We all know that it has become exceedingly rare for women to be stay-at-home moms—most families rely upon two salaries to make ends meet. And while moms still spend more energy and time making the home purchases and creating and enforcing monthly budgets, there still is some indication that they are not the primary adults making decisions about savings, loans, investments, and retirement. And this is especially critical in single households where moms are in charge, which is a growing family structure. According to the U.S. Census Bureau, from 1960 to 2016 the percentage of children living only with their mother nearly tripled from 8 to 23 percent.
The fact is that women are an economic force, even with the gender wage gap of 20 percent, where women earn on average 80 cents for every dollar earned by men. Recent data indicates that 42 percent of U.S. mothers are the sole or primary breadwinners, contributing at least half of family income, according to a study Pew Research Center analysis of data compiled from U.S. Census information—up from only 11% in 1960. This indicates an ongoing trend for women’s economic power. And while women continue to be the deciding factor in most family purchases, they don’t always have the big picture of the overall family financial picture. Which doesn’t really make sense, right?
Here’s another important fact for women to consider: women live longer than men. U.S. men currently have a life expectancy of 78.7 years, while women have a life expectancy of 81.2 years. This has important implications for women being an equal partner in financial matters. And a necessity for them to become money savvy, since at some point they will have to take over the money reins.
The time is now for women to tear down any obstacles in their path (self inflicted or otherwise) and become financially fit. Excuses like “it’s not nice to talk about money,” or “my husband takes care of all that,” is not acceptable in 2017. Being interested in money and how to best manage it is the definition of being a modern woman.
Becoming proficient in money issues is no longer an option for women—it’s a must! The good news is that it is something that women can do. A study by Joanne Hsu, an economist at the Federal Reserve, looked at spousal relationships and money. She confirmed that in the early years of marriage many women were not as financially literate as men. However, she found that by the time that women approached widowhood, 80 percent of women were as financially literate as men. So there is no mental capacity barrier to women’s financial fitness, it’s just takes the will to do so.
Steps to Financial Fitness
Women need to be empowered to speak the language of money so that they can make smart decisions about major issues such as loans, investments, and retirement savings.
- Focus on Earnings
Women often don’t ask for a raise or seek out new opportunities that will bring greater revenue. Don’t stay stagnant in a job—network and keep an open mind for more lucrative jobs. Or consider a side job, today’s ‘gig’ economy offers plenty of ways to pad the coffers.
- Learn About Finances
Be proactive about financial education. The internet has a wealth of sources and inspiration. Check out the Financial Women’s Association, which includes basic banking, budgeting, and borrowing skills. The Women’s Institute for Financial Education provides guidelines on cost of living, retirement planning, taxes, divorce, widowhood, and more. Another good resource for long-term financial welfare for women is the Women’s Institute for a Secure Retirement, which in addition to retirement planning, offers financial planning advice regarding divorce, estate, home ownership and care giving.
- Create a Budget
One of the most important ways to understand how your finances are flowing and determine ways to save is with a budget. Once you have determined ways to cut costs, stick to it! (And make certain you have created a way to save an emergency fund of six months of expenses.)
- Pay Off Debt
To be able to save with a clear conscience and really know what the bottom line is, you need to pay down your debt. Pay off loans and credit cards with higher interests first and consider debt consolidation if appropriate to your situation.
- Save for Retirement
It goes without saying that you need to save as soon as possible for retirement. After all, you will undoubtedly have a longer period of retirement than men of your generation. The goal should be to put away 10% off your income. If you can’t meet that goal, then put an amount that is comfortable and increase the amount in increments. Certainly take advantage of a 401(k) if your company offers one, and get that entire company match!
- Open an Independent Account
There is a measure of comfort knowing you have access to finances should something unexpected happen. Open an account in your own name, even if you are married or in a committed relationship and have joint accounts.
- Establish Your Credit
It is critical to establish credit in your own name. Don’t rely on being a co-signer or additional card holder. You need good credit in the event that you need to get a car loan, mortgage, etc. on your own.
- Get Comfortable Talking About Money
Aside from being proactive about financial education, it is a good idea to find like-minded women with whom you can bounce around financial ideas and decisions. Find a group of women and form a “money club.” Together you can create an agenda for each meeting, invite speakers to your group, or create a fictional portfolio to practice investing together.
Need more inspiration? There are powerful and capable female role models in the world economy such as Christine Lagarde who has been the managing director of the International Monetary Fund since 2011, or Janet Yellen, who is the chairwoman of the U.S. Federal Reserve. These women prove that women know how to manage money. All the rest of us women need to do is build up our confidence and then we can take financial control of our own lives.