Financial literacy is an essential life skill that everyone should learn. Money impacts every decision we make in life, from where we live to the careers we pursue to the schools we send our children to and even how we prepare for retirement. Unfortunately, very few people take financial literacy seriously. Society’s general attitude is that people ought to learn how to earn money, but what they do with money is really up to them.
But this is not an attitude that a smart and progressive woman can afford to have. If you want to live comfortably and provide for your loved ones with ease, you really should consider becoming more financially literate. Here are a few compelling reasons why financial education is critical and how you can better manage your money.
Why is Financial Literacy for Women Important?
Women Shoulder Multiple Responsibilities
The responsibilities that we as women shoulder throughout our lives vary immensely. From building careers to providing for our households and being primary caregivers, we often have to juggle multiple roles at once.
This multi-faceted approach that we must take to life can take a toll on our finances. Research shows that women often stress over not earning enough money and continually struggling to make ends meet.
Further, we are three times more likely than men to feel like we can’t save for retirement. We are also more likely to quit jobs to care for our loved ones. Even when we don’t leave our jobs, we scale back on our commitment to our professions by working part-time to care for family members who need extra care.
All of these decisions affect our money-making abilities, usually for the worse. However, with financial literacy, we would be better able to judge the impact of our choices so we can make decisions that allow us to live more comfortably. Not only that, but we would be better placed to earn passive income through various investments, which would free up our time and ease our workload immensely.
Women Have to Confront the Gender Wage Gap
The gender wage gap is a global phenomenon that is as frustrating as it is annoying. Generally, women earn less than men for the same work. In some countries, the gap is as wide as 50%, while others have a smaller gap of 20%. Nevertheless, this unpleasant phenomenon places women at a disadvantage when it comes to earning an income.
A lower earning potential means that women have to be better at managing their finances to live well. This is yet another compelling reason why financial education is crucial for women.
Women Live Longer Than Men
Studies have repeatedly shown that women live longer than men. While there are obvious positives to this fact, it also means that women need to prepare better for retirement. Additionally, we are also more likely to incur higher healthcare costs in our sunset years, which only impresses the need to have money at hand to fulfill this need.
Home Ownership is Expensive
One of the assets that most people aspire to own is a home. While homeownership is a desirable goal, it helps to consider the pros and cons of financing a home purchase before buying your house.
Home equity can open financial opportunities that many other assets cannot. For instance, you can borrow money to finance a business or pay your kid’s college education using your home as security.
On the flip side, you can be steeped deep in debt in your quest to own a home. This is because mortgage repayments tend to be hefty and long-lasting. You may find yourself tied to monthly home repayments for as long as 30 years.
This is why it helps to seek out as much information as possible before starting the homeownership journey. If the numbers don’t make much sense, then think twice before boarding the homeownership train.
Women Are Poised to Become Future Asset Managers
Did you know that women today hold more wealth than they did in the past? We are also more likely to earn higher education than men. Not only that, but we also own a formidable number of investible assets and are poised to inherit more wealth in the future.
While this is welcome news, it also means that we should learn how to be good managers of the assets we possess. Mismanagement can only lead to undue hardship and stress, which is certainly not what we want.
Financial Products Are More Sophisticated
Over time, financial products have become more sophisticated. Today, basic financial skills will not enable you to maneuver the world of finances comfortably. Gone are the days when you could rely on your employer to fund your pension scheme, for instance. Today, it is up to you to fund your retirement plan and make arrangements for later years.
Additionally, there are countless credit options for consumers, and this can be inundating. It is easy to borrow more than you can repay, especially when dealing with multiple creditors. Consequently, you may find yourself with more debt than you can handle, and this can cripple you financially for ages.
How to Be A Financially Literate Woman
Know Your Income
It is difficult, if not entirely impossible, to manage something when you do not know how much of it you have. This is why the first step in financial literacy is knowing the exact amount of money you bring. That way, you can allocate it to different roles, like paying your loans, paying tuition for your kids, and paying your bills.
Know Your Credit Score
Your credit score plays an indispensable role in determining the financial products you can access. Lenders rely on it to decide whether or not to give you money. It is a measure of your trustworthiness and responsibility. Therefore, you need to know your credit score and improve it if you need to.
You can easily access your credit score for free on numerous websites. If your score is very low, create a plan to lower your debt so you can improve the score significantly. Sure, this will require discipline and willpower, but it is undoubtedly worth all the effort.
Create and Stick to a Budget
Budgeting is the cornerstone of sound financial management. When you have a budget, you spend money on the things you want to, and you can account for all your cents. Additionally, a budget is a useful tool to prevent you from overspending.
To create a realistic budget, start by tracking all your expenses. Then separate your needs from your wants. Allocate money to all your needs, which would generally include utilities, food, transport, rent or mortgage repayments, and tuition. Then you can allocate the reminder to your wants.
Open a Savings Account
One of the best ways to ensure that you save your money regularly is to set up an automatic deduction arrangement with your bank. That way, the money will be reaching your savings account before you even touch it. With such an agreement, you will not need to practice intense self-control when it comes to saving.
You can set apart the savings account for an emergency or fund your dream.
Fund Your Retirement
Planning for your retirement is a task that you cannot start too soon. Whether you have just joined the workforce or have been working for a decade, it is never too early to start thinking about retirement.
If you think that the process of saving for your retirement is a bit complex, consider talking to a financial expert about the matter. You could also dedicate some time to conduct thorough research and increase your knowledge of this area.
Advance Your Education
One of the best ways to increase your earning potential is to advance your academic accomplishments. Studies show that college students earn considerably more than those without a college education. The more education you acquire, the higher your earning capacity becomes. Advancing your education to a bachelor’s or master’s degree can enable you to increase your income tremendously.
Today, you do not have to spend a fortune to earn a higher education. Online study with reputable universities will get you the education you need but at a much lower cost. Consider pursuing programs like the Victoria University online MBA course to help propel yourself forward financially.
If you are looking to grow your wealth considerably, educate yourself about the various available investment opportunities. Investing in the stock market, government bonds, hedge funds, and real estate can change your financial trajectory immensely if you do it right. However, it can cost you a hefty sum if your investments go wrong. Only try your hand in these investments if you are well informed about the pros and cons.
In today’s world, we as women need to be financially literate. It is only by managing our finances that we can improve our quality of life and avoid stressing about money. Not only will financial literacy enable us to provide for our households, but we can also invest money better and prepare for retirement if we are financially literate.
Fortunately, acquiring financial literacy is not as difficult as you might imagine it to be. You only need to take control of your current finances, look for ways to improve your earning potential, and invest your money wisely. If you need guidance, don’t hesitate to seek it. With time, you should see your finances improving if you follow these tips.
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