Achieving financial security can be a difficult task as women are still underpaid and under-represented in the workplace. Having a savings account and retirement plan is just the beginning of financial literacy, and there are many things women can do to improve their financial standing.
Pursue Your Education
The best way to invest in yourself and feel financially secure is to go to college and pursue an education. Whether you’re just out of high school or you already have an associate’s or bachelor’s degree, continuing your education is a great way to improve your career prospects and earn more money in the future.
You can also educate yourself in financial literacy with the help of the Internet and some physical resources. Books and free online materials can help you develop a deep understanding of finance, but if you need more guidance, you can reach out to a financial adviser to help teach you the ropes.
Learn from Mistakes
Another way to feel financially secure is to learn from previous spending mistakes. Identifying previous mistakes can be difficult when you first begin but can help you avoid making the same mistakes in the future. Once you’ve identified your mistakes, you can begin to analyze what exactly went wrong to better plan for your financial future.
Avoid Credit Card Debt
Inadvertently building up credit card debt is an easy way to prevent yourself from saving money in the future. Credit card debt can accrue massive amounts of interest that make it feel impossible to pay off a card in full. Some cards have interest rates higher than 20 percent!
The best practice for credit cards is to use no more than 10 percent of your credit line and make regular payments to avoid paying too much in interest. Avoiding credit card debt is the best financial decision you can make to plan for financial security in the future.
Set Goals and Stick to Them
A surefire way to feel financially secure is to set financial goals and stick to them. Setting short-term and long-term goals will help you identify actions you can take to improve your financial standing.
Setting goals will also help you improve your financial literacy by forcing you to plan ahead. For example, if your goal is to begin building an emergency fund, you will need to develop a deeper understanding of your finances to reduce spending and save more.
Budgeting your money every paycheck is the only way to meet your financial goals. Through budgeting, you can eliminate unnecessary expenses and begin building a savings account, making investments, and prioritizing your money.
When you begin to budget, you can see your overall cash flow and find ways to cut expenses and contribute to your financial future.
Investing your money in a Roth IRA or the stock market can exponentially increase your wealth if you play your cards right and perform careful research. You should review your investments every quarter to make sure they are still helping you meet your financial goals.
A financial planner can help you make smart investments that will contribute to your financial future.
Plan Ahead for Retirement
Many young people forget to plan and invest in their retirement fund. A large retirement fund can ease the transition out of the workplace in the future and guarantee financial security. The earlier you invest, the better, because money placed in a retirement fund will grow with compound interest.
Many employers offer retirement plans like a 401(k) that can also help you save for retirement. Take advantage of employer-sponsored plans to maximize your potential retirement savings. Some employers will even match your 401(k) contributions to help provide more financial security.
Regularly Add to an Emergency Fund
Unexpected emergencies can drain your savings accounts and upend your financial planning if you do not adequately prepare. Setting aside a part of your paycheck to build an emergency fund can help you feel financially secure when life throws you a curveball. A good rule of thumb is to have about six months’ worth of your expenses in an emergency fund.
Part of building an emergency fund also means building a support network and finding adequate insurance policies. When shopping for insurance plans, you should consider the exact type of insurance you need. You should at least have health insurance and life insurance.
Additional forms of insurance that can help you feel financially secure depend on your individual needs. Consider a car insurance plan, renter’s insurance plan, or homeowner’s insurance plan to help protect your physical assets. Umbrella policies can help you save money on insurance if you have a lot of different assets to insure.
Take Advantage of Online Tools
Online tools and phone apps are the best way to manage your finances and stick to a budget. There are thousands of apps that you can download that can all help you manage your money, build a budget, and invest in the stock market like a professional.
Most banking and money management apps also allow you to set up recurring deposits and automatic bill payments. Automating your finances can help save time and make budgeting much easier when you don’t need to manually move around money from your paychecks.
Make an Estate Plan or a Will
Writing up a will or an estate plan is as uncomfortable as it is necessary. While you may not need a complex plan if you do not have a large estate or a lot of earnings, a will can still help you feel comfortable about the future of your finances.
Writing a will becomes especially necessary if you have a family. Writing guardians into your will for minor children gives peace of mind to all. Dividing your wealth and estate in advance can also help avoid unnecessary conflict.
For more help feeling financially secure, check out our other blog posts to learn how we can help you achieve your financial goals.