Are you Saving Money and Ready for the Future? Why Women Need to Be Better Wealth-Builders  

Women in the age group of 27-45+ are unique in that perhaps for the first time in history, many are in complete charge of their own financial planning.  While this is positive, the flip side is that they also need, by this point, to be firmly ensconced in planning their future financial security — and many are not.  This is no easy task: today’s financial landscape is complex, and the economy is prone to rapid fluctuations.

But if tackled with purpose, being in charge of one’s personal financial future is freeing and opens the door for further power-brokering of life. When one has financial freedom (which is to say, a solid investment plan with money in the bank), one can make often difficult choices: a woman in charge of her finances is free to leave a bad relationship, the wrong job, or even where she lives.

Being Mindful About Money: Key Strategies to Help You Save

Recently at a recent professional conference in San Francisco, Manisha Thakor, CFA, CFP, who has created a very helpful website, moneyzen.com, and is Director of Wealth Strategies for Women at Buckingham and BAM, spoke on the topic of “Am I on Financial Track?” During her talk, she provided a very informative checklist and powerful rules to help determine whether one is, in fact, prepared for the future as regards money.

One of the quick and easy tools shared was “The 50/30/20 rule.” This means that of one’s entire income, 50% should be spent on household needs; 30% can be spent on “wants” (and when thought of this way, one might become a bit more judicious in spending in this category; 30% may be a lot to some people!); and the final number of 20% is for savings. Let that sink in a moment. 20% should go to savings. How many of us are hitting that mark? Likely not many.

Another interesting exercise was “Joy-Based Spending,” where a person tracks all expenditures for thirty days. All – as in everything, do not think about it, just track it – both the amount and the item. Example: “Starbucks, $3.58” and so on, for a whole month. At the end of the thirty days, take a highlighter and highlight all the things that did not bring you joy. What an eye-opener! This kind of financial introspection can be the beginning of getting one’s financial future on track.

U.S. Women Will Control $22 Trillion by 2020

In a 2012 article in The Wall Street Journal, “Clients from Venus” (the title is a play on the John Gray book Men are from Mars, Women Are From Venus), Candace Bahr, of the Bahr Investment Group, confirmed what we already suspected: “Women are an under-served and ignored market.” The article points out that this situation still exists, even in the wake of the revelation that in the U.S. alone, women control $8 trillion in assets, and that by 2020 the number is expected to surpass $22 trillion!

This article goes on to state that women are finally recognizing that they need to understand financial concepts, and be active participants in how they save and plan for the future. Heather Ettinger, managing partner of Fairport Asset Management in Cleveland, Ohio, notes that her firm holds monthly events specifically aimed at female investors, where cocktails and conversation – not sales pitches – predominate.  As she notes, “Women want to get to know their advisers through the eyes of other women.  Men are not as relational, and are more focused on investments rather than the whole-life picture that women seek.“

All of this data points to and underscores the importance of women saving and planning for retirement. Financial security is imperative, for the present and the future.

Identify how you relate to money, then set goals, use the pointers outlined here today, but mostly – just get started!   Here are some ways to do that:

Tips for Achieving Financial Security

• Start as soon as you can; starting early is best, but it is never too late!
• Treat your savings as an expense, similar to paying your mortgage.  If you can do this as a pre-tax deduction – all the better!
• Save as much as you can in a tax-deferred account; the penalties associated with early withdrawal will help stave off the urge to spend this money.
• Diversify your portfolio – i.e. don’t put all your eggs in one basket.
• Consider all the potential expenses in your financial plan (people don’t want to think about long-term care, however, it can be a reality).
• Periodically reassess your portfolio – this will help ensure your retirement planning is on track.