One Size Does Not Fit All
Top 5 financial fitness tips for women
When shopping for a t-shirt or pair of pants, what’s designed for a man might not fit properly on a woman. It’s the same when it comes to financial fitness.
But why is that? Why do women need to plan differently than men when it comes to financial security?
Lisa Calongne, financial advisor with Edward Jones, says there are some life situations that women face that most men do not, and women have to prepare accordingly. “Eighty percent of women will be solely responsible for their financial needs at some point in their lives,” she says, “and 57% of women will, at some point, leave the workforce to care for children or sick and elderly family members.” Women may have to take a break from climbing the corporate ladder, and that can impact their income and earning power.
The following are the top five things women should do to make sure they’re financially fit.
Have a plan.
The focal point for financial fitness is to set goals and have a plan to achieve them. The best way to do this is by partnering with a financial advisor who will help you plan for retirement, emergency savings, insurance, and estate and legacy planning.
“A trusted financial advisor will work with you, with your best interests in mind,” Calongne says.
Tamara Wyre, vice president and senior portfolio manager at Hancock Whitney bank, says women in particular thrive when they have defined objectives.
“Set the goal and then move on to the next,” she says. “Then set the next goal and move on to the next. It’s truly a marathon, and there’s no right or wrong way to do it.”
Create a budget.
Creating a budget and living within your means goes hand-in-hand with setting and achieving financial goals. Calongne says people often spend money without realizing how much they’re spending. Once you see where your money goes, you can make better decisions on where it should go to maintain your financial goals.
“Are you contributing more than you can afford at the current time to your retirement? Maybe you need to reallocate some of those funds into emergency savings or paying down debt,” Calongne says. “You may have too much money going into your entertainment budget – so that’s where the budget is really helpful.”
Keep a close watch on your credit.
Closely tied with budgeting and living within your means is being mindful of your credit score.
“You’re able to get a free copy of it every year; you should not have to pay for it,” says Tammy O’Shea, chief marketing officer at Fidelity Bank. Your credit score and your debt-to-income ratio both impact how banks make decisions on loans. O’Shea warns women to be careful with store cards that offer a sales discount.
“If you are going to apply for a card just to get a discount on a purchase you need to make sure that you pay that off immediately and that you close out that account afterwards,” she says, “but truthfully, its better if you just don’t do it at all.”
Save, save, save.
Whether preparing for emergencies or for retirement, experts say it’s never too early to start saving, and the best place to start is with an employer-sponsored retirement account, especially if your company offers matching funds.
“Women should definitely contribute the minimum that is needed for any type of employer matching funds,” says Calongne. That personal contribution is usually around 3 to 4% for most companies, and triggers an additional contribution from your employer, or “free money.”
But don’t just set it and forget it, says O’Shea.
“Ramping up [your contribution], even if it’s just a percentage every year — believe me you won’t feel it in your paycheck,” O’Shea says. “Shooting for a goal of being able to save at least 15% of your salary I think is realistic and well-prepares you for retirement.”
While saving for retirement is important, women also need to have some money available for emergency situations. Lisa Calongne says the best way to plan for the unexpected is to pay yourself first.
“Have the money directly deducted from your paycheck, before you even see it,” she says. Another trick Calongne recommends is having your paycheck deposited into your savings account instead of your checking account, “then move your monthly allocated budget from your savings account to your checking account, not vice versa, because if you ever hope to have extra money it needs to remain in your savings account out of sight.”
Work with where you are.
It can be overwhelming to try and accomplish all of these financial goals at once, and everybody’s financial journey is different. “It needs to be based on where you are in your life,” says Wyre. “Look at what are those things that you’re looking to achieve and then set goals based on that.”
Financial Goals by Decade
Lisa Calongne, financial advisor with Edward Jones, suggests women focus on the following financial goals based on their age:
20s Set a budget to live within your means, start an emergency fund and contribute to your employer retirement plan.
30s Concentrate on paying off bad debts (credit card, high interest) and make sure you are properly insured.
40s Focus on building your retirement and increasing your savings.
50s Make sure that your long-term care needs are in place, start preparing your legacy plan and catch up on retirement savings.
60s Maximize your social security, pay off all debts and boost savings.
Helping Women Find their P.O.W.E.R.
In 2018. Fidelity Bank introduced its P.O.W.E.R. program. An acronym for the potential of women entrepreneurs realized, the goal of the program is to provide opportunities for women business owners, entrepreneurs and heads of organizations which include networking opportunities and a suite of financial services.
Tammy O’Shea, chief marketing officer at Fidelity, says it’s not that women have different needs when it comes to running their business, they just sometimes go about things in a different way than men. do
“Women tend to be more collaborative and make a conscious effort to try to do business with other women in many cases,” O’Shea says.
Small businesses are typically self-financed – maybe starting out on credit cards, or loans from friends and family. O’Shea says Fidelity is aware of unique situations that women entrepreneurs may have experienced that affect their borrowing ability.
“Sometimes we see women who have maybe gone through a divorce, and typically women don’t make as much income as their male counterparts, and that sometimes affects their credit score.”
Just over a year after it launched, the P.O.W.E.R. program has over 500 members. O’Shea says the program’s products include a checking account with more free transactions than a typical business account, and a dedicated team of small business lenders to work one on one with P.O.W.E.R. members.