March was National Women’s History month, and April is financial literacy month. The recognition and awareness of both events, combined with the fact that women control a large amount of personal wealth in the U.S., make now an ideal time to remind our fellow women that talking about finances is an OK thing to do.
Polls taken during the past few years show that women trail men when it comes to being comfortable with financial literacy. Becoming knowledgeable about finances is often a trial-and-error process that involves gathering information, recognizing when you might be making mistakes and feeling comfortable enough to admit needing help. When women feel financially literate, we gain the confidence and knowledge to create personal or household budgets and actively participate in managing our finances, as well as those of our families.
Here are a few key concepts that are important to increasing your financial literacy.
Budget. Budgeting is a smart way to keep your finances under control. To get started, you must understand where you spend your money. You may realize that you’re not as bad off as you thought — or you might find that the situation is much worse. Either way, in order to get where you want to go, you need to know where you are now. Identify each dollar you have to work with and plan out your expenses, so you can get on track to being financially secure and stop overspending.
Once you’ve determined your income, look to expenses. First list monthly priorities, like mortgage or rent, transportation and food, to get a realistic view of how much is available to spend on extras such as entertainment. Monitoring your spending and finding places in the budget where you can cut down, like eating out, will help you stay on track with your monthly budget. And writing it down on paper or keeping an electronic record provides insight about where adjustments need to be made.
Save. Saving for retirement, unforeseen expenses and life events that occur unexpectedly is critically important, especially for women. That’s because many women find that, at some point in their lives, they become solely responsible for their finances. The average age of a widow in the U.S. is 59 and, on average, women divorce for the first time at age 30. In addition, men tend to die five years before their spouses do (76 for men versus 81 for women).
Saving on a regular basis can help you avoid being short on funds in case of an emergency, loss of a spouse or divorce, and can enable you to live with fewer concerns about financial resources. Setting aside money, even a little at a time, builds up and can come to the rescue when you need it most. Too many women in the U.S. overlook retirement and emergency savings and can end up in serious debt when life happens.
Debt. Avoiding debt is an important part of keeping your finances in order. Unfortunately, when you consistently spend and live above your means, you can wake up one morning and find yourself in a deep hole of debt. That can be overwhelming, cause significant stress and become a compounding problem. Digging your way out often costs much more than the effort to keep yourself from experiencing such a situation in the first place.
Learning anything new requires that you invest valuable time and energy. But becoming financially literate, or enhancing your financial know-how, is worth the investment and can help empower you in every area of your life.
Photo by Katie Harp
Lisa Taranto Schiffer
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