By Michael Gold, CFP®, MBA
We all face financial challenges as we walk through life, but unfortunately, women experience unique obstacles not often faced by men. Even with all the economic progress women have made over the decades, and even though they make up almost 47% of the workforce these days, (1) they typically earn 85 cents of every dollar earned by men. (2) They usually spend fewer years in the workplace because they may take time off work to raise children or take care of elderly parents. Since women generally live about 5 years longer than men, they have fewer years to save a higher percentage of their income, to fund their longer retirement.
Doesn’t seem fair, right?
That’s why women need to be even more informed and empowered concerning their financial opportunities and learn how to maximize what they have. Here are a few key principles all women should know about personal finance to thrive financially.
If you want to move closer to your financial goals, you need to track your spending. Even if you have a high net worth, you may be surprised at how much more you could save if you cut unnecessary purchases. It could potentially equate to thousands more by the time you retire. A recent study shows that only 23% of women make the primary decisions about their family’s day-to-day finances. That number drops down to 18% when it comes to making decisions about longer-term retirement and investment planning. (3) If you’ve left budgeting up to your spouse or partner until now, set aside one night a week to go over the details and get on the same page. It could save you a lot of heartache and frustration down the road should something ever happen to your spouse or your relationship.
Once your budget is solid, start finding ways to save more money. There are typically two ways to do this: decrease spending or increase income. The most effective way is a combination of both.
Small everyday purchases add up to a large amount of money over time. Think about ways you can decrease spending without depriving yourself. For instance, could you make your own coffee throughout the week instead of grabbing a cup on your way into the office? If you want to increase income, could you ask for a raise at your current job, rent out your spare bedroom, or start a side job?
Whatever you do, make sure you take advantage of your retirement plan. Whether it’s an employer-sponsored plan or a personal plan, contribute as much as you can—especially if you’re near retirement. You’ll thank yourself later.
Investing is a great way for women to close the gender pay gap and save extra money for retirement. Did you know women typically have a 0.4% higher return on investments than men? (4) It’s true. But women are also more likely to keep their money in a low-risk savings account than in investments because their earned dollars are more precious to them. Breaking this cycle and having a strong investment portfolio gets you one step closer to reaching your financial goals and living your dream life in retirement.
Given the right tools and education, women can succeed in reaching every financial goal they set for themselves. It may be overwhelming at first, but the more you know about investing and the more you do it, the easier it becomes. The best way to gain momentum in reaching your financial goals is to seek help from a trusted professional.
At Gold Family Wealth, we can help you build a financial plan and investment portfolio that works for you. Want to learn more? Reach out to us at firstname.lastname@example.org or (800) 303-2533 to schedule a complimentary consultation and start taking control of your finances!
Michael Gold is the founder, president, and CEO of Gold Family Wealth, an independent wealth management boutique and named one of the Top 100 People in Finance. Michael has 20 years of experience in the financial industry and has a bachelor’s degree in business and economics from the State University of New York College at Oneonta, an MBA from NYU Stern School of Business, specializing in Quantitative Finance and Leadership, and his CERTIFIED FINANCIAL PLANNER™ (CFP®) credential. He serves business owners and entrepreneurs by stress-testing their financial plan to identify red flags and missed opportunities. Michael strategically outsources professional experts from various fields, such as tax, insurance, retirement and trust, and estate law to collaborate on potential solutions to help position his clients to achieve their desired goals.
Michael currently lives in Westport, CT. When he’s not working, you can find him spending time with his wife, Giselle, their three children, Sebastian, Aria, and Pierce, and their dog, Charly. To learn more about Michael, connect with him on LinkedIn.
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