When I was 22, I worked at a bank, and most of my colleagues were men. As my first real job in the real world, I learned a few things. First, men and women act differently in the workforce. Second, I needed to learn a lot about how to navigate an industry where men seemed to be rising to the top very quickly while I toiled at my job like a good little soldier.
My first eye-opener was when a supervisor turned in her two weeks’ notice. A male coworker immediately scheduled a meeting with management and demanded a raise since he would be taking on more work now than before. I was shocked at the audacity. And then I thought about it. Why had I not done that? Where was my ability or courage to negotiate like that?
Here is a secret…men and women are different, with different societal pressures, expectations, and norms to navigate.
Shocking, right? We handle our working careers differently than men; we climb the ladder (or don’t) differently than men. Some of us may be the breadwinners of the family, yet those same women may be the ones rushing home when children are sick. We may be the one who handles the household finances. We may be aware of the big picture items, like how much our mortgage is, but not necessarily sure if we have enough life insurance or how much is in the other spouse’s retirement plan.
Each of us has a different way of handling our finances, but some truths cannot go ignored. Women live longer than men: 9 out of 10 women will be solely responsible for their own finances at some stage in their lives, due to divorce, single parenting, aging, or death of a spouse. Since we, on average, make less than men during our lifetimes, we may receive less from Social Security. According to AARP, we will even spend 50% more than men on healthcare in retirement.
Women still earn 19.5% less than men as of 2017 median earnings. Women tend to be more conservative than men when it comes to asset allocation, causing them to underinvest their portfolios (Goldman Sachs Asset Management, 2018). On average, only 46% of women participate in retirement plans (Employee Benefits Security Administration – US Department of Labor, September 2017).
According to the Women’s Bureau, US Department of Labor, women make up 46.8% of the workforce. We earned 57% of the bachelor’s degrees in 2019 (AAUW), but hold 929 Billion dollars worth of the student loan debt. That’s staggering!
It’s time to get serious!
It’s time to accept the challenges we face and make plans to secure a healthy financial future. Women control over 22 trillion dollars of the worlds’ wealth (BMO Wealth Report), and yet some women do not feel confident in their ability to manage those dollars properly.
Thankfully, there are great resources available to help women empower themselves financially. Here are eight things women can do right now to take control of your financial situation:
1. Evaluate your situation
Lay it all out in front of you. How much income is generated in your household? How much debt do you carry? What are your priorities? It’s important to start with a baseline. Being honest and transparent is tough; owning up up to where you are today is a critical step in moving forward.
2. Get organized
Do you have a budget that you follow? Or do you spend until your bank account tells you to stop? Take steps to figure out how much you should be spending first and then worry about long-term investment strategy later.
3. Build a Plan
What are your short term and long-term goals? At what age do you want to retire? Do you anticipate having to care for aging parents or grown children? Do you or your significant other have a shorter or longer-term life expectancy than most? If your grandmother lived to 100, you need to factor this into your planning. Build a plan to pay down your debt. Be aggressive with this step. If you have less debt at retirement, you need less income to live comfortably. Establish a savings and investment plan utilizing your risk tolerance.
4. Contribute and invest
Are you self-employed? Do you work for a company that offers a retirement plan? If you do, you should be hyper focused on saving through your 401(k) or 403(b) plan. If there is not a plan available to you, you should consider opening an IRA. The point is to take action and make sure you are putting aside enough for your future.
5. Protect your assets
Create a will, purchase life and LTC insurance, create guardianship provisions and health care proxies. Make sure that the majority of your retirement funds are held in a qualified plan. There are protections offered by ERISA that could shield that money from creditors, liens and judgements.
6. Get advice
Work with a financial advisor to help you build your plan. You should not have to do this alone. If you have prepaid legal benefits at work, consider working with an attorney to set up your will and trusts. Choose the professionals that you feel comfortable working with. Consider fees when working with a professional. Make sure you understand the services you will receive in exchange for the fees paid.
7. Educate yourself continuously
It’s not enough to hire great professionals. By furthering your education and understanding, you will be better prepared to make the right decisions for your future.
8. Review and modify as needed
What is the saying about the best laid plans? Build a plan and review it each year. Life will throw you curveballs. Be ready to bob and weave and make changes as life changes.
As women, we sometimes find ourselves lacking the confidence to take action where we need it. It’s time to step up our game for the good of our futures.
If you are interested in learning more about this topic, attend out webinar: Women’s Financial Wellness! Click below to register.
Content provided by Kim Cochrane, Director of Retirement Plan Services at Raffa
Recruiting and retaining employees is easier when you can proudly offer a comprehensive benefits plan that makes your team members feel as valuable as they are. At Raffa, we build cost effective, long-lasting employee benefits strategies to keep your business and your employees in optimum health.
Photo by julief514