Women need to take special care when it comes to their finances. A couple of common facts about women and their financial health may influence your future. - Women, on average, live five to seven years longer than men. This means the time horizon you plan for needs to be specific to you, not to a couple. Older women are one of the fastest growing poverty segments.
- Women typically earn less money. For all the improvements with women's rights, women still earn about 75 cents for every dollar that men earn.
Because of this, here are a few tips to consider about your financial future:
Proactively save for your retirement
On average, women stay at home about 12 years to raise children instead of working outside the home, so they are less likely to participate in a company-sponsored retirement plan. Stay-at-home moms can, however, participate in a spousal IRA, which can be established either as a traditional or a Roth IRA.
If saving is difficult, take advantage of PIPs
Society pressures us to spend, not save. Consider setting up a periodic investment plan (PIP).* A PIP is an automatic purchase plan, usually of a mutual fund. Once you do the paperwork, money is deducted automatically from your account.
*Dollar cost averaging is not a foolproof investment technique. It does not assure a profit and does not protect against loss in declining markets. It involves continuous investment in variably priced units, regardless of price fluctuations. Investors contemplating the use of dollar cost averaging should consider their ability to continue purchases over a period of time, even when prices are low. Get educated
Learn the basics about financial management and investing. Take a class through a reputable source where the instructor is not going to try to sell you products. Look to your local community college or local adult education opportunities. Read books.
Get involved
Don't passively delegate the investment of your money to someone else. Ask questions and expect to understand the responses. Don't be intimidated by jargon. Ask them to explain their response to you differently—and to your satisfaction.
Develop a relationship with a trusted professional
The key word is trusted. Do your due diligence. Ask other women for recommendations. Look for a qualified individual to whom you relate well and who listens to you and understands your particular needs. Interview several professionals to get a sense of who speaks your language and who you are comfortable with. The important thing is that you take action and exercise control over your financial future.
"An investment in knowledge always pays the best interest."
- Benjamin Franklin
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