What All Women Should Know About Personal Finance
By Maura C. Schauss, CFP® and Ann D. Blakey, CFP®, MBA
Updated from 5.10.2019
A few decades ago, it wasn’t uncommon for the husband in a relationship to be in complete control of the finances while the wife focused on other responsibilities to keep the family in order. So what would happen when the husband suddenly died or the marriage ended in divorce? The wife would often find herself struggling to get a grip on her new financial responsibilities. Fast forward to today. While challenges do exist, women can still reach all their financial goals. Here are a few topics ALL women should know about personal finance in order to succeed.
First, a little background for our discussion. Women make up over 47% of the workforce. But, women still face financial challenges not often faced by men. Studies continue to show that women typically earn 86 cents of every dollar earned by men, and they usually spend fewer years in the workplace because they may take time off work to raise children. Because women generally live about 5 years longer than men, this means women have fewer years to save a higher percentage of their income, so they can fund their longer retirement.
The good news is, knowledge is empowering. You can still reach all the financial goals you have set for yourself, regardless of these setbacks, by understanding your personal situation.
To reach your financial goals, you need to track your spending. Even if you have a high net worth, you may be surprised at how much more you could save if you cut unnecessary purchases. It could equate to thousands of more dollars come retirement.
A recent study shows only 23% of women make the primary decisions about their family’s day-to-day finances. That number drops down to 18% when it comes to making decisions about longer-term retirement and investment planning.
If you’ve left budgeting up to your partner until now, set aside one night a week to learn the ropes. It could save you a lot of heartache and frustration down the road should something ever happen to your spouse or your marriage.
Once your budget is solid, start finding ways to save more money. There are typically two ways to do this: decrease spending or increase income. The most effective way is to do a combination of both.
Small everyday purchases add up to a large amount of money over time. Think about ways you can decrease spending without depriving yourself. Could you make your own coffee throughout the week instead of grabbing a cup on your way into the office? If you want to increase income, could you ask for a raise at your current job, rent out your spare bedroom, or sell some of the items that have been accumulating in your home?
Whatever you do, make sure you take advantage of your retirement plan. Whether it’s an employer-sponsored plan or a personal plan, contribute as much as you can. You’ll thank yourself later.
Investing is a great way for women to close the gender pay gap and save extra money for retirement. Did you know women typically have a 0.4% higher return on investments than men? It’s true. But women are also more likely to keep their money in a low-risk savings account than in investments because their earned dollars are more precious to them. Breaking this cycle and having a strong investment portfolio gets you one step closer to reaching your financial goals—and living your dream life in retirement.
Given the right tools and education, women can succeed in reaching every financial goal they set for themselves. It may be overwhelming at first, but the more you know about investing, and the more you do it, the easier it becomes. The best way to gain momentum in reaching your financial goals is by seeking help from a professional.
At Washington Wealth Advisors, we can help you build an investment portfolio that works for you. Want to talk? Schedule a meeting with Ann, call our office at 703.584.2700, or email email@example.com. We are here to support your journey towards financial peace of mind.
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Washington Wealth Advisors is a fee-only registered investment advisory firm serving busy families, executives, women building wealth, and small business owners. We provide Wealth Advisory Services—financial planning coupled with asset management—guided by a personalized investment strategy based on each client’s unique goals. Our unbiased advice, independent approach, and proactive investment management help to support our clients’ overall financial peace of mind.