Four Financial Planning Tips for Women
How Gender Can Have an Impact on Your Financial LifeKathy Longo, CFP®, CAP®, CDFA® Monday, 12 September 2022
They say money is the great equalizer and these financial planning tips for women can even the playing field and help women feel more empowered and financially secure. There are several considerations that are incredibly important for women to keep in mind: the gender pay gap, comparatively less time spent in the workforce, growing wealth, and longer lifespans, to name a few.
The world is changing and gender-based expectations are ever-evolving. So, there is all the more reason to do what you can now to ensure your financial plans are firmly in place for the years to come. The four tips below can help women plan and protect their financial futures.
1. Mind the Gender Pay Gap
Despite significant progress, legislation, and social change, as of 2022 women still earn 17% less than men on average. There is an even greater gap for women of color. It’s a large enough percentage on paper, but it feels even bigger when put into actual dollars. This discrepancy costs American women who work full-time between $700,000 and $2 million over the course of their lives.
That’s one of the driving reasons it’s advisable for women to save a greater percentage of their income than the average man. And, it’s ideal to start as early as possible. Here’s an example of why that’s important: if you invested $5,000 a year starting at age 45, you’d have $194,964 saved at age 65, assuming a 6% annual rate of return. If you invested the same amount but started 10 years earlier, you’d have $419,008 at age 65. That’s a $224,044 difference!
Looking beyond investing, there are other steps you can take to help close the gender pay gap on your own terms:
- ● Don’t put off asking for a raise or promotion at your current job.
- ● Do your research—find out what colleagues or competitors are making to learn whether you’re being underpaid.
- ● Get comfortable with negotiating, particularly if you’re starting a new role. Every time you switch jobs, you should be looking for at least a 20% raise.
- ● Own your worth. Come to the table with concrete ways to showcase how you contribute and why it’s valuable.
It can be uncomfortable for many women to be so forthright with their employers, but it’s important to be your own best advocate.
2. Invest in Your Own Career Progress
Women are often expected to multitask when it comes to their lives and careers. They are more likely to have their careers disrupted by childcare responsibilities, caring for aging parents, or other family-related tasks. COVID-19 has exacerbated these trends, with one out of every four women who reported becoming unemployed during the pandemic citing lack of child care as the reason—twice the rate of men.
Even if you don’t have children or weren’t professionally affected by the pandemic, time away from the workforce in any capacity can have a significant impact on your career progress and financial future. Though it’s impossible to predict some disruptions, like a global health crisis, there are others you may be able to plan for. Meeting with a financial advisor to go over your long-term strategy can help you make adjustments that will keep your goals and priorities on track.
3. Take Control of Your Finances
For far too long, women in our society took the back seat when it came to financial decision-making. Women’s wealth is growing, however, and it’s predicted to continue to rise. As of 2022, women control $10 trillion in U.S. financial assets –a figure that’s predicted to triple by the end of the decade. In addition, recent research shows that the number of women interested in investing has risen by 50% since 2020 alone.
The key to making your money work for you is confidence in your decisions and your ability to meet your financial goals. Consider your risk tolerance and what you want out of your investment portfolio. Would you like to travel more? Help your children or grandchildren with their education? Retire a bit earlier? Whatever you’re hoping to achieve, partnering with a financial advisor to take control of your investment strategy is a smart step forward.
4. Plan for a Long Life
According to the CDC, women live an average of five years longer than men—which means your money may need to last longer. A good strategy to stretch your investments is to consider balancing stable income sources with growth-oriented investments so you can get the best of both worlds.
Growth-oriented investments generally include stocks, while stable income sources refer to things like Social Security benefits, pensions, annuities in payout, and any certificates of deposit (CDs) made with a bank, which earn a fixed interest rate.
Financial Planning Tips for Women: Key Takeaways
Women have more financial opportunities than ever before – and more wealth to consider, too. There are many valuable strategies you can use to take greater control of your financial future and meet your goals. Reach out to us today if you’d like professional guidance in developing a savvy financial strategy now and into the future.
About the Author
Kathy Longo brings over 25 years of expertise and experience to Flourish Wealth Management. Kathy is wholly dedicated to improving the life of each client and finds joy in making complex matters simple and easy to understand. She excels at asking the right questions, uncovering new possibilities and implementing the most advantageous strategies for success. Playing such a pivotal role in her clients’ lives remains an honor and a privilege. After earning a degree in Financial Planning and Counseling from Purdue University, she began her career at a small firm in Palatine, Illinois where she worked directly with clients while learning to build a viable, client-centric business. Over the years, she gained extensive knowledge and wisdom working as a wealth manager, financial planner, firm manager and business owner at notable, various sized companies in both Chicago and Minneapolis.