What All Women Should Know About Personal Finance
Updated: Apr 12, 2022
By Novi Wealth Partners
Things have drastically changed for women in the past few decades. Not only do women now make up 50% of the workforce, (1) but they are also starting to play an increasingly important role in managing their household’s finances. Gone are the days when husbands were the only ones in control of the family’s money (2).
It’s good news that women are starting to take ownership of their finances because they tend to face financial challenges not often faced by men. Despite all their progress, women typically earn 81 cents of every dollar earned by men, (3) and they usually spend fewer years in the workplace because they may take time off work to raise children or take care of elderly parents. Because women generally live about 6-8 years longer than men, (4) women have fewer years to save a higher percentage of their income, so they can fund their longer retirement.
Doesn’t seem fair, right?
That’s why women need to be even more informed about their financial opportunities and how to maximize what they have. Here are a few key principles all women should know about personal finance in order to succeed.
Know Where Your Money Is Going
To reach your financial goals, you need to track your spending. Even if you have a high net worth, you may be surprised at how much more you could save if you cut unnecessary purchases. It could potentially equate to thousands more by the time you retire.
While it’s estimated that 85% of women make the primary decisions about their family’s day-to-day finances, that number drops down to 58% when it comes to making decisions about longer-term retirement and investment planning. Since having a long-term plan impacts short-term decisions and behaviors, women need to be involved in all aspects of a household’s finances(5).
If you’ve left budgeting or planning up to your spouse or partner until now, set aside one night a week to go over the details and get on the same page. It could save you a lot of heartache and frustration down the road should something ever happen to your spouse or your relationship.
Get Creative With Your Saving
Once your budget is solid, start finding ways to save more money. There are typically two ways to do this: decrease spending or increase income. The most effective way is a combination of both.
Small everyday purchases add up to a large amount of money over time. Think about ways you can decrease spending without depriving yourself. Could you make your own coffee throughout the week instead of grabbing a cup on your way into the office? If you want to increase income, could you ask for a raise at your current job, rent out your spare bedroom, or start a side job?
Whatever you do, make sure you take advantage of your retirement plan. Whether it’s an employer-sponsored plan or a personal plan, contribute as much as you can—especially if you’re near retirement. You’ll thank yourself later.
Invest With Confidence
Investing is a great way for women to close the gender pay gap and save extra money for retirement. Did you know women typically have a 0.4% higher return on investments than men? (6) It’s true. But women are also more likely to keep their money in a low-risk savings account than in investments because their earned dollars are more precious to them. Breaking this cycle and having a strong investment portfolio gets you one step closer to reaching your financial goals—and living your dream life in retirement.
Find A Trusted Partner
Given the right tools and education, women can succeed in reaching every financial goal they set for themselves. It may be overwhelming at first, but the more you know about investing and the more you do it, the easier it becomes. The best way to gain momentum in reaching your financial goals is to seek help from a professional.
About Novi Wealth Partners
Novi Wealth Partners is an independent, fee-only comprehensive financial planning firm dedicated to empowering clients to discover their definition of true wealth while providing the confidence to achieve it. With 20+ years of experience, we have found that most people don’t care about money, but instead, they care about what money can do for them and their loved ones. As a result, we focus on guiding our clients to find their unique vision for their life and developing a plan to help them live out their values. Our goal is to truly understand our clients on a personal level and help them navigate life’s many changes.
We are located in Princeton, New Jersey and we service clients both locally and nationally. There are four CERTIFIED FINANCIAL PLANNER® practitioners in the firm, all of whom are members of the prestigious National Association of Personal Financial Advisors (NAPFA) and the Financial Planning Association (FPA). We prioritize a team-based approach, which allows us to deliver comprehensive financial planning, investment management, tax planning advice, retirement planning, estate planning advice, risk management advice, and concierge level wealth management. We are committed to providing each of our clients a level of service as unique as they are and we are proud, as Fee-Only™ financial advisors, to offer unbiased financial expertise. To learn more about Novi Wealth Partners or to get started on your financial journey, visit our website or connect with us on LinkedIn.