When it comes to financial management, women face unique challenges over their male counterparts. Less than a quarter of the adult female population feel they received sufficient preparation from their parents concerning financial matters. This lack of preparation has left many women struggling to handle their financial future. Women need to take control of their financial independence. Below are a few tips to help get you started.
1. Make Budgeting a Priority
Creating a budget will allow you to track your spending habits, determine if you have income shortfalls, and allow you to save for your future financial goals. Even a simple budget will help you to get and stay on track. Calculate your monthly expenses, including the amount of money you want to save each month, and subtract it from your monthly net income. If there is a shortfall, you may need to cut expenses or find ways to supplement your income.2
2. Prioritize Investing
Investments are a great way to set up another income source and an excellent vehicle for growing savings. Investments can help to combat inflation and may provide you with consistent dividends that are a great supplement to your income. Investing is a great way to increase wealth if you appropriately evaluate your risks and investing goals before making the jump. For some people, short-term investments are the ideal vehicle, while others may want to grow money for retirement through long-term investments.1
3. Be Prepared for the Unexpected
Significant expenses happen when you least suspect them. Without an emergency fund, those unexpected expenses will quickly derail your budget and eat into savings. Make funding your emergency savings part of your budget. When you have to pull money out of it, replace it. If possible, put aside three to six months of expenses in the emergency fund. This will help you through significant issues such as job loss or medical leave.1
4. Plan for Retirement Early
The earlier you begin to save for retirement, the longer those investments have to grow. On top of that, women will live an average of six to eight years longer than men. This means that your retirement money will have to last longer. If you have an employer match for your 401k, try to max out your contributions up to the maximum match. You also may want to look at other retirement options, such as Roth IRAs.2
With many women making less than men and relying on retirement funds longer, it is critical to learn how to plan for their financial future. Women may find more struggles on the road to financial independence. Yet by improving their financial literacy and focusing on saving and investing, they will be starting down the path to a brighter financial future.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial professional prior to investing.
Investing involves risks including possible loss of principal.
The payment of dividends is not guaranteed. Companies may reduce or eliminate the payment of dividends at any given time.
The Roth IRA offers tax deferral on any earnings in the account. Withdrawals from the account may be tax-free, as long as they are considered qualified. Limitations and restrictions may apply. Withdrawals prior to age 59 ½ or prior to the account being opened for 5 years, whichever is later, may result in a 10% IRS penalty tax. Future tax laws can change at any time and may impact the benefits of Roth IRAs. Their tax treatment may change.
All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.
This article was prepared by WriterAccess.
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1 “Guide to Achieving Financial Independence for Women, Money Geek,” https://www.moneygeek.com/financial-planning/resources/womens-guide-to-financial-independence/
2 “Men have over 3X more retirement savings than women—7 steps to make sure you are financially secure,” CNBC, https://www.cnbc.com/select/financial-steps-for-women/