When’s the last time you took inventory of your finances—not a quick glance at your bank account balance but an in-depth review of your spending habits, earning goals, and investment opportunities? Financial literacy can sometimes fall to the wayside with all of our many responsibilities, but it’s truly the foundation of our lives. Financial decisions are the foundation of most life decisions. Financial literacy can refer to many things. National Financial Educators Council defines financial literacy as “possessing the skills and knowledge on financial matters to confidently take effective action that best fulfills an individual’s personal, family and global community goals.” Emphasis on the skills and knowledge.
Money is a taboo topic in our society, especially among women, but we’re breaking the ice on that and opening ourselves up to financial decisions that make dollars and sense. You can make better financial decisions by being aware of your spending, saving, investing, and investment. There are many options that can help you improve your bottom line. These tips will help you get closer towards a healthy financial position, regardless of your current financial situation.
Ditch Limiting “Money Rules” and Reclaim Your Relationship with Your Finances
There are so many arbitrary “money rules” that affect our inter- and intrapersonal relationships with money. These are the cardinal money sins and must not be broken. For example, men should be the financial breadwinners and women should accept salary offers without negotiating. These are just a couple of common “rules,” and you can probably think of more based on your own personal experiences. Despite social limitations, women have the greatest ability to change these rules. 90% of household financial decisions are made by womenThis means we have the greatest impact both on our own finances as well as those of our loved ones. As women, it’s critical that we leave these dated, unnecessary rules in the dust because they have never benefited us, and in fact, our obedience to them costs us in major ways. Women earn an average of $15,000 per year. 86 CentsFor every dollar men make. This amounts to approximately $900,000 for a career of 40 years. That’s almost $1 MillionUnearned money. We’re leaving funds on the table, ladies, and it’s time for us to be more vocal and vigilant about our financial potential.
Identify Your Financial Goals
Are you saving for a car? A career move that offers a different salary? Planning for retirement and starting a family? Investing in NFTs and other cryptocurrency? Each of these are real financial decisions that require planning and preparation. But you can’t be strategic or deliberate about your financial decisions until you assess how the decisions impact your overall financial goals. Charles Schwab, a financial institution, releases an annual modern wealth indexThis survey asks Americans about their financial habits and financial plans. The index categorizes your goals into financial security, financial happiness, and financial wealth. Which goal you set your sights on will depend on how you define them and your individual lifestyle. But whichever goal you choose, it’s Your Your financial goals should be aligned with your financial decisions. Understanding and being comfortable in your financial goals is the first step towards changing your financial situation. You have to know where you are in order to get to where you’re going.
Write down your financial plans
Charles Schwab says that only 5% of the population is eligible for this benefit. 33% of AmericansA written financial plan. This is a huge missed opportunity for the remaining 77% of Americans. People who have their financial plans down are more likely to have better financial outcomes. A plan will help you feel financially stable by having an emergency fund, not carrying any credit card balances, and considering investment options. Your financial plan should be written as well as your personal goals. There’s something about seeing the words on paper (or screen) that makes it more real. Of the 77% of Americans without a written financial plan, 42% say it’s because they don’t think they make enough money to need one, but this is a misconception. Even if you live paycheck to paycheck and there’s little room in your budget for anything extra, planning what you do with the funds available to you will help you see where your money is going, where you can cut costs, and which parts of your plan could use some strengthening. Don’t underestimate the power of the pen!
