There are good reasons why young married women should aim for financial independence. Not only are women expected to live an average of seven to 10 years longer than men, their retirement income is less than half that of the opposite sex. Not to be too much of a downer, the reality is that 45-50 percent of marriages end in divorce and women comprise 84 percent of single parents. Combine these factors with historically lower salaries for women, establishing financial security early in life is an absolute necessity.
Financial independence, however, isn’t just about money. Statistics show that independent young women also become stronger individuals and are better able to take care of themselves. On the other hand, women dependent upon men are more likely to fall prey to “predators” or fall into abusive relationships. As the bumper sticker says, “A man is not a financial plan.”
Rather than reiterate the standard tips like “create a budget” and “pay off your credit cards monthly,” Coupon Sherpa offers 10 tips specific to women’s financial security.
1. Know Your Finances
Until women’s liberation came along, men usually handled family finances and wives knew next to nothing about their financial status. Divorce or the husband’s death could leave women with a mountain of paper and not a clue as to where they should start. Modern women tend to be more involved, often maintaining responsibility for paying monthly bills. But it’s also vital to understand all other aspects of your monetary health. Schedule a financial date with your husband at least once a month to review bills, investments, retirement accounts and your budget. The highly respected Mint.com is an easy way to manage your money with a constantly updated record of your family finances. PNC.com isn’t as easy to use but it provides both private and business online money-management systems.
2. Educate Yourself
The more you know about finances and the investment process, the more confidant you’ll feel dealing with personal finance issues. You can learn more via online research, the multitude of books on the topic or community courses. Cooperative Extension offers an excellent program in many counties specific to women. The Women’s Institute for Financial Education (WIFE.com) also is an excellent resource with easy to understand information. You also might consider joining a women’s investment group. The more you know, the better decisions you can make.
3. Be Selfish
It may sound like an oxymoron, but being selfish about your personal finances can actually help you enhance the lives of others. Financial security reduces your stress and allows you to be more patient with your family, more financially charitable and more productive at work.
4. Establish a Personal Cash Cushion
Bank three-months worth of expenses as a cushion should your family face an emergency such as a health emergency, unemployment or other unexpected expense.
5. Pad Retirement Accounts
Financial advisers always recommend beginning a retirement account the day you begin working. In reality, it’s often not possible or feasible to think that far ahead. Still, it’s vitally important women begin retirement accounts as early as possible because they’re more likely than men to enter and leave the workforce while raising children. Women also live longer than men, so will have to draw on these accounts longer. After you hit 50, remember to take advantage of the increased amount of money you’re permitted to contribute to your 401k. Contributing the maximum amount allowable ensures you have a comfortable nest egg.
6. Don’t Over-Spend On Others
Too often, women get into trouble not when they spend on themselves, but when they over-indulge their children. The proliferation of electronic gadgets and increased cost in trendy clothes can set you back financially. Learn to say no and stick to it. If children absolutely must have the latest phone, use this as a carrot to teach them to become financially intelligent, rather than leading them to think money grows on trees.
7. Build an Independent Credit Rating
Your credit rating begins the first time you establish a credit account, be it a student loan, credit card, utility payments or what have you. Follow standard guidelines to maintain a high credit rating before and after marriage. It’s not enough to just have joint credit accounts with a spouse. Make sure you annually ask for and examine a free copy of your credit report from AnnualCreditReport.com. (This is the ONLY website authorized by the U.S. government to fill orders for the free annual credit report you are entitled to under law.)
8. Establish Your Own Accounts
Many couples share joint accounts to pay household bills – and that’s fine if your spouse is financially responsible. Having a separate savings or checking account gives you a heightened degree of financial autonomy and helps you become better at saving and budgeting. If your hubby has poor credit, however, experts suggest you maintain a financial wall to avoid his lousy habits from impacting your credit rating. CNN.Money offers excellent advice on how to “keep your credit pristine and your partner’s past from undermining you both.”