All around women have been taking giant strides and breaking boundaries in many industries. This is a significant shift from managing households to managing businesses. However, women still seem to struggle when it comes to money matters and their personal finance.
Poor money habits or lack of proper financial know-how can lead women to take poor financial decisions. To ensure financial independence, women need to be more confident and sound in all money matters. Women who practise good money habits can take good financial decisions and turn money into their best friend.
So what can women more to improve their money habits and empower themselves to run their financial life? Let's understand.
1. Educate Yourself on Basics
Before getting involved in strategies for a solid financial foundation, take out some time to learn about money management and how to invest; according to a survey, women, on average, are less comfortable making retirement decisions, and hence exhibit lower levels of financial literacy compared to men. Data shows only 32% of women with a bachelor's degree are comfortable managing their investments.
If you aren't comfortable managing your money, you can start reading books on personal finance, following financial content online and contacting local nonprofits to ask about free educational resources that can be available to you. You can explore social media for relevant groups to join or follow to upgrade your knowledge about personal finance. If you get overwhelmed or confused while studying, seek professionals for help.
2. Set Some Financial Goals
When you set goals, you give yourself solid targets to work towards. This exercise helps you with a starting point to flesh out the necessary steps to turn your dreams into reality. When you are setting financial goals, think of what excites you, and then set realistic targets to achieve them. This will motivate you to keep hustling even if the road gets a bit rocky.
Set both short-term and long-term goals. Short-term goals are achievable within one year and give you those small victories that propel you to move forward. Long-term goals like retirement planning or building your child's college fund require more effort and time but still doable.
Be mindful because plans sometimes change over time. Be sure to revisit your list of goals and make adjustments based on where you are in your life with your finances.
Also read: How to Set Achievable Financial Goals
Make a budget and stick to it.
The first step is to gather all your bills and payments and then write down your monthly income and expenses. Break up your expenses into needs and wants. Further, subtract your expenses from how much you make every month. If you don't have enough savings goals, see what you can cut back on or start a side hustle for your hobby.
Following a spending plan may seem restrictive and difficult initially, but doing so can help ensure you meet your financial goals promptly. A budget enables you to prioritize your monthly expenses by placing your needs before you do not run out of money each month. Revisit your budget time to make adjustments. A realistic plan can help you become financially independent faster.
Also read: Why Is Budgeting Important? 5 Key Benefits
4. Build an Emergency Fund
An emergency fund is an integral part of a healthy financial plan. It's a way to protect your finances against unexpected events, like a job loss or medical emergency. If you don't have enough funds for a rainy day, you should start taking steps towards building an emergency fund. Every time you get a paycheck, it is a priority to save some money.
To simplify, have your employer directly deposit part of your paycheck into your savings account. Apply this habit, and you'll be ready for that uncalled rainy day when it comes.
5. Retirement Planning
Women's annual contributions to retirement accounts are 30% lower than men's contributions. Every six women, on average, face a more significant retirement savings gap than men and thus experience higher poverty rates later in life. Most women are found to work part-time jobs that don't qualify for a retirement plan and interrupt their careers to take care of family.
Ultimately, fewer years of work lead to more periodic retirement savings. All of this shows even more reason for women to prioritize retirement, saving early in their professional lives.
The earlier you start, the longer you have to multiply your money through compound interest. Creating young also saves you the hassle of playing catch-up and making hefty contributions that stretch your budget thin later.
Take advantage of your retirement plans offered by your employer, and if your employer doesn't offer a retirement plan or if you're self-employed, use an IRA if you seek more flexible investing options. Be sure to contribute to the employer match first before funding your IRA.
6. Avoid Debt
Some debt like mortgages and student loans are OK to take, but only if they fit in with your overall budget. Those kinds of debts are considered "good" debts because they're investments.
"Bad debts" include high-interest credit card debt. Credit cards are convenient and safe to pay for things, but making them work for you is not. It's critical to keep from using credit cards to finance your lifestyle, as the double-digit interest that accompanies these little pieces of plastic can make it hard for you to get ahead financially.
The best way to avoid debt is to create a financial plan and stick to it. If you're suffering these kinds of effects, seek the help of a licensed professional.
7. Learn and Grow From Your Past Mistakes
Experience is the best teacher. Instead of being ashamed of past financial missteps, learn from them. Everyone can grow from the financial mistakes they make. Create a list of the errors you've made thus far. Next, note how you acted, what went wrong, and what actions you can take to prevent history from repeating itself.
This may be a painful exercise in the short term. However, it can be crucial to identify money moves to avoid in the future and give yourself the best chance at long-term financial success.
(Check out 'Learn & Grow with Wizely' 'to read and learn all about personal finance and financial planning.)