As a woman, making smart financial decisions is empowering and can help support your goals and dreams throughout your life.
Whether you have goals in the short-term or long-term, a strong foundation is going to help carry you through. For example, maybe you want to get rid of your current car and buy a new one, or perhaps your goal is to buy your own home. It could be that you want more financial freedom or a secure retirement.
Regardless of the specifics, the following are smart financial decisions that can help you achieve whatever you want financially.
Pay Down Debt
There’s a lot of benefits of paying off any debt you have as quickly as you can, especially if it’s high-interest credit card debt.
When you pay down debt, it’s a relatively fast way to improve your credit score. Once you get it paid, you can focus on saving and other goals you have. Plus, when you eliminate debt, even if you’re chipping away at it slowly, it can make you feel emotionally stronger and like you’re in a better position.
Having debt is a financial and psychological burden. If you have it looming over you, it’s going to stop you from achieving other goals.
This is especially problematic if you want to buy a car or home, for example. These things will require you to have good credit, so it’s going to be tough to move forward in your financial life and in general without combatting the debt first.
Find a payoff plan and strategy that works for you. Maybe, for example, you start with your smallest balances so you can knock them out and feel a motivational sense of achievement. You could also start with your highest-interest accounts first if you prefer.
Whenever you can pay more than the minimum balance on debt, do it.
Another strategy you can use is taking advantage of balance transfers. If you have a high-interest credit card with a balance you think you could reasonably pay off in a few months, see if you can get a balance transfer card with a zero-interest period. Make sure you pay the debt that you transfer off before the expiration of the balance transfer.
When you’re working on paying off debt, take credit cards out of your spending rotation. Leave them at home if you have to until your debt is under control. While you’re at it, delete your saved payment information from online retailers. Having saved payment information can make it way too easy to spend money. Make it a little harder on yourself, so you’re mindful before spending.
Take Advantage of Opportunities for Free Money
If your company offers a 401(k) matching plan, you should absolutely be taking advantage of this so-called free money. With 401(k) matching, your employer matches a percentage of what you put into your retirement account.
Don’t make the mistake of overlooking this and going immediately to outside investments. Take advantage of this one first.
Work on Developing Confidence
Women tend to be less confident about their finances and money in general. One way that affects them long-term is that they don’t take advantage of potentially riskier but more rewarding investment opportunities. Learn as much as you can about investment opportunities and financial options so that you’re making information-driven decisions that you feel confident about.
Women tend to allocate more of their money to savings than men, and yet they simultaneously invest in less risky assets. With inflation high right now, this can erode your savings significantly and is actually causing you to lose money.
Ultimately the most important thing you can do right now to improve your success financially is to increase your financial literacy.
Start Investing Simply
If you’ve never invested money before, start with a robo-advisor. Robo-advisors have managed portfolios that will provide you with diversification and allow you to choose between varying risk levels.
You can do something called dollar-cost averaging. This is when you regularly invest in small increments, so you’re shielding yourself from some of the effects of market volatility.
You’re deriving the benefits of keeping your money invested, so you get compound interest. Compound interest means your returns get reinvested, increasing your earnings.
One of the biggest setbacks for women and their finances is not just avoiding taking risks in investing but waiting too long to get started. You don’t need a massive amount of money to start. You can start with anything. You can deposit less than $5 a month and get started as an investor.
Women are often caretakers. We tend to prioritize other people’s needs before our own, which can, unfortunately, impact us financially. You might not put your own financial goals ahead of what other people want or need from you.
You may then end up vulnerable to things like divorce or death.
You shouldn’t give up financial control to your spouse or let them be the only deciders of what your goals are going to be.
Deferring decision-making to your partner can be extremely problematic. Around 90% of women will have sole responsibility for their finances at some point in their lifetime so prepare for that reality now.
Work with a Professional
If you aren’t sure where to get started or feel you’re behind where you should, or you would like to be financially, think about working with a financial advisor.
A financial advisor can be someone you just work with once or every once in a while, so it doesn’t have to be a huge expense, but you can get enormous benefits.
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