Five reasons why women should handle their own financial planning
How much control do you have over your finances? Here are five reasons why women should handle their own financial planning.
Financial planning is an essential life skill that everyone should learn. Women, in particular, must be adept at managing their cash flow and knowing exactly where their money is going, especially if they’re living independently.
You can find lots of materials online. You can also enlist the support of professionals like the team from Mercer Advisors to help you find the perfect strategies for your personal finances.
Here are five reasons why women should be adept at handling financial planning.
1) You’re in full control of your finances
Whether you have a family or are living alone, every woman needs to hone the skills of managing their finances. You need to be aware of the difference between financial independence from financial freedom.
The former means that you can take care of your current expenses. However, you should strive for the latter, which entails securing your future and ensuring that you can maintain the lifestyle you desire throughout your lifetime.
Financial freedom doesn’t automatically come just because you have a stable income each month. It requires meticulous planning and strategizing so that you’re financially prepared when emergencies or urgent situations arise.
For instance, if you’re married, you and your spouse might have a joint bank account for your savings. Even if this is the case, it’s also prudent for you to have a separate account which you can easily use during times of crisis, such as hospitalizations, divorce, or death.
2) We have longer life expectancy
It’s universal knowledge that women live longer than men. This phenomenon is attributed to various factors, including the male propensity for smoking and other vices.
With this in mind, financial planning for women should take into serious consideration this extended retirement period. You might need to fund a retirement that stretches over 30 years. A financial advisor can help you find solutions to this issue and come up with personalized strategies for your finances.
Here are some tips to help you when saving for your retirement nest egg:
- Try your hand at investing – Start looking for viable assets now so that you can take advantage of compound interest, which maximizes the term of your investment.
- Be mindful of inflation – You should take inflation into consideration when planning for your retirement. The funds you have estimated to cover you through your older years might lose their purchasing power over time. Investing is also a good hedge against inflation.
- Determine your retirement expenses – Along with inflation, identify future expenditures, which usually revolve around your health. Knowing these expenses beforehand allows you to plan for how much you need for retirement accurately.
- Develop healthy habits – Since health expenses are expensive and constant when you’re older, it’s wise to start developing healthy habits right now to keep your body strong. You should also begin being financially fit by creating a budget and sticking to it as early as now.
- Pay off your mortgage – Work toward completing the payments for your home years before your retirement. You can also direct the money toward your retirement funds afterward.
3) The gender pay gap still exists
While it shouldn’t be a competition between the sexes in the workplace, the unfortunate issue of the gender pay gap continues to be prevalent today. As advocates push for equality, women must learn how to work with the current arrangement to their advantage.
Financial planning is a valuable tool in maximizing your income and ensuring your financial freedom. You must know how to make the most of your salary to save for your future.
4) We take more career breaks
Childbirth and taking care of older family members are two of the primary reasons why women take more career breaks than men. During these situations, you don’t want to add to the financial burden that your family is going through.
That’s why you should learn how to manage your finances well before these times of crises occur. With your finances under control, you can take a leave of rest without worrying so much about money matters.
5) You can get better investment guidance
Women also tend to be more conservative when it comes to investing. While it’s prudent to weigh the pros and cons, sometimes, you might miss out on significant returns because you were scared of the risk that investments entail.
When you get advice from professionals, you become more educated on the high-risk, high-return assets that work for your current financial standing. This way, you can make smart decisions on various investment ventures.
Here are some of the steps you can take if you’re thinking about investing:
- Find a strategy that works – Some people prefer to be passive investors. This means that they invest their money in a particular company and give their funds time to grow along with the business. Others opt for a more aggressive approach, which involves buying and selling stocks when the time feels right. You should look into yourself and identify which method suits your needs and preferences.
- Determine your budget – The most common budgeting rule is the 50/30/20, which indicates that 50 percent of your income should be allocated for your necessities. Meanwhile, 30 percent should be portioned for self-care and 20 percent for saving or investing. You can customize this strategy according to your financial situation. Just make sure that you set aside money for investing.
- Learn the basics – As with any other venture, you shouldn’t dive blindly into investing. You should learn the fundamental principles and processes behind investments so that you know how you can maximize it to your advantage.
- Select a platform – There are plenty of options online. Do your research to see which websites have the features and functions you need. Read up on reviews as well to determine the apps that have helped other women succeed in their investing journeys.
Take full control of your money
But more importantly, overall, women should handle financial planning so that they can take full control of their money.
Acquiring this essential life skill will help you plan for retirement, career breaks, and emergencies, even with your current pay. You you can also make informed decisions on investments to supplement your income and save for your future so that you can continue maintaining your desired lifestyle.