How Women Can Regain Control Over Their Finances After a Stressful Year
72% of women surveyed reported being most worried about their retirement savings.
April 27, 2021
While life can throw stressors our way, it seems safe to say that the Covid-19 pandemic introduced an onslaught of stress into our lives that many of us could have never anticipated. That stress took on many forms and for 79% of women it came at them in the form of job and financial stress. Sadly, those stress levels are on the rise.
A February 2021 Fidelity Investments study found the amount of women experiencing financial and work stress rose greatly from November 2020 when only 67% of women were suffering from financial stress.
To get a handle on money-related stress, the study reports that 71% of women are planning to get more hands-on with their money in the next six months so they can gain greater control of their finances. If you’re planning on doing the same, consider this financial advice for women.
Boosting Retirement Savings
The women that reported feeling stressed about money stated that they are most worried about their retirement savings (72%). If you’re already contributing to retirement savings accounts regularly, but want to increase how much money you’re saving, one easy way to boost your retirement savings in the coming months is to use your tax refund. If you’re getting a hefty tax refund this year and don’t need to use it for bills or to pay down debt, an option to increase your retirement fund is putting the tax refund into your retirement savings account. Reaching out to friends or colleagues is a good way to find a finance professional that is well versed in financial planning for women.
Adding to an Emergency Fund
Speaking of savings, having emergency savings that you might need to use sooner rather than later can give you some much-needed peace of mind during a volatile job market. About half of women (52%) reported needing six or more months' worth of savings to keep from losing sleep at night worrying about money. Having a solid emergency fund helps them feel confident they can meet any unexpected expenses that come their way.
Unfortunately, less than a third of women (30%) reported having an emergency fund that will last them six months, which explains why 79% of women expressed an aim to replenish their emergency fund this year.
If you’re not familiar with what an emergency fund is, it’s essentially a chunk of savings set aside for unplanned expenses. An emergency fund can be used to pay your everyday bills if you lose your job or to cover financial emergencies such as medical bills or car repairs. Having an emergency fund at the ready can lessen the need to take on debt when a financial emergency occurs.
How much money you should put toward your emergency fund varies greatly depending on each person's financial situation. Generally, the recommendation is having enough to cover living expenses for a certain period of time (such as three to six months) if you lose your job or enough to tackle the cost of unexpected expenses you may have experienced in the past (like if you’ve been hit with big medical bills before).
Once you’ve determined how much you need to cover emergency expenses, set a savings goal and start working towards it. Similar to saving for retirement, you can set up automatic savings deposits after each payday to go towards your emergency fund.
When it comes to getting their finances in order, the top task that women reported in Fidelity's study as something they wanted to address was paying down debt. If you have debt that you want to get out from under (like high interest credit card debt), there are a few strategies you can follow that can help make paying it down easier.
The avalanche method. If you’re looking to save as much money as possible on interest payments, you’ll appreciate the avalanche method which focuses on paying down debts with the highest interest rates first, saving money in the long run.
Snowball method. The snowball method doesn’t look at interest rates but at outstanding loan amounts. To follow the snowball method, you’ll focus on paying off your smallest debt first to eliminate it as quickly as possible. This method can be really motivating as you’ll see certain debts paid off more quickly. Once a debt has been paid off, the money that was allocated toward it can be paid toward the next largest debt, and so on, creating a snowball effect.
No matter which method you choose, continuing to make minimum payments on all your debts is important, but you can more aggressively put money towards the debts you’re focused on eliminating first.
Budgeting With Financial Goals in Mind
Looking for some tried and true money advice for women? One of the easiest ways to get your whole financial life in order is creating a budget that takes your financial goals into account. Creating a budget also happens to be the second most important money task that women reported wanting to get a handle on. Here are a few simple steps to create a budget that works well for you.
Step 1. Identifying Where Your Money Comes From
If you have only one source of consistent income, this step will be easy to complete. Before determining how much you have to spend each month, take some time to tally up all of your monthly income from your job, side hustle or investments like a rental property.
Step 2. Determining How You Spend Your Money
Before you create a budget, you’ll want to either comb through past credit card and debit card statements to get an idea of where your money has been going or to keep a log for a few weeks to track how you spend your money. Knowing exactly how much you spend on necessities like food, housing and utilities is the first place to start because those costs are somewhat fixed. Then you’ll want to see how much you spend on discretionary expenses like travel and entertainment so you can map out how much you generally spend each month.
Step 3. Noting When Your Bills Are Due
As you marked down the cost of each bill when tallying your expenses, adding their due dates will help you remember to pay them on time. Not paying bills on time can lead to late fees, interest charges, or negative marks on your credit score. Keeping a close eye on due dates will help with timely payment.
Step 4. Creating a Budget With Financial Goals in Mind
Now that you know how much you earn and how much you spend, you can create a budget that helps you take control of your financial life. Want to increase your retirement savings? Add that as a necessary and regular expense to your budget. Same goes for building an emergency fund or paying down debt. Looking at your financial goals as a necessary expense like utilities or transportation will help you prioritize them over less necessary, but oh so tempting, discretionary expenses like frequent clothing and dining out purchases.
Working the Plan
A budget is nothing more than a plan for your money, and having a plan can help you be in control of your finances. Financial planning for women typically includes some extra considerations when compared to those for men. Women have a longer life expectancy than men and women are more likely to take time away from the workforce in unpaid caregiving roles. These issues surrounding personal finance for women are sometimes not focused on, but they are no less important to a household's long-term financial goals. Household money management is commonly a woman's responsibility, and the amount of financial assets owned by households is expected to triple over the next two decades, making financial planning for women a growing need.
As the world inches toward post-pandemic normal, there are a lot of aspects of life that people would like to regain control over — Tally can help with the financial part.
Want to gain control of your credit card debt? Learn how Tally can help you pay down your debt quicker and save money at the same time.