The world has changed, and so have our households. Life spans are longer – particularly for women – and many families now live off of two incomes.
Today women are successful business executives,entrepreneurs and business owners. Now,more than ever, they are in a better position to achieve financial security for themselves and their families. That means becoming more involved in their financial plan and taking an active interest in their investment savings.
Here are six steps women can take to improve their current financial state and to adequately prepare for their future:
1. Do some research and educate yourself
It’s important that women find financial empowerment and success alongside their spouses. The first step to achieving that is simply setting aside time to do research and find out what is right for you and your family. Are you starting from scratch, or do you just need to brush up on some things? Start with the basics, such as magazines and books. Also, seek help through your retirement plan at work, as many plans provide educational materials and assistance. You don’t have to do it all at once, but don’t put it off. First, figure out what your knowledge of the topic is and what you need to know in order to move forward.
2. Give yourself a financial overview
In order to create a successful plan, you need to be aware of what your current finances look like. See where you are right now, what your situation is, and figure out your short- and long-term goals. Review everything available to you – all your finances, how much you have in income, debt, living expenses, planned savings, after tax savings, etc.
3. Take advantage of everything available to you
Hopefully, after you’ve completed your financial review, you know what investment vehicles you are – and aren’t – utilizing. If you and your spouse are still working, how much are you saving? Are you taking full advantage of your tax-deferred deduction through your employer plan? Does your company provide a contribution match, and are you taking advantage of that match? What are your current investments, and are they appropriate for your risk tolerance and your financial goals? Additionally, you might want to consider speaking to a tax advisor to make sure you’re taking advantage of applicable tax deductions and/or tax credits.
4. Have a conversation
This one is often the most difficult for women, but don’t be afraid of this step. Take a vested interest in your family’s finances. I hear women saying they don’t have the time, but if you don’t get up to speed on your financial state by discussing it in-depth with your spouse, you could end up paying for it – literally – later down the road.
Also note that you are not alone in this. Others have the same questions and investment concerns. It is okay to talk with friends who may have similar questions,but do your own research and seek out professional advice. Don’t act solely on the hearsay of others.
5. Plan for the long-term
It’s easy to plan for the short-term because you’ll be rewarded sooner. However, everybody should have long-term goals. Someday you would like to retire, but in order to get there you need to make decisions to achieve that goal. Figure out what you would like your retirement to look like and whether you’re on track to fund that kind of lifestyle.
Many employer-sponsored retirement plans have built-in savings calculators that can tell you whether you’ve saved enough for estimated expenses, or,if you haven’t, how much you need to save. Determine what you can expect for your future Social Security and Medicare benefits and factor in the cost of health care and long term care. Create a financial plan and then begin to work through the steps of your plan.
6. Consider seeking the help of a financial professional
Women are the key to their own financial futures, and to help make financial decisions, they need to become educated and informed. The world of financial planning isn’t always easy or convenient. In many cases, women can benefit greatly from working with a professional who can help them understand their options and to implement plans designed to provide for them and their families with financially secure lives. Don’t delay – you’ll thank yourself later!
Ellen Jordan, CFP, is senior vice president, Wealth Management Division, at Bryn Mawr Trust.