As we close the 2020 chapter, one of the objectives that every woman should set is Money Goals. When it comes to money management, statistics have shown that 54% of women leave household finances in the hands of their male partners. Sadly, there are some common stereotypes with respect to money and women. For instance, women are viewed as vicious spenders, they are known to be financially insecure, they don't need financial protection, or that they are financially illiterate. Nevertheless, the problem lays with the male-dominated world we live in where men take control of every aspect of a woman's life coupled with the rooted structural barriers that affect her financial wellness and her ability to grow professionally and personally, like the hurdle of the gender gap, the compulsory career breaks, and the increased household responsibilities. Luckily we live in times where things are progressing towards a more gender equality society and women are becoming more financially empowered. In this post, I will provide you with five money moves that will help you to be financially independent and build your wealth.
Build net worth- Assets- Liabilities= Equity. Yes, we have all seen this horrendous equation in our accounting classes, thinking we wouldn't have to deal with it for the rest of our lives. But here where it comes in handy. This simple equation will show you what you owe, and what you own. The goal is to reduce your liabilities as much as possible and increase your assets. For instance, if you have student loans, try to create a short to long-term plan on how you can accelerate your debt payments. As a simple rule, If you get paid twice a month, then you can set biweekly automatic transfers towards paying off your debt. By quickly servicing this obligation, you can shift your focus towards investing and creating wealth consequently.
Maximize your defined benefit plans - Women are known to live longer than men which is why you should start planning for your retirement as soon as possible. If you are a full-time worker, your company must probably be offering you retirement plans. Enroll in them, and match to whatever contribution your employer offers. This way, you will maximize your contribution and your money can grow exponentially thanks to the magic of compounding. The sooner you start, the sooner you will be financially free and lead a comfortable life.
Bulk up your emergency fund - First and foremost regardless of your relationship status or life stage, it is crucial that as a woman, you all have an emergency fund as a cushion to face unexpected life events. The rule of thumb is to have 6 months of your basic living expenses in your savings. Start small and allocate a certain percentage of your income every week, every month, or whatever frequency works best for you.
Engage in money conversations with your partner - Money is the core of many couple disputes. Indeed, money talk with your partner is almost unthinkable. Tackling with money conversations with your partner has demonstrated building a solid understanding of your values and money goals. Whether you are at the early stage of your relationship or you have been in a long term commitment, sit down with your partner and share your views and values about money. Be transparent and clearly communicate what your short to long-term money goals are. If you are married, you are both equally entitled to stay involved with the household obligations and share financial responsibilities.
Create your investment portfolio - Despite the stereotypical beliefs that women are not good at managing money, women do possess good qualities when it comes to investing. Above all, women have different risk and return profiles. They are risk-averse and long term investors looking for growth and a stable return. Whether you are an expert in the stock market or it is your first time investing, do your research, and invest in whatever company you like. Start small and choose a strategy that works for you. The goal is to " never put all your eggs in one basket" and do not invest what you cant afford. #bethebossofyourmoney
At every stage of your life, never blindly give up on your financial dreams.
Be in control of your financial faith and financial wellness.
"A woman’s best protection is a little money of her own"
– Clare Booth Luce, American Author and US Ambassador.