Women face several gender-specific risks that can interrupt careers, hinder income and lower lifetime earnings. Personal finance experts have the following targeted advice for women.
1. Manage Your Own Money
Women often make the mistake of ceding control of their money to their partners. When the relationship ends (divorce or death), they struggle to take control of their finances.
What to do: Check your accounts online daily or weekly. Consider using a budgeting or expense tracker app (such as Mint, NerdWallet or Expensify) that links to your bank accounts, categorizes your expenses for you and alerts you when you overspend.
2. Save More
Because women often take time off work to care for children or parents, their Social Security benefits and retirement savings tend to be less than men’s, making it more important for them to save.
What to do: Establish a savings account as well as a pension or retirement plan. Try setting aside three to six months’ worth of living expenses in an emergency fund, but save what you can.
3. Pay Off Debt
Prioritize paying down high-interest debt, such as credit card debt, payday loans and store cards. Most credit card issuers charge high daily interest rates, causing the balance to skyrocket the longer it goes unpaid and jeopardizing any potential for financial security.
What to do: Commit to paying an additional amount per month toward the balance of your high-interest debt.
4. Build Credit
Having credit in your name is crucial to attain any kind of financial stability or security. But building your credit usually requires having a credit history, as without it, lenders tend to deny credit applications.
What to do:
- Become an authorized user on your partner or a relative’s existing credit card or store account, one that is properly managed and in good standing.
- Open a secured credit card that can later be upgraded to an unsecured card.
- Get credit for paying utility and other eligible bills on time through a credit-boosting service like Experian Boost.
5. Account for the Gender Pay Gap
According to the U.S. Census Bureau, women earn an average of 82 cents to every dollar that men earn. Black and Hispanic women earn even less, 63 cents and 55 cents to the dollar, respectively. This discrepancy can cost the women $700,000 to $2 million over a working lifetime.
What to do: Negotiate for a higher salary, regularly save a greater percentage of your income, and partner with a financial advisor early in your career.
6. Plan for the Future
You should plan for your retirement years, long-term goals (such as your child’s college education) and unexpected events and expenses. Remember that women generally live longer than men, and consider how others’ finances will be affected if something happens to you.
What to do: Consider having an estate plan, and balance growth-oriented investments (such as stocks) with more stable income sources in retirement such as pensions, annuities in payout, Social Security benefits, and certificates of deposit.
