Financial Tips for Women

By Anita Johnston,
LendersMark.org Staff Writer

For many centuries women were seen as dumb, being unable to make their own financial decisions and confined to waiting for the man of their dreams to help them plan and secure their future. Fortunately, times have changed and women are capable of taking any business and financial challenges, even against all odds.

Today, many women are more capable than men in different areas, including money management. However, a typical woman's income is lower that what a man earns and women get fewer assets after a divorce than their spouses in the inverse case.

According to the Women's Institute for a Secure Retirement (WISER), 3 out of 4 working women earn less than $25,000 year, half of them working in traditionally female positions, with relatively low paid jobs and no right to pensions or retirement benefits. Women spend around 7 years out of work to have and raise children, lowering their Social Security benefits as well.

Statistics reveal that women’s earnings average 74 to 76 cents for every dollar earned by a man, resulting in a loss of over $250,000 during their lifetime. After a divorce, women usually get the children, a situation that lessens their incomes even more. However, following simple tips, any woman can ensure her prosperity by putting the odds in her favor.

The U.S. Department of Health and Human Services has found that only 1 out of 8 elderly women live in poverty, in comparison to 1 out of 12 men, as of 2003 figures. Because women live longer, if you are a woman wanting to secure your future, the sooner you begin to plan, the faster you cut out those differences.

The first step is by taking control of your finances. For a single woman this is not hard to achieve, but if you are married learn to actively participate in managing the family finances or take the leading role, if you can. Considering that 50% of marriages end in divorce this role will prepare you, financially speaking, if your marriage fails.

Invest more is your only option to save the difference between what your spouse earns and what you get. Those discrepancies will be tremendous over time when comparing your retirement benefits. Investing in your savings, aggressively, is the only way in which you can get the larger retirement benefits that you will need.

A woman who takes in average 7 years off from the working force should be prepared to receive only half of the pension benefits received by another with the same years of uninterrupted services. However, this pension will always be lower that the pension received by a man for the same period.

Your pension or social security benefits will add some money to your finances in the future, but not enough to depend on this income alone. In addition, keep retirement as your most precious investment. It is estimated that men save 10% of their gross income for retirement, because you will live longer and earn less, save 12 to 15% instead.

Do not take out of focus your present lifestyle and understand your spending habits to reduce your debt, if it is not possible to get them totally paid off. It is advisable to pay off high-rate debt first or transfer high-rate debt to lower-rate credit cards. Get financial advice if necessary, perhaps from your husband who will be pleased to help you.

Setting your financial goals and training yourself to become financially independent is something that you would have to learn as early as your teen years, but it is never too late to start during any stage of your life. As women get older, fear may be an obstacle to take new challenges, but you must dare and go ahead.

Many women have found that one of the major challenges and yet best investments they can do is to buy a home, even if they move to their husbands' home after marriage. You may learn that your home is your only asset after a divorce or the death of your spouse; you need to learn how you can keep your home in the event that you can no longer afford the payments.