on too much risk. Proper asset allocation is one key to having a successful investment account.

These tips will get you started; give us a call if we can help with any of them or to discuss your situation in more detail. We love helping our clients get the information they need to be successful.