I normally don’t post on Thursdays, but when my friend Chelsea from Mama Fish Saves reached out to see if I’d be interested in contributing a post in honor of International Womens Day, of course I said yes. This article will be all about my number one piece of money advice for women. What is it? You’ll need to keep reading to find out.
But first, what’s this collaboration all about? Here’s how Chelsea describes it:
International Women’s Day is a day to celebrate all the varied and incredible achievements of women around the world. But it is also on closing the gender gaps that still exist.
Financial literacy and business development is one area where women are still behind in the US and abroad. Here are some facts:
- Only 22% of US women can answer three key finance-related questions correctly.
- Less than 2% of venture capital dollars and 4% of commercial loans go to women-owned businesses.
- US women have less than one-third the household savings of men and are 80% more likely to live in poverty at age 65 and over.
So this collaboration will be about inspiring women to take action: improve their finances, chase a dream, start a business, own our immense power!
Now on to my number one piece of money advice. It would be…
Know Your Money
There are too many women in the world who depend on someone else to know their money for them – and they suffer for it. Perhaps it’s a husband who “takes care” of all the money and investing, or a financial advisor they rely on to act in their best interests. Or maybe they just don’t want to learn about all this “money stuff” and execute on the ostrich strategy of personal finance. That would be spending until the checking account runs out, not thinking of the future, and living financially only for today.
Money is important. Financially free is the way to be. No matter if you’re a high income earner, or a low one – whether you have a lot of money or a little – you need to get money smart. For yourself, for today, and for others, you need to take charge and know your money.
Frankly, even if you’re married to the wisest money-smart man or woman in the world, you need to learn about money. Long time readers know that I’m a huge proponent of knowing all the “jobs” of the other person in your relationship, because you just never know what might happen.
What Does This Mean?
What does it really mean to “know your money”? Here are the key aspects to knowing your money:
- Know Where It Goes:What is your money spent on? Knowing where your money goes every month is the first step to getting to know your money better.
- Know Where It Is:What’s your net worth? What is your money invested in? Why is it invested that way? If you don’t already know this, ask.
- Know Your Goals and Dreams: What do you really want – long term – financially speaking? Maybe it’s to retire at 50, to start a business, send your kids to college, or pay off your mortgage. Maybe you want to move to another location, buy a house, pay off those student loans, or something else entirely. You need to know what you want in order to get there.
- Align Your Spending and Investing With Your Goals: Once you’ve tracked your money, know where you stand right now, and know your goals and dreams, go back and check your spending/investing alignment with those dreams. If you’ve never looked at this before, you’ll likely be surprised at how miss-aligned your spending is with your real priorities
- Is your goal to send your kids to college, but you’re spending $800 per month on car payments?
- Or do you really want to pay off your mortgage but you’re dropping $500 per month on eating out?
- Want to save to start a business, but you’re spending $300 per month on clothes and nothing toward your business fund?
- A dollar can only be spent once – and when it’s gone, it’s gone. If it goes to that car payment and not into the college fund, your actions are saying that your car is a higher priority than college. And if that’s true, that’s OK – everyone gets to set their own priorities (hence the “personal” in personal finance). But many people have gotten into spending without really thinking how and whether that spending aligns with their dreams.
- Challenge Everything: Get rid of the thought that you “have to” spend on X, Y, or Z. No one is making you spend money on anything. You need to get comfortable with being uncomfortable, and open to change, in order to change your life. If you keep everything as it is now, you will be stuck where you are now forever.
- Check In Regularly: Track your spending every month, and continue tweaking your spending and investing so it better aligns with your real goals dreams.
Why Is This Important To Me?
You might be wondering why it is that this is the piece of money advice I would choose. It’s primarily because of my personal experience with the near-death of my husband six years ago. In my case, I was the one who was money-smart in our relationship. I handled all the spending, saving, and investment decisions. So when he was in a coma in the ICU, and away from home over a month in the hospital and rehabilitation, I knew I could handle the money issues and decisions that were coming my way.
But it got me thinking – what if I hadn’t been the money smart one. What if my husband had been the one handling all the saving, spending, investing, and then suddenly he was gone? What if that had been the case, and he had died? It happens to women all over the world, unexpectedly, every day. Due to illness, accident, death, and divorce, women everywhere of every age can be suddenly thrown into a money role they never expected.
There are also too many women out there who have their own dreams, are deceived into thinking a spouse or advisor shares those dreams, and find out too late that they’ve been tricked. The spouse got the lovely house, car, college for kids with a ton of debt – leaving a net worth of zero or negative. Or the advisor is taking that money you said needs to be totally safe for a house down payment next year, and investing it in risky funds instead.
I also know an awful lot of people who feel like their financial goals and dreams are out of reach due to circumstances beyond their control, when in reality, there’s a lot more in their control than they think. I can think of multiple co-workers who spend on multiple car payments and cable but “can’t save” enough to get the full match in our 401k. These are people who earn six figures and most certainly could save six percent of their salary. I also know people who say they couldn’t possibly save anything for their kids to go to college, but somehow have enough to buy a brand-new top of the line SUV for their one or two kids. It’s all about priorities and accepting your control of most things in your money life.
So, Know Your Money
If you know a woman who wants to get on the path to knowing her money better, send her the link to this article to get started. And be sure to check out all the other amazing women who are rocking their money today here at Mama Fish Saves site.
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