How to be financially successful at every stage of your life.
There aren’t different rules for women when it comes to personal finance and money management, but there are certain challenges that women face throughout their financial lives. Knowing what those challenges are can help you plan ahead and create effective strategies for reaching your financial goals.
Fact: A 2013 survey found 53% of women were primary breadwinners. However, only 23% of those felt equipped to make financial decisions.
With that in mind, we’ve created this useful guide to women’s finance. We break out the challenges you’ll face at any stage of life that may come. This way, you can make effective plans for you and the rest of your household. You can plan ahead to make the transition from one stage to the next easier.
If you still have questions or you need help, call us or fill out the form to the right. We can connect you with the right professionals to address your concerns and help you find solutions.
Financial Life Stage 1: Money management for school
Going away to school is often the first time you gain financial independence. Even if your parents provide money so you don’t have to work, you’re still likely to be in charge of the day-to-day oversight of your finances.
You may also start to get credit card offers that you can sign up for on your own. At the same time, if you get into trouble, you can’t just depend on your parents to bail you out. You may be on the hook for whatever debt you incur.
Fact: In 2012, 71.3% of female high school graduates moved on to some type of college – 10% more than men.
The following tips can help you manage your money effectively while you’e in school:
- Create a budget. Even if you’re only responsible for a few bills and minor expenses, make a budget so you know where your money is going.
- Use on-campus meal plans. You save money on food using a campus meal plan. It’s also easier to plan ahead for in a budget, and usually healthier for you, too.
- Don’t be tempted by high-interest store cards. Retail stores often target young female shoppers with in-store credit card offers, but these cards can cause problems with debt even more often than traditional credit cards.
- Don’t procrastinate on bill payments. Late payments can get you into trouble with service providers and lead to collection problems. Late debt payments get reported on your credit profile and can drag down your credit score.
- Don’t go overboard with brand name & specialty shopping. Shopping by brand and treating yourself is fine if you have the money for it, but if you’re in school you should be sticking to a budget and setting yourself up for success.
Financial Life Stage 2: Entering the workforce
Whether you enter the workforce directly from high school or after you attend college, entering the workforce is really where you usually establish your own financial identity and set the foundation for your future. You’re responsible for your own credit, debt and financial destiny.
Here are some tips to help you establish your outlook effectively:
- Always negotiate with your employer! Statistics show women rarely negotiate on salary, which may contribute to statistically lower pay rates. Understand your own value and negotiate so you can get ahead
Fact: Women are four times less likely to negotiate for higher pay than men; 20% say they never negotiate at all.
- Set up retirement savings early. Don’t wait to start saving long-term – especially if your job offers a 401(k) program. If not, consider opening an IRA or Roth IRA and set up automatic monthly contributions that work for your salary.
- Check your credit often. As you open more lines of credit (credit cards, loans, etc.) and manage the debt, your credit profile can change quickly. Check your credit report at least once every twelve months and/or sign up for a credit monitoring service.
- Don’t carry a lot of debt. Just because credit cards ask for a minimum payment, it doesn’t mean that you can’t pay more. Determine how much you can comfortably devote to debt payments and pay debt off as quickly as possible.
- Look into student loan debt relief if you don’t get the right salary right out of school. Student loans can be difficult to pay back if you have problems finding a job or don’t get enough salary on your first job. Look into student loan consolidation.
Financial Life Stage 3: Merging finances & building a family
Every time your household grows – whether it’s through marriage or adding kids into the mix, your financial strategy has to evolve. You have changes in your expenses and different goals that you’ll want to reach.
One of the biggest challenges during this time is how to blend your own financial perspectives with someone else. You may have to adjust your financial habits or meet in the middle with your partner.
- Talk about your finances as early as possible. Discuss when you want to pay bills, how you like to budget and how much money should be spent on various needs and interests. You’ll be less likely to have problems.
- Check your credit before you tie the knot. One partner’s bad credit habits can really potentially make it harder to reach your goals as a couple. Check your credit reports together. If bad credit is a problem for either of you, start fixing it immediately.
- Define your long-term financial goals. This conversation should include how you want to save for retirement, raise a family, buy homes and cars, and even plan ahead for vacations.
For more information on how to manage your money effectively as you bring kids into your household, refer to our guide on Money Management for Families.
Financial Life Stage 4: Retirement
These days, American workers are having trouble retiring on time without a need to at least take on a part-time job to support themselves. So you need to plan ahead as early as possible for retirement and make sure your outlook is ready so you can live out your golden years the way you’ve always wanted.
Here is what you need to do before and after you retire to be successful:
- Don’t rely on social security. No one knows what will happen to the program in the future. Benefits could be the same once you retire or they could be less.
- Use your company’s 401(k) if it’s offered.. A little money out of each paycheck as early as possible will go a long way when you’re ready to retire.
- Supplement with an IRA. Contribute to your 401(k) first if your company offers some kind of dollar-for-dollar match program, but then put extra contributions into your own account.
- Pay off your mortgage before you retire. The last thing you need on a fixed income after retirement is the big expense of a mortgage. A paid-off home means one less bill to worry about.
- Don’t try to support your grown children. You’re on a fixed income and you’re supposed to be enjoying the retirement you earned. Giving loans, co-signing or providing support puts your own outlook at risk.
Dealing with the financial detour of divorce
Even a smooth divorce is going to bring big changes for your financial life. So it’s important to know what to expect so you can plan ahead and do what you need to do to ensure you don’t fall into a bad financial situation because of a separation.
Fact: According to the U.S. census, women face an average decrease in household income of 37% following divorce.
The following tips can help you manage your money during divorce:
- Know what accounts and assets you share. Make sure you have documentation of balances and other details of all of your accounts – joint and separate.
- Check your credit reports once accounts are closed. Ensure that all joint accounts have been closed and you aren’t tied to your ex in any way credit-wise.
- Don’t hesitate to file for support – especially for kids. Sometimes pride can get in the way, but your kids deserve to grow up with every advantage possible.