Are you the CEO of your family? Do you manage the finances, food, and household? If so, read this article to determine if you are also a financially savvy woman. This quick read outlines the habits of financially savvy women and suggests ways to verify your family is on track for financial success.
Women Are Breadwinners and Family CEOs
A Prudential study shows, “nearly half of women — 44% — are the primary breadwinners in their households, and 27% of married women now say they ‘take control’ of financial and retirement planning.” This means more women are controlling their personal and family finances. By default, this makes women also responsible for their family’s financial success. So it is very important for women to be financially savvy.
Most financially savvy women have a few things in common. For one, they know where they stand financially. Secondly, they pay themselves first. And lastly, they save. This discipline helps maintain balance in the home and the budget. If you are currently not a financially savvy woman, make changes to your financial habits today. Use this article as a guide to get you started.
Things Every Financially Savvy Woman Should Do
Do a Financial Check-Up
Financially savvy women know where they stand financially because they do periodic financial check-ups. It’s important to know how much you earn, spend, save, and owe each month.
Also, don’t forget to set financial goals. Each month check to see if you are closer to reaching your savings goals. If not, figure out where your money is going and make course corrections. If you owe a lot of debt, establish a debt pay-off plan. Then each month track how much debt you paid off and how much you still owe.
Set a Schedule to Track and Pay Bills
Savvy women are organized and may use a monthly budget to keep their expenses in order. If you do not have a budget, consider using Mint to help you track your purchases and pay your bills.
In my household, I handle most of the finances. To help our family stay organized, I track every bill’s due date on my iPhone calendar. I set a reminder alert the day before I would like to pay a bill.
Then, I set up automatic payments for those bills. I set bill payment dates according to what is best for my family, and not based on what’s best for the companies. If a due date for a bill is prior to your payday ask the company if you can change your payment due date. If not, consider getting ahead by one month on that particular bill, and then set up a payment schedule that ensures that the next bill is paid on the date you choose.
Put Bills on Autopay
If you have a strong handle on your finances, pay your bills automatically using your bank’s bill pay service. Or you could set up automatic payments through the company’s websites.
My only exception to this rule is utility bills. You should look at those monthly and pay attention to any possible spikes in usage. There could be a water leak or incorrect meter reading and you have to challenge these types of errors immediately. Each month, once you have confirmed the utility charges are accurate, then pay the bill.
Be Involved In Your Finances Even If You Don’t Manage Them
It does not matter if a woman is the family’s breadwinner or an equally contributing stay-at-home spouse. In any relationship, both parties should be involved in the finances. All women should know how the income of their household is allocated, even if they are not paying the bills.
Financially Savvy Women Do This Too
Always Pay Yourself First
Financially savvy women pay themselves first by having automatic contributions made to their employer’s retirement plan. Starting from your first job — go all in to save for retirement by maxing out your annual retirement fund contributions.
If you start this practice while you are young, your budget will become accustomed to saving for retirement first and at the highest level possible. It is extremely difficult for many women to increase their retirement contributions once they start a family or increase their living expenses. Therefore, learn to live off less, so you can save the most for retirement.
For 2021, the IRS permits an employee to contribute up to $19,500 to her retirement account. Compare this amount to what you are on track to save this year. If your contributions will be less than $19,500, see how close you can get to this figure and challenge yourself to contribute more money to your retirement fund.
Listen to How I Saved over $80,000 for retirement in one year.
Always Take Free Money
If you cannot afford to max out your annual retirement contributions, you should at least invest enough money to receive the free money (also known as the employer match) offered by your employer.
For example, my employer will contribute up to five percent of my salary to my retirement account, if I contribute at least five percent of my salary too. So, if I make $50,000 a year and contribute at least $2,500 to my retirement, my employer will match my contributions with a $2,500 deposit into my retirement fund. Ask if your company offers an employer match and contribute at least that percentage to your retirement account to get the free money.
Don’t Put All Your Eggs in One Basket
You do not have to save all of your retirement funds in one place. For those that qualify, sometimes it makes sense to invest in your employer’s fund to receive your match contributions and then to put any extra money into a Roth Individual Retirement Account (IRA). Roth IRAs are beneficial because when you retire you can take out the money tax-free. In 2021, if you are under 50 years old you can contribute up to $6,000 per year into a Roth IRA.
Income dictates who can contribute to a Roth IRA. Single people who want to contribute to a Roth IRA cannot make more than $140,000, and if you are married your combined income cannot exceed $208,000. Many single and married women do not qualify for Roth IRA for long if they have high salaries or a high combined household income. So if you want to get the tax benefits of a Roth IRA start investing in a Roth IRA when you’re making a lower income and are just starting out in your career.
Stay at Home Moms Can Save For Retirement Too
If you are a stay-at-home spouse, you also can have a retirement fund. Every time your spouse gets paid — so should you. Talk with a financial advisor or bank about setting up a Spousal Individual Retirement Account (IRA). With this account, your spouse can make contributions to a retirement account — in your name — on your behalf. Compound interest and time help your money grow, so start saving consistently as early as possible.
Save For When Life Happens
It is recommended that you have three to six months’ worth of living expenses saved for a rainy day. You do not want to be financially crippled by an unexpected medical expense, job loss, or disability. Significant savings also ensures that if you want to take time off work to go back to school, raise children, or pursue a career change, you can make this decision without impacting your household’s finances.
Financially savvy women save regularly. A hefty savings account does not happen overnight.
The best thing to do is to set up automatic contributions into a savings account every time you get paid. Your payroll office could make direct deposits to your savings account or you could set up automatic transfers from your bank to your savings account.
Your checking and savings accounts do not have to be at the same bank. In fact, sometimes it’s recommended the two accounts are separate so you are not tempted to spend your savings on non-essential items.
Are You a Financially Savvy Woman?
If this article describes you 100 percent, then, Way to Go! You are a financially savvy woman!
If not, don’t get discouraged.
Take note of the advice and start making changes to your financial habits to become financially savvy. It is never too late to take control of your finances and your life. Figure out where you need help, seek advice from a professional if you need additional help, and get started!
If you’re ready to take control of your finances and need my help, check out my course The Purpose of Money Masterclass: Finances 101. I will show you how to budget, save, invest, and build wealth one dollar at a time.
For more tips and tricks on how to save and improve your finances follow me on Twitter and Instagram.
You know what else financially savvy women do? They list to my podcast, The Purpose of Money! Check it out and be inspired by my guest who are women building real wealth.