Women control a third of total US household financial assets—more than $10 trillion in total. This number is poised to grow quickly and irreversibly. Compared with five years ago, 30 percent more married women are making financial and investment decisions, according to recent McKinsey research on affluent consumers. Clearly, women are leading the charge on their own financial future, despite the hurdles that still stand in their way.
Managing your own money comes with security and confidence, along with a laser-like focus on your growth and goals. This is true for anyone, but it is particularly important for women. And yet, according to research by CIBC, only 44 percent of women aged 18 to 34, and 68 percent of those aged 55-plus actually feel confident about investing.
When women don’t get involved in managing their own finances, there can be potentially harmful long-term consequences. For example, they might be surprised by a shortfall of savings due to divorce or death of a loved one. It can also lead to less options if they have to make major life decisions, such as leaving their job to get a graduate degree or start their own business (or they simply may not even realize that these are even options if they don’t monitor their savings). In order to be prepared for tough circumstances but also take advantage of opportunities, it’s important for women to be in control of their own finances. Here are four things women can do to take charge of their financial future:
- Build knowledge
Fortunately, good financial advice is not difficult to come by, even from the comfort of your own home. Look for library events, webinars, YouTube videos, or podcasts about saving and investing. Join investment or money groups on social media, and follow accounts that promote financial literacy.
Once you feel that you’ve learned what you can through these channels, invest in personal finance books aimed for beginner to intermediate investors. A little more knowledge can breed a lot more confidence.
- Get comfortable talking about money
If you’ve done step 1 and taught yourself about personal finance, investing, and saving (all the good stuff), talk to your friends about money. Even if you feel like an amateur, talk about what you know, would like to learn, and where you get your knowledge from. Don’t help keep the topic of money and investing taboo. We need to start talking about investment concepts and money management because talking openly creates an environment of learning and encourages us (and other women) to ask for help.
- Think big picture
Whether you’re single, married, in a relationship, have children or not, you should have your own money goals. These goals can be unique to your life – for example, you might want to start your own business, save for higher education, or have your own retirement fund. If you don’t work a salaried or hourly-paid position, your goal might be to have one budget meeting a month with your family to go over savings and investments (you should still have your own checking and savings account – fund it according to a predetermined agreement about the family income). Setting your own goals, and setting a timeline for these goals, also helps put you in the financial driver’s seat.
You also need a holistic financial plan: your plan should include what’s important to you and how you’d like to live. It should integrate your fixed expenses and discretionary spending, estate planning, taxes, and retirement. If you and your family don’t talk about money often, it can be awkward to bring up these topics, but it’s extremely important. What happens if a spouse loses their job? What if you want to work towards FIRE but your spouse is more about the daily luxuries? Do you need life insurance? When was the last time you updated your will?
Prioritize your goals and set timelines for when you want them to be accomplished. If you feel like you have too much debt, for example, focus first on paying down high-interest credit card balances or loans. Some of your goals will have hard deadlines, like saving for a wedding or paying for a child’s first year of college. Others are more flexible, like saving for a special vacation or a home renovation project. Especially for longer-term goals, including funding your retirement, be sure to set SMART goals to keep yourself on track.
- Invest your money!
Research shows that women make better investors than men because they spend more time researching investments and are better at matching their goals to their investments. So, chances are that no matter how late you are to the investing game, you can now make some well-thought, rewarding investments.
What you choose to invest in and your overarching investment strategy will depend on your financial goals, time frame, risk profile, and preferences. For example, if you try to support ethical and sustainable companies, you may decide to only invest in ESG funds or ETFs (exchange-traded funds). ESG investing, which considers environmental, social, and governance issues, can be a great leap into the world of investing.
Here are some questions you can ask yourself when you’re looking to get started on investing:
- Do you have an emergency fund saved up? (anything from $1,000 to six months of expenses, depending on your career, industry, spending, etc)
- How much can you afford to invest on a regular basis?
- Will you need this money in the short term?
- Do you want to invest via robo-advisors or work with a financial advisor?
- Do you understand what you’re investing in?
- Should you explore asset types like real estate and bonds in your portfolio?
You don’t need to understand all the intricacies of the stock market or all the current hot holdings (like bitcoin) to succeed at investing. In investing, boring is better – taking an active role in investing doesn’t mean day trading or putting thousands of dollars in options. It simply means becoming more involved and aware. As you practice financial skills and put in the time to learn about personal finance, you’ll become more confident in your financial decision-making. Confidence is one of the key precursors to success – whether as an investor, an employee, a community member, or as a parent.