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Did you know that there are about 110.6 million Americans, 18 and older, who are divorced, widowed or have always been single?
That’s almost half of the US population and about 53% of these single folks are women.
The average salary of a woman is about $40,000 a year, compared to a man’s $49,000 a year. Now, I’m not going to get into a debate about the gender wage gap, but I’m going to show women how they can be smart with their money.
Here are 7 Strategies for women – whether they’re single, married, divorced or widowed:
1. Manage your own Money
No matter what your relationship status is, women need to know how to manage their own money.
Learn how to budget, handle the bills, the banking, and any other financial obligations in your daily life. Leaving it to someone else – a parent, a roommate, boyfriend, or even your spouse without understanding how to do any of it – is a disaster in waiting.
Why do I say this? Several important reasons come to mind:
- Lack of control – Leaving your money for someone else to decide what’s best for you doesn’t just deprive you of your power, but there’s the potential for wrong decisions made. What if you wanted to get a car, but your “caretaker” thought it was more important to save for a house?
- Trust issues – If you leave your money management to someone else other than your spouse, how do you really know all your money is there as mentioned?
- Life events – There’s always a possibility of life events – illness, disability, divorce, death that will impact the management of your finances. I personally know a few women who either got divorced or widowed that had no idea how to use a checkbook or even where their bank is.
Managing your own money is one part of being an independent, empowered woman.
2. Pay off Debts
One major money strategy is to have a plan for paying off your debts.
Paying off your debts will definitely provide more money in your bank account and gives you much more elbow room to do the things you really want to do.
Not only do you need to pay off your debt, but you also need to prevent creating further debt.
As much as I don’t want to impress the stereotype, but It’s no secret that many women love to shop (4 out of 10 women rather be shopping than having sex).
3. Start Saving
You should also start putting money away into savings while you’re paying off your debts too.
You should aim at having several types of savings accounts:
- An Emergency Fund – At least a $1,000 set in a savings account to use in emergencies only.
- A Retirement Fund – Start planning for retirement early, especially if you’re single.
- Financial Goals – A savings account for things you’d like to have: a car, a house, vacation.
The easiest way to start saving is to create a budget, track all your income and expenses and trim out the excess spending. This will give you “found money” which you can apply towards your savings (and debts).
It’s important to start saving for retirement as soon as you can. It’s been shown that women rely on Social Security to provide half of their retirement income if they’re single. Change this statistic for yourself and work to provide yourself a nice cushioned retirement fund.
Having several savings plans gives you peace of mind with money, helps fortify your budget by not needing to cut into it for emergencies, and sets up your future financial goals.
4. Don’t Let Relationships Interfere
Similar to #1 about managing your own money, don’t let your relationships interfere with your finances.
Budding love can be blinding and you might feel you’re going to be with this one “forever”. It’s here at the beginning where we could make some financial mistakes.
We make big purchases for the new love, loan them money for things like car repairs, rent, or perish the thought – bail money. To me, asking for money early in a relationship is a red flag that it isn’t going to be a healthy one.
Have a discussion early in the relationship about money and how it will be handled between the two of you.
The same goes for married couples, if your spouse is a spender when you’re trying to make ends meet, you need to nip that in the bud. Again, have a conversation on money issues and get on the same page with the same goals and create a financial roadmap for the two of you.
5. Take some Financial Risks
Stereotypical thinking assumes that women are more demure and quiet and don’t want to make waves. Sometimes we, as women, were brought up that way and sometimes old habits die hard.
So, it’s time to break old standards and start taking more financial risks.
Risks such as:
- Negotiating our salaries and raises – Check on PayScale for the average salary of your job and discuss those. Don’t forget to include benefits, perks, and retirement options as well.
- Accept bigger projects – Sometimes self-doubt takes over when we’re offered bigger jobs or projects. We feel that we can’t accomplish them, but you won’t know until you try, and it’s still okay if it doesn’t work out too.
- Move to where the jobs and lifestyle are – Sometimes we stick close to where we feel comfortable, which can stunt our job opportunities and personal growth. Take a risk and move to where the jbs and life experiences are.
- Make investments – This affects me personally, even though I’ve read all the investment app reviews on Frugal for Less, I was still hesitant to start. I just went ahead and downloaded Acorns and started my investing journey.
Taking risks can be scary, but it also can be thrilling. Just remember there are no failures, just lessons to learn. Step out of your comfort zone and try something new to improve your financial situation.
6. Invest in a Place
One way to secure your future is to invest in your own place. Whether it’s a house or a condo doesn’t matter but it would save so much money than paying rent for an apartment.
Let’s do a little math for living in Quincy, MA (near Boston), where 39% of the population are single:
- Average monthly rent of a 2-bedroom apartment – $1,837 a month. Total rent paid over 15 years (not counting increases) = $330,660!
- Average monthly mortgage of a 2-bedroom home – $1,265 a month. Total mortgage paid over 15 years (not counting increases) = $227,700!
Not only will you save $572 a month, but you will also have a place to sell if you need to move.
Another benefit would be being able to rent out space on your property for extra income. More and more singles are deciding to live together and share expenses.
7. Plan for the Future
No matter your relationship status, you should always plan for the future.
I’ve already talked about savings and retirement, but that’s only part of it. Many of us forget the smaller details – such as having different insurance policies, naming beneficiaries on these policies, or even having a Will.
It’s important to have a few insurance policies for yourself (and your family) to ensure your financial security and well-being. The types of insurance you should have are:
- Car and Home/Rental Insurance – These are no-brainers and usually are required before being able to drive or own a place.
- Health Insurance – You should have some type of health insurance to prevent huge medical debt in the future.
- Disability Insurance – Whether it’s an illness, a short-term disability, or a long-term disability, insurance will cover any income loss during this period.
Now that you have these insurance policies in place, you should remember to name beneficiaries on them too. Whether it’s your partner, a family member, or a local charity – name someone that will receive the benefits in the event of your passing.
Most of the time accounts without named beneficiaries or a Will goes through Probate court and depending on how large your estate is and the state you’re in, this may take a long time.
If you died “intestate”, or without an estate or will plan, then the court will split it among your “heirs” – surviving spouse, children, siblings, and extended family. If you were single without children, then your parents would usually receive your estate.
Now, if you have family dynamics where you have issues with some family members, naming a specific beneficiary would ensure that the sister you despise won’t get your retirement benefits, hmm?
Lastly, you should have a Will no matter your age or income. Did you know that only 42% of women have a Will? Writing a Will shouldn’t be expensive, or even need lawyers and be typed on fancy letterhead.
A handwritten Will entirely written by you in front of two notarized witnesses is accepted in most states. Completing a Will on LegalZoom only takes 15 minutes and costs $69 for a basic one.
These 7 money strategies for women were given as a way to get ahead in an often-biased world.
Women don’t have just the wage-gap to deal with, they have to deal with men’s mentality that we’re the inferior sex and we “don’t know what we’re talking about” when it comes to money. (Which between you and me that is plain bull).
Did you know that:
- In 4 out of 10 households’ women are the breadwinners?
- Women who negotiate their salaries end up earning a million more dollars during their whole career?
- Women made up 53.7% of the workforce?
- Only 5.2% of the Unemployed were Women?
- 1 of 3 businesses in America are owned by women?
- Women have slightly lower debts than men?
- Women have a slightly higher credit score than men?
Let’s widen the gap in these statistics and make our lives much more empowering and independent.