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:
#WomenRockMoney Collaboration
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? Â 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
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- 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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I love this advice, Liz! Knowing your money is so important as a woman. It can feel overwhelming to figure out exactly what your assets and liabilities are, or even what those two words mean. But the more you learn (even if it’s really slowly!), the more you’ll be able to align your values and your spending, as you point out! #WomenRockMoney!
Yes! It’s so true. You need to know where you are and where you want to go, in order to get there. And don’t rely on someone else to do it for you
It is crucial to have (at a minimum) a basic understanding of your finances… even if you aren’t the primary manager! You never know what life will throw at you and you need to be ready and feel comfortable with where you are at. Excellent advice!
Exactly-I often think about what if my husband was sick (like he was) but I had zero money knowledge? Many women find themselves in that position every year. Knowing their money would help them
Love your advice Liz, agree it’s essential that everyone know what money they have coming in and what is going out. But scary how many people don’t. Once you have the figures, no matter how bad you can start to make plans for the future.
So true!
What fabulous advice!! I always thought I had a pretty good handle on our finances, but it’s taken until this past year – and my blog – to REALLY know my money.
It sounds simple, but if every woman just did this one thing, they would be in so much better shape financially
Having at least a basic understanding of your finances is so important and it sucks it’s not something highlighted when we’re in school. I love the advice to ‘challenge everything’. Setting your own norm instead of following the pack is such a strong mindset to have.
Yes-all expenses should be challenged! Maybe there’s a creative way to reduce them, or perhaps they can be eliminated altogether. You never know until you try
What fabulous advice, Liz, and it’s so important! I can’t even imagine how much worse the experience of your husband’s illness would’ve been if you didn’t know about your money and weren’t prepared to handle the situation. I’ve got plenty of money anxiety and it *still* took me a while to actually get to know mine. I’m so glad I finally changed that!
Happy International Women’s Day!
I’m glad you changed that too! It can feel intimidating at first, especially when you don’t know where to begin and it seems like there’s so much to learn. Baby steps are the key!
What a scary experience to go through. But, you are right, at least you knew how to handle things while your husband was sick.
I am always surprised with how many of my educated, professional, strong willed friends have NOOOO idea what is going on with their finances. Ahhhh. It’s not enough to make a lot of money, you also need to know what to do with it.
Great article. Thanks for sharing your story.
My grandad passed away last year, leaving my 74 year old Grandmother to deal with the finances alone. She isn’t totally clueless and is actually pretty savvy, but she hasn’t worked outside of the family home/farm in over 50 years and only opened her own bank account a few years ago so she could have her state pension paid in to it. She has said countless times over the past year that if she didn’t have a large family there to help her figure it out, she just wouldn’t know where to begin with basic things like bills. I hate the thought of anyone being in that situation, but unfortunately many are, especially women of her generation.
She is always telling me I am a “real independent woman of the world” and I think this is solely down to the fact that I look after the money in my household!
Yes my grandmother was in a similar situation when my grandfather passed. Luckily she was also pretty money smart, but she went from being able to rely on my grandfather for all money decisions, to having to do it all herself. She kept pretty much all her money in CDs, I think she was afraid to do anything else.
I agree – great advice Liz, you need to take responsibility for your own financial outcomes and put the effort in regularly, to understand where things are at. I’m all for the hands on approach! 🙂
Ignorance is definitely not bliss when it comes to money! Knowing your money AND your money goals is so important and it’s never too late to start learning. Thanks for sharing 🙂
This is wonderful advice Liz! I too am the one in my relationship who handles the money, and as reluctant as my hubby was to learn the ins and outs of our finances teaching him was so important.
Yes, this is really important. I have a close friend who lets her husband pay all the bills and she doesn’t want to know anything about it – then gets furious when taxes and the mortgage aren’t paid. She’d be so much better at it than he is, but she won’t grab the reins and take control, so they lurch from one crisis to the next.