Be strategic about credit and debt
Credit can quickly become a slippery slope. As if actual credit cards weren’t enough, now we have things like Klarna and Afterpay that allow us to buy now and pay later (no shade to credit companies, Klarna, or Afterpay). The immediate gratification of credit use can feel pretty good, but it’s getting stuck on those buying rushes that can lead to trouble. Debt isn’t necessarily bad, and if used wisely, it can enhance your financial options. Access to funds and a well-timed payment schedule are the keys. If you spend more money than you actually have, it is a deficit. This isn’t a good place to be, and depending on how far into deficit you get, it can be very difficult to get out. Remember that most credit is unsecured. You owe the amount you spent. plusA percentage of the interest earned on this amount will be charged to you. The higher your balance, the more interest you pay. Not only should you have the funds available to pay all or most of what you’ve charged on credit, but you should also time payments according to your billing cycle. If you have a recurring billing cycle, for example, Make payments before interest is calculated on your balance, you’ll pay less in interest and more of your payment will go toward your actual balance. You’ll also have more credit available to you this way since the amount you owe on the principal balance will be less, and you’ll be debt-free quicker if that’s one of your goals. This will most likely mean paying your bills. Before Your due date. If you’re in the financial position to make early payments on credit card debt, it’s not a bad option to consider.
Look for easy investment options
It can be daunting to invest. There are many investment options that offer different risk levels and opportunities. Even the smallest risk may seem too daunting for those with limited income. However, investing can make a big difference in your financial position if you change your thinking and look for low-hanging investments. How others invest can impact the strength of your investments, which can cause performance fluctuations. However, there are some “safe” investment options that are minimally impacted by fluctuations and carry less of a risk. Make sure you are enrolled in a 401(k), if your company offers one. The plan will take a portion of your check and place it in an investment account you can access when you retire. Many companies will match some portion of your contribution. This basically means that money goes into the account for free. The delayed gratification of having a large sum available to you once you’re no longer working will be enormous, but if you absolutely need to access your 401(k) funds early, you can. There are penalties for early withdrawal and the IRS will tax the funds as income, but if you’re in a pinch and need money, it’s a nice plan B to your plan B. Remember, though, that it takes time for the funds to add up, so don’t expect to have a substantial amount available if you haven’t been contributing to the plan for very long. Other “safe” investment options include U.S. Treasury bondsPurchase Stock optionsIn publicly traded companies, and buying property to rent or lease. List of temporary stays.
Talk about money like you talk about anything else
We’ve all heard it before: Never discuss your salary or earnings. It’s “unladylike” to talk about money. How much you earn is not anyone’s business. These are just a few sentiments that contribute to women’s tendency to be uncomfortable with having conversations about money. There are many reasons for the general discomfort, some of which are very valid. However, there is still room to relax and have conversations that advance our financial goals without being intrusive. Try having light and optimistic financial conversations with friends, trusted coworkers, or family members: “You’ve been working so hard on this project! Have you considered asking for a pay increase?” “I’m setting money aside for my emergency fund, so I can’t make the trip this time.” “I haven’t treated myself in a while, so I bought [insert item/service] as self-appreciation!” Avoiding specific amounts, clearly articulating goals, and encouraging financial enjoyment are easy ways to incorporate money into your conversations.
Create a financial foundation and access resources to support it
There are many stigmas associated with money and finances. Many of these stigmas are experienced firsthand by women, which can have a negative impact on our financial potential. Beyond the gendered views of finances, there are also regional, cultural, or even familial differences that can impact our relationships and money. Many people want to have better relationships and more money. There is always room for improvement. Fortunately, financial relationships are one of the most personal relationships we have with ourselves, so that means it’s ongoing and constantly evolving. As we move through life’s changes, our finances flow with us. Just like any relationship, we have high seasons and low seasons, so it’s critical to have a sturdy baseline that puts you in the best financial position with any given situation. Your “best financial position” is relative and might look different now from how it looked in the past or how it will look in the future. That’s why your baseline is so important.
Once you have established your baseline, you can begin to explore financial options with a financial advisor or wealth management planner (bonus tip!A financial advisor or wealth management planner can help you to identify the best strategies and make recommendations for your specific situation. If you’re struggling with even identifying your financial baseline, a financial planner could help you with that too. Many financial professionals offer free consultations and some of their regular services even come with no cost. You can take advantage of your resources. All you have to do is look at what they are. These are the tips and next steps. Now, get to work!
Source: The Every Girl
