Wednesday, June 5, 2024

Five Ways for Women to Take Charge of their Financial Futures

 

I recently attended a webinar about women’s finances presented by the FINRA Investor Education Foundation in cooperation with the New York Public Library. The webinar began with a justification for focusing on financial planning for women. Among the statistics that were presented from various studies are the following:

 

¨   37% of women have high financial knowledge (vs. 57% of men)


¨   59% of women feel anxious about their finances (vs. 52% of men)


¨   48% of women (vs. 40% of men) find it very or somewhat difficult to cover monthly bills


¨   48% of women (vs. 53% of men) have access to an employer retirement savings plan


¨   In 2020, women controlled $10 trillion of assets; projected to rise to $30 trillion in 2030



Following the introduction, the following five steps for women to take charge of their finances were presented:

 

Set Financial Goals- Goals should be SMART (specific, measurable, achievable, realistic, and time-bound) with a target dollar amount and deadline. SMART goals should be written down and prioritized with periodic reviews and revision, if necessary. It is not necessary to achieve one financial goal before starting to save for another. Multiple financial goals can be funded concurrently. For example, debt repayment and savings for a new car and retirement.

 

Start an Emergency Fund- Even modest savings amounts make a difference. A study by SaverLife® found that maintaining a savings balance of $100+ is correlated with avoiding high-cost borrowing, greater financial satisfaction, and a better ability to pay utility bills. Webinar attendees were encouraged to aim for 3 to 6 months of essential expenses in emergency savings, automate savings if possible, and put tax refunds to work by saving all or part of them.

 

Get Involved With Family Finances- All women should understand their household’s cash flow (income minus expenses) and net worth (assets minus debts), even if they are not the lead financial manager in their family. This includes understanding characteristics and amounts of different categories of investments including retirement savings plans like IRAs and 401(k)s.

 

Know Your Investing Options- Major investment categories include stocks, bonds, cash equivalent assets (e.g., money market funds and certificates of deposit), mutual funds, and exchange-traded funds (ETFs). When investors diversify, they reduce risk by spreading out their holdings. Stocks can be diversified by selecting different industry sectors and company sizes and bonds can be diversified by types of issuers and different maturities.

 

Start Saving for Retirement- U.S. adults are living longer and women live about 5.8 years longer than men, which needs they need to accumulate adequate savings to create a “paycheck” in retirement. Three tips were provided: understand your retirement savings plan, automate your contributions, and learn about the tax benefits of IRAs and employer plan contributions.


This post provides general personal finance or consumer decision-making information and does not address all the variables that apply to an individual’s unique situation. It does not endorse specific products or services and should not be construed as legal or financial advice. If professional assistance is required, the services of a competent professional should be sought.

 


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