Are you financially confident?
If the question makes you nervous, you're not alone. More than half (63%) of Americans say they are confident about their finances, but many are still living paycheck to paycheck according to MetLife's 17th Annual U.S. Employee Benefit Trends Study.
The disparity is magnified when it comes to women. The survey also shows that, compared to men, women are more likely to live paycheck to paycheck (55% women vs. 44% men) and feel less secure when it comes to their finances (55% women vs. 70% men).
With personal finances being the lead stressor for Americans, women who take a more active role in their personal finances may gain more clarity, confidence and control when it comes to managing their money.
Here are key ways women can start to take charge of their finances:
1. Know Your Net Worth
Your net worth is the total value of all your assets including investment accounts, bank accounts and real estate, minus any outstanding debts such as credit cards, mortgages, car loans, or student loans. Knowing your net worth is a good starting point for understanding your overall financial picture and choosing where to focus next.
- Do you have high-interest debt such as credit cards or personal loans? If so, consider creating a plan for paying it off as soon as possible.
- Do you have three to six months of cash available for emergencies? If not, try setting a goal of saving up an emergency fund. Even saving $25 or $50 per month is a great starting point.
- If you're already on a savings track, how much money are you saving each month? Can you challenge yourself to set aside an additional 5 or 10 percent each month?
If you’re married, you and your partner should both keep track of your respective and joint assets and debts so you’re on the same page. Some couples schedule periodic money dates to review spending and saving and ensure that they’re on track to reach their goals.
2. Commit to Investing
Because of inflation, simply saving money isn’t enough to help you achieve most financial goals. You may be able to earn a percent or two of interest on a savings account, but increases in the cost of living generally outpace those interest rates and erode your spending power over time.
Investing can help your money grow over time. Women tend to invest more conservatively than men, but that can be an asset in the long term. Even small amounts consistently invested over time add up.
If your employer offers a match on an employee retirement plan like a 401(k), why not take advantage of that option. Make sure you’re contributing enough to capture the full match. And if you’re not already maxing out your retirement contributions, can you bump up your contributions by a percent or two?
Of course, you don’t need an employer-sponsored retirement account to start investing. You may be able to set up an Individual Retirement Account (IRA) outside of work. For money you plan to access before retirement, mutual funds or a brokerage account could be a good starting point.
3. Fill in Your Knowledge Gaps
If you want to learn more about debt management, investing, or how to prepare for life's curveballs, there are plenty of resources to help you get up to speed. Some options you can choose are:
- Meet with a financial advisor to help you get clarity on where you are in your financial journey and what to do next.
- Listen to financial podcasts to boost your money savvy. Search for personal finance or financial wellness shows on your usual podcast platform — it's a great way to learn money tips from financial experts while on-the-go.
- Check your local community college or adult education center for low-cost courses on saving and investing.
- Research and join a book club that focuses on reading and discussing personal finance books as a way to build a support system as you work towards greater financial confidence. If that appeals to you, see if your local library or Meetup group has a personal finance book club, or consider starting your own.
4. Prioritize Expenses
Identify fixed and variable expenses, as well as distinguish between your wants versus needs. Needs such as housing or food must take priority over wants such as a vacation or a new TV. Fixed expenses are things like rent or a car payment that do not change from month to month. Variable expenses are things like groceries or entertainment that can vary.
If you can lower a fixed expense by moving to a cheaper apartment or switching to a cheaper cell phone plan, that can put money back into your wallet month after month. You can lower variable expenses by being more mindful of your grocery bill or how much you're spending on entertainment, but this requires ongoing attention.
For additional tips and advice on personal finance, access MetLife's financial wellness resources here.