It might surprise you that it wasn’t until the Equal Credit Opportunity Act of 1974 that women could participate equally in financial transactions. Prior to that, it was fathers or husbands that had to cosign for a woman just to get a credit card. Thankfully, a lot has changed since then, but there is progress still to be made. According to a 2019 report, 85% of women take charge of household expenses, but only 23% of women are involved with long-term financial planning. (1) Whether single, married, divorced, or widowed, every woman should be a full participant in her own financial future.
Let’s cover some of the basics of what all women should know about personal finance.
Establish Credit
Every individual should have their own established credit. Even if you are part of a couple, you should have your own credit independent of your spouse. In the event of a bankruptcy, divorce, or death of a spouse, you won’t be left struggling to establish credit.
Save For Retirement
Women are substantially behind men in saving for retirement and are much more likely to live in poverty after age 65. The rate is 26.1% for single women, 18.4% for divorced women , and 16.3% for widows. (2) Women are more likely to save less for their retirement for several reasons: they take time off to have children or care for an elderly parent or work part-time jobs and are not eligible for company retirement savings benefits. Women caregivers under 50 have 30% less retirement savings than non-caregivers. (3)
Saving for retirement is essential even if you have a spouse with substantial retirement savings; odds and actuarial tables say that you will survive your spouse by six to eight years, so you have to be prepared. (4) Will you have enough money after your spouse dies? And for single women, how do you bridge the savings gap?
You should have a clear picture of your finances. How much debt do you have? How much money do you have in an emergency fund? In an IRA or 401(k)? Do you and your spouse have enough life or long-term care insurance? These are all questions to ask and plan for. These may be difficult conversations to have, but knowing where you stand is a start.
In terms of debt, if you are afraid to know how much you owe, then take control and open up those statements and look at those interest rates. Pay down your highest interest rate credit cards first and then move on to the next. Use your new debt-free lifestyle to save for retirement; contribute to your IRA every year. For 2020 the maximum annual contribution is $6,000, and $7,000 if you are over 50. Contribute to your company plan, and if you can, max out the yearly contribution of $26,000 for those over 50.
It’s Not Too Late
If you’re feeling overwhelmed and wondering if it’s too late for you to get on track, don’t despair—it’s never too late. Start by setting manageable financial goals for yourself. If you’re married, set goals with your spouse. And always have a plan to accomplish those goals. Here are three things you can do right now:
- Establish credit
- Reduce debt
- Contribute to retirement accounts
If you need help putting a plan together, I’m here to help guide you through the process. Email me at jim@glhcfinancial.com or give me a call at 916-276-8677. Let’s start the conversation to see if I am the right fit to help you pursue your ideal financial future.
About Jim
James Callens is a financial advisor at GLH&C Financial Services, a full-service, comprehensive wealth management firm. Jim has over 30 years of experience in the financial industry and uses his extensive resources, knowledge, and experience to help his clients experience simplicity and clarity in their financial life. Jim spent over 20 years working for GE Financial Advisors, both in their insurance services department and as a regional manager and financial advisor. He took part in GE’s Six Sigma Quality Training program and completed the National Association of Life Underwriter’s four-year LUTCF course. Jim also earned his certificate in financial planning from the University of California at Davis. In 2011, Jim combined his own firm, Callens Financial Group, with GLH Financial Services, creating GLH&C Financial Services, so he could provide even more value to his clients.
Jim is a member of the Financial Planning Association of Northern California and National Association of International & Financial Advisors (NAIFA). He has served as a board member of several nonprofit organizations and has been involved in Cub Scouts leadership and youth sports coaching. Jim lives in Folsom, CA, with his wife, Melissa, and his four children, Jacob, Kristen, Grant, and Andrew. Together, they enjoy outdoor activities such as kayaking, bicycling, and vacationing at Lake Tahoe. To learn more about Jim, connect with him on LinkedIn.
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(2) https://www.fa-mag.com/news/the-facts-of-life-for-women-retirees-54755.html
(4) https://www.who.int/gho/women_and_health/mortality/situation_trends_life_expectancy/en/