When it comes to financial planning women certainly have something to celebrate. For women, long gone are the days of letting her husband do all the planning and investing.
Women are now a prominent component of corporate America and the global business landscape. Their emergence as entrepreneurs, leaders, and innovators has made them an integral part of our country’s economic health and the future of global business. More women are taking stewardship of family and business finances.
Steps to create a solid financial plan.
Take money lessons to heart.
Women need to understand where their attitudes and habits about finances come from, and where necessary, write another story. For example, as a young girl you may have watched your father gamble money away or spend foolishly as your mother remained quiet. This could be an inspiration for you to be more assertive in matters of the wallet.
Write some financial goals
Having financial goals is the foundation for your financial success. You have to know what you want to accomplish in order to actually accomplish it. It’s great to have big, lofty goals, but be sure to break them down into smaller chunks. That way, you’re not overwhelmed trying to accomplish them and you can easily measure your progress.
It’s also important that one of your goals includes a plan to deal with emergencies. You want to make sure you are prepared to weather a storm. Otherwise, you’ll just end up in debt again.
Pay off debt
You can’t really kick-start your financial future if you’re carrying a ton of debt. Between sky-high interest rates, large minimum monthly payments and the damage lots of debt can do to your credit score, you’re better off paying your debts first. Create a debt pay-off strategy and be patient but consistent when working toward becoming debt-free.
Plan to invest
If you wanna building wealth, then you’re going to need to put your money to work for you. This is where investing comes in. Before you put any of your hard-earned money into investments, it’s important to have well-defined objectives. Think about what the investment is for when you’ll need your money and what your risk tolerance is.
Investing is a long-term activity, We have to commit to it if we really want to see the money grow. Worried that you’ll need your money in the short term? Well, that’s what your savings accounts are for; to put aside your emergency savings and money for your short-term goals (you’ll need in five years or less).
You also want to make sure you have a basic understanding of any investment you put your money into (real estate, stock market, or business). Your plans to invest should be included as a part of your monthly budget where you allocate a certain percentage of your income toward your investment goals.
Create a plan for retirement
In order to have the lifestyle you dream of in retirement, you need to plan adequately for it. You’ll need to determine how much you are going to need to retire, and how you plan to invest and save in advance for that period of your life.
Buy the right insurance
After working so hard to earn money, the last thing you want is an unplanned occurrence to wipe you out. Insurance is essentially your back-up plan that will protect your assets in the event a life circumstance happens that requires a large amount of money to resolve.
Insurance coverage should include life, health, disability, auto, home and business. Basically, you want to protect anything of major importance that has a high value to ensure that you are protected financially. Having the right insurance can turn what could otherwise be a major disaster into a mere inconvenience.
Estate planning is not something a lot of people like to think about, but it’s essential. Estate plan allows you to determine exactly what happens to your assets after you are gone. It involves listing out all your assets, creating a will and making it accessible to the people who need to have access to it. A financial planner or estate lawyer can help you set things up correctly.
Taxes are annoying, but they’re certainly not going away anytime soon. So your long-term income projections must include taxes. Not planning for taxes can impact your cash flow in a major way.
In addition, you definitely want to look into tax savings investment options and stay up to speed on any relevant tax deductions you can apply to help you save money on tax payments. You can plan to sit with a tax accountant or financial planner to help ensure your plan for taxes is adequate.
Review your financial plan frequently
Once you have your financial plan outlined and churning along, it’s important to review your plan frequently and make the necessary adjustments if your goals or the circumstances around your life change. Maybe your insurance needs change, your risk tolerance changes, etc. At a minimum, you want to check in on your overall financial plan at least every six months.
If you check your financial plan infrequently, it’s easier for you to deal with unplanned life occurrences, bounce back from setbacks and accomplish your financial goals.
Think about what you do to maintain your personal health.
Don’t ignore risk.
Market risk describes the fluctuations in security prices as a result of market activity and expectations. But market risk is not the only factor that can affect your balance sheet or financial well-being. Because women have longer life expectancies and often lower retirement account balances than men, they also need to be mindful of inflation risk and longevity risk. For this reason, it is important that women do not invest too conservatively. Age 60 is the new 40. Take my grandmother, who lived to be 94 years old: she was eating Greek yogurt and doing yoga in the ‘70s before it became cool! Trends change and so do demographics.
Recognize your needs and motivations.
Some people view money as a sign of status or defining success. To be mindful, women need to understand what motivates them to both spend and save money. Be realistic about your needs and wants, and identify and prioritize your financial goals.
Don’t lose sight of what you value.
The financial choices you make determine what’s important. Buying the latest designer bag for example, may sound like fun, but take a step back and think about how you want the future to look. Will making this purchase place your financial independence or retirement savings at risk?
Stay the course, avoid overspending and learn from mistakes
Journey to financial independence won’t always be easy. There will be some tough days. Pursuing a goal of financial independence that’s very much tied to delayed gratification is not always fun, but it’s completely doable. Have a solid plan for your finances, be disciplined and avoid overspending. You’ll find out how great you’ll feel when you really make a concerted effort to stick to your budget.
As you work on your finances, you may still make mistakes with your money, and that’s okay. Sometimes you might be unable to resist the urge to buy something that isn’t in your immediate budget. And sometimes you will feel like ripping your entire financial plan to bits because it just doesn’t seem like fun.
However, as long as you keep your reasons “why” you want to be financially free in focus and make an effort to rebound quickly from your mistakes, you’ll do just fine. It’s all about assessing the mistakes you made, understanding why you made them and making a plan to avoid making them again. Then, you’ll need to take those lessons and apply them to your future success.