Women and Their Financial Identity
Women need to empower themselves with financial information. They need their own financial identity. Women, more than men, need to make their money go a long way. The median income of women over 65 is a mere $6,300. Roughly 80 percent have no pension eligibility and with a longer life span there is a greater risk of having chronic disabilities. Problems arise when women are faced with immediate goals – like making payments on their credit cards and student loans, paying the rent, covering child care and saving for college – this makes them reluctant to fork over money for a obscure need 20 years in the future.
The US Bureau of Labor says only 4 out of 100 people 65 and older are financially independent. Saving money requires the discipline to pay yourself first. Without a savings plan, you will only tread water, or worse, drown in a sea of debt. A good rule of thumb is to invest at least 10 percent of each paycheck. An automatic transfer into a savings account or mutual fund minimizes temptation and keeps the money out of view. Putting money into you company’s 401K plan has the added benefit of cutting your tax bill.
It is absolutely critical to have a budget, to assess short and long term financial objectives, and to investigate the various options. Women should write a budget to find hidden or wasted dollars which can be used for savings. Make a list of necessities and luxuries, and then determine where you can cut back. Do you really need to buy your lunch every day or can you brown bag more often? Do you really need to have that “to-die-for” dress?
Budgeting can be like crash dieting. If you cut your expenses back too far, you won’t stay with it. By simply trimming the fat you can be successful with your budget. Prioritizing and budgeting enables you to find out what should be bought now, what should be saved for another time, and what should be passed by altogether. While scrimping and saving doesn’t sound like much fun, if you are seeking financial security you must set goals and work to reach them. At best, Social Security and company pension plans account for 40 percent of retirement needs. For women, things are even bleaker. On average, women only make 75 to 90 percent of men earn, have smaller pensions and tend to live longer. Usually, if you change your attitude and become more optimistic about the future you can build a better financial self-esteem and be more likely to build retirement savings. It is up to you to do the best with what you have and this means start saving now!
About the Author
The following blog post is from April Lewis-Parks, the director of education for Consolidated Credit She is a certified credit counselor and a consumer affairs advocate who is dedicated to generating awareness about personal finance issues. She is on the education advisory committee of the JumpStart Coalition, which is dedicated to furthering financial literacy for the youth and she is active in the South Florida chapter of Junior Achievement which promotes entrepreneurship and financial literacy through hands-on programs.