Women and Wealth: Take Control of your Financial Future in 8 Steps
Are you living in financial uncertainty? Do you dream of a dream of a life where you are confident about your financial future? In this article, I discuss the starting point – eight simple financial planning steps to get you started today.
Are Women at a Financial Disadvantage?
Much has been written about women and finance and the reasons we continue to be at a disadvantage to our male counterparts. The reasons for this are nuanced and many. However, there are four main reasons we fall behind:
- We earn less and take on more debt
- We save less and have smaller pensions
- We need larger savings because we live longer
- Many of us are not confident in our financial literacy
How to Go from Uncertain to Confident:
Whether you’re married, widowed, single, or partnered, you will benefit greatly from learning about your finances. If you can master some basic steps, and repeat them, you will gain confidence in your ability to understand engage in your financial future. Confidence builds upon itself and is important to your future financial success. It will also enhance your ability to live your life abundantly.
You can gain control of your financial future in eight steps. Here’s how:
1. Know Your Current Financial Reality
Before mapping your financial steps, you must first know your starting point. What are your resources and how much do you owe?
List out your assets: Assets are anything that can offer money when you need it. A home, your savings, and investments, retirement accounts, insurances, annuities, and more. List them all out so that you know where your wealth is (and how much!).
List out your liabilities: Liabilities are on-going debts and money owed. These are things like mortgage loan, student loan, or credit card debt.
Begin by making a written list of both of these items. You will review it over time, so make sure to put it someplace easy to find. Then review your assets compared to your liabilities. If your debt it high relative to your savings, look for ways to bring it down. If your savings/resources are low, prepare to plan out a systematic savings program.
2. Imagine Your Future Financially Secure Life
This Is a big one. Many of us have worked all our adult lives caring for others, with little attention to ourselves and our own future. We are trained to think this way. But I want to ask you to imagine your future abundant life. What does it look like?
One way to do this is to imagine (no holds barred) that you just inherited $5 million dollars. What would your life be like without money worries? How would you spend your time? What new activities would you do? Who and how could you help others? This is your abundant life.
Imagine your future life and write it down. Revisit It often. The act of thinking about something wonderful and writing It down has an uncannyability to Influence the outcome in that direction. It’s not magic. Fulfilling goals after writing them is neuroscience!
This thought experiment forms the foundation of your financial “roadmap”. Don’t skip this step. How can you map a plan if you don’t know where you want to go?
3. Ask Questions and Learn
Don’t be afraid to ask questions and learn.
- If you are working, ask questions about your retirement benefits.
- If you have a financial advisor who speaks gobbledygook, stop that person and ask for an explanation. A good financial advisor wants you to understand and will appreciate this.
- Read and listen to podcasts.
- Take some time with foundational books and articles designed for women.
Do not feel discouraged if you’ve fallen behind in your understanding of the ever-changing financial world. It’s a process. It’s never too late to begin the process to grow your financial knowledge.
4. Financial Mindfulness! Become Aware of Your Spending and Saving
Get comfortable with knowing how much you are spending and how much you are saving. You don’t necessarily need a tight or rigid budget, but you do need a spending/saving plan.
This is an important starting point for retirement planning. You cannot know how long your assets will last unless you know how much you spend and save. (For Information on forming a spend plan, check out this article: https://scheibelplanningsolutions.com/why-you-need-a-retirement-spend-plan-and-how-to-build-one-part-1/)
5. Pay Attention to Time and Risk (with Your Investments)
How are your investments invested? What Is the amount of risk that you are taking? If you align your assets with your goals and financial road map from Step 2, then different Investments will be invested differently.
Some Investments will be held for a long time (five or more years) and spent much later. These can take on more risk than the assets that you will be spending in the next 2-5 years. In fact, your longer-term investments must be invested for growth, with an appropriate amount of risk. It’s the only way your assets will grow enough to keep up with your spending and inflation over a long retirement.
6. Avoid the Landmines
No matter how much good planning we do, circumstances can change and derail our plans. Some things we can plan for and some we cannot. We can plan for a medical emergency, job loss, inflation, and increasing health care costs. These are known risks that can and should be planned for.
There are other emergencies that take us by surprise. For these, you just need to have some cash on the sidelines–your “emergency fund”. How much depends on your individual circumstances but a good rule of thumb is 3-6 months’ worth of living expenses.
7. Write a Love Letter to your Family
This is code for making sure you have up-to-date estate planning documents. Your estate documents reflect your wishes and protect your assets in the event of an untimely death or incapacitation. Without these, your loved ones could be forced into a protracted and unpleasant ordeal—with courts and creditors and lawyers. Even worse, your wishes about the end of life won’t be known and honored.
I get it. We don’t like thinking or planning for such things, but we must. These acts are what we do for those we love. We prepare our financial world for the benefit of our loved ones.
The 2020 Covid 19 pandemic caused many people to take notice of a lack of organization in their financial affairs. Even so, most people have outdated estate documents… or no estate planning documents at all! Visit an estate attorney and get these done. This is the truest form of a love letter to your family.
8. Wash, Rinse and Repeat
If you completed steps 1-7, you have moved the needle by raising your awareness and adding to your confidence. You have also taken the steps to form the foundation of your financial success. You now have a map and know which direction to go for your abundant life. Then, as the world changes and your life changes, you pull over to the side of the road and adjust your map, slow down, speed up, or even take a detour if needed. This is the most important step in the process.
Ready to Own Your Financial Future?
Just start with one of these 8 steps. I take all of my clients through this very same 8-step process. Yes, we go into more detail, but the process is the same. If you are interested in having a trusted partner walk with you in your financial journey, get in touch. I can help you secure your financial future and live your abundant life, with greater confidence.
Or, if you would like an expert to share this roadmap at your next women’s event, please let us know.
I speak regularly to women on various financial topics. In all cases, the workshops are meant to be fun, informative, and empowering. I love these opportunities to teach women, to share what I have learned as a financial advisor and as a woman!