March is Women’s History Month, a time to celebrate the vital roles and achievements of women in American culture and society.
It is also a time to celebrate you as a woman and continue – or begin – healthy financial habits that will create the life you desire.
In the last few years, it has been estimated that women lead 40% of U.S. households. Whether you are single, a sole parent or the designated person in a partnership handling the monthly bills, many people feel stress about making sure they are checking all the right boxes, and not missing out on opportunities to increase their wealth.
As the esteemed writer/poet Maya Angelou once said, ”When you know better, you do better”. And in the spirit of building a better financial future, here are a few money tips for women to keep your household on track.
Put Your Goals in Writing
People with written goals are more likely to achieve them. It entails envisioning what you see for yourself and then using that goal as the momentum to make it a reality. Financial goals can be both short-term and long-term. Short-term you may plan to pay off debt, whereas a long-term goal may be to save up enough money to buy a house. Either way, make sure to revisit your goals at least once every 3-4 months and make adjustments when needed.
Create a Budget
Many people see budgeting as a punishment plan. And it can seem that way if you are trying to correct years of financial problems in one day. But really a budget is just a financial blueprint that shows your income and what expenses you have on a monthly basis. You now can make informed decisions on where your money goes.
Emergency Fund and Retirement Fund are not one and the same
There is a saying that encourages people to save for a “rainy day, because it going to rain.” But many people put that into one bucket called Savings, and due to tight financial circumstances don’t feel they have anything significant to put into their savings. An Emergency Fund is designed to prepare you for unexpected job loss or large expenses. From your budget, you can determine a set amount to put into a savings account from each paycheck, which will give you up to 4-6 months of living expenses. Some people have their employer directly deposit part of their paycheck into a savings account.
Your Retirement Fund is a longer-term process. In fact, the younger you start saving or investing, the less you will have to worry about growing the fund later in life. If your employer offers a 401K plan, you can take advantage of the pre-tax savings. If there is not a 401K option, or you are self-employed, you can invest in an Individual Retirement Account (IRA).
Know the Good from the Bad
Many people talk about the difference between good debt vs. bad debt. But really debt is borrowing money you haven’t earned yet. If there were a way to define it, it would be a low-interest loan to acquire an asset or improvement – like a house, car, or student loan. Beware of high-interest credit cards that can become difficult to pay back if your financial circumstances change unexpectedly.
Be the Financial Role Model for Your Family
It is never too early to instill sound money management habits. Many times we keep our children out of the financial management decisions because we want to protect them from any anxiety. But actually, it is important for them to know that things cost money, and there is a way to plan for what you want in life, instead of just buying on impulse.
You can start by reviewing a simple budget, allowing them to plan out their spending, even put measures in place for them to earn their allowance. For older children you can set up an account that has a monthly amount, where they can draw money for gas and incidentals; and when it’s gone, it’s gone.
Testimonial of a Milestone Achievement
Mona Alvarado used GreenPath credit counseling to help manage her goal of paying down mounting credit card debt. At first, she hesitated to make the initial call, because she assumed it would be a complicated process, and it would seem like she had to get help to pay off her debt. Fortunately, Mona set her fears aside and took the necessary first step in getting control of her debt.
The call was not what she expected. She thought the credit counselor would be like a “financial fairy” and take over her debt payment process. Instead, she was provided with options that allowed her to become informed and control her own debt payment process.
Today Mona has successfully paid off all her credit cards, which resulted in an improvement in her overall credit score. Most importantly, her four children now have a great role model for financial management.