When it comes to multitasking, women corner the market. In our personal lives — as mothers and wives, sisters and daughters and friends — women have always excelled. In the corporate world, 2019 is the first year in which women are nearly the majority of the college-educated labor force, according to Pew Research Center.
Despite the great strides being made, disparity still exists between men and women. For example, although the gender pay gap has narrowed since 1980, in 2018, women still earned just 85 percent of what men earned.
Women also tend to be less involved with their finances overall, which can lead to challenges when it comes to saving and investing for the future. According to MetLife's 17th Annual Employee Benefits Trend Study, women feel less confident about their finances when compared to men (55 percent vs. 70 percent) and are more likely to live paycheck-to-paycheck (44 percent vs. 55 percent).
Taking a more active role in our own financial wellbeing isn’t just a point of pride: women who are more actively involved in decisions regarding their finances will be more readily able to make the necessary adjustments to meet their goals. Taking the financial reigns might seem overwhelming at first, but a little research — and a lot of practice — goes a long way.
Below are strategies for each life stage that can help empower women to become more financially confident and independent throughout their lives.
Potential life events: College, first jobs, marriage
How to prepare: Women today earn about 57 percent of all bachelor’s degrees, surpassing the number of college-educated men for more than a decade, according to Pew Research Center. Being smart about college means more than just passing classes, though. With student loans at an all-time high, a strategic after-college financial plan includes developing a strategy to start paying back any student loans immediately.
With your first job, be sure to sign up for any company-sponsored retirement plans, especially if there is a match. It's also smart to include debt repayment and emergency saving in your regular budget and avoid living above your means. The more you can put away now for retirement the better, thanks to compound interest.
If marriage is on the horizon — the median age of marriage for a woman in 2019 was 28, according to the Census Bureau — make it a priority to maintain control of your money, even as a couple. Keep some of your own money separate with your own checking account and credit cards, and be smart about money that’s spent jointly by setting a monthly meeting to discuss financial goals.
Potential life events: Starting a family, deciding whether to rent or buy your first house
How to prepare: Having a baby is an expensive endeavor, but it could be even more costly for a woman who loses out on income and/or retirement savings while taking time off of work. Be sure to research all of your maternity options to ensure you get the most out of them if you plan to take time off. Check to see if short term disability insurance is available through your workplace, as this coverage can help replace all or part of your paycheck when you have a baby. Also consider saving up more of a cushion in an emergency savings account while you’re pregnant to cover unexpected costs. Finally, if you can, research your health insurance options ahead of time to make sure your plan covers you fully for your needs.
If you’re starting a family, you may also want to look into additional insurance policies — like life insurance — to ensure your family is covered financially, should something happen to you.
When it comes to your home, it’s important to weigh a number of factors before deciding whether renting or buying is the right option for you. Buying a home can be a good investment, but there is more to consider than just the purchase price, like paying for taxes and upkeep. Plus, if you do decide to purchase a home, putting less than 20 percent down on the value of the home as a down payment means you’ll also have to pay Private Mortgage Insurance. As with all of your spending decisions, it’s important to stay within your means when buying a home. A financial advisor can provide a helpful, objective viewpoint on how much mortgage you can easily afford, if you need a little help.
Potential life events: Saving for college, career advancements/changes, estate planning
How to prepare: If you have a family, you might be starting to plan for their college education. It’s true that the earlier you can save in a 529 for your child, the more money you’ll make, but it’s also important to never divert money from your retirement goals in order to fund a college savings account.
If you’ve been moving up the corporate ladder at work, you might be making more money now, as well, so it’s a good time to revisit your financial goals — emergency savings, retirement, college funds, etc. — and to see if you’ve distributed your assets appropriately.
If you haven’t already, now is also a good time to put together a solid estate plan to ensure all of your assets — both physical and financial — go where you want them to go when you pass. This is especially important if you have a family and would like to leave a legacy.
Potential life events: Empty nest, caring for aging parents, retirement planning
How to prepare: Really boosting your retirement savings in your final years before actually retiring should be a goal now that some of your other priorities have likely lifted. If your children are about to or have already left the home, now is a good time to reevaluate your overall needs. For example, downsizing your home to save more money each month is a good option to increase your retirement savings. If your child is already out of college at this point, you might be able to divert the money you were putting towards their college fund into your retirement account, as well.
Although financial responsibilities for your own children may be winding down, studies show that individuals ages 55 to 64 are most likely to provide eldercare, with the majority of the caring — 58 percent — being done by women. If you are caring for an elderly family member, be sure to check out the resources available to you for financial aid or free or low-cost services — the National Association of Area Agencies on Aging and Eldercare are good places to start — and remember to keep your own financial goals as a priority, as well.
Potential life events: Retirement
How to prepare: If you’ve planned carefully throughout your other life stages, you can hopefully retire at the age you hoped. Even so, retirement itself takes a well-thought-out strategy. Be sure to understand how your retirement savings can translate into income during these years, and figure out what will keep you busy and happy. Keep in mind that women generally live an average of six to eight years longer than men, according to the World Health Organization, so we need to make our money last longer.
Women have many opportunities today that have been hard-fought for. In order to make the most out of every life stage, it’s important to stay on top of our financial needs and goals, and to reevaluate as necessary.