All women should learn to be savvy with their money and have some solid financial know-how to help them properly manage their money. Women often earn less than men, which means we need to be even smarter with what we do earn so we can fund the lifestyles we want, and still build healthy savings. Here are some of the best financial tips for women to help you make smart choices and avoid financial pitfalls.
Don’t Rely On Someone Else For Financial Security
Many women rely on a husband or a boyfriend for their financial security. This can leave you in a very dangerous position, as much as it isn’t nice to think about. What would you do if you were to split up, or your partner was to become ill or they died, leaving you in charge of the money? You should be prepared to fend for yourself when it comes to money.
If at all possible, have your own money. Whether from earnings, savings, or just keeping a separate bank account, some money of your own is important to have. Ideally, you should aim to have the equivalent of a few months of your household’s monthly expenses saved up, just in case of illness or job loss. Your own money saved up would also be helpful if you need to be financial responsible for yourself again after a break-up or your partner losing a job.
At the minimum, you should have some understanding of how finances work. Make some effort to educate yourself on financial matters. Understand the difference between a bank and a credit union, learn about investments and interest, and make sure you understand how to manage the household money by yourself.
Set Goals
Having clear goals is the key to financial success. A measurable goal gives you something to aim for and is easier to achieve than a more vague target. For example, if you just aim to ‘save more money’, this can’t be measured. This makes it easier to get distracted from the goal, and you’ll be less likely to get there. Instead, set a clear target that you can actually measure, like aiming to save a set amount by a certain date. You can track this properly, which will make it easier to get there. Clear goals are a useful way to manage your money. Set savings targets, or set goals to increase your financial knowledge, such as learning to understand how investments work.
Don’t Use Money To Make Yourself Feel Good
A lot of us can easily fall into the trap of spending money to make us feel good. We feel low or have a bad day, so we treat ourselves to something to make us feel better. These little treats can soon add up, and end up costing you a lot of money. The brief satisfaction from new things often doesn’t last for very long either, so you’ll just end up still feeling sad, only with less money. Instead, try to learn to turn to other, more productive, methods to cheer yourself up, like self-care, fitness, or creative projects. You’ll find it easier to save money if you aren’t spending money every time you have a bad day. Avoid this unhealthy habit, and save your money for more important things than a pick-me-up.
Spend Less Than You Earn
This sounds like an obvious tip, but it’s one many people accidentally ignore. Living within your means isn’t always easy, but it’s important to do. Many people get into a loop of living paycheque to paycheque. You get paid, and most of your money immediately goes out of your account again to pay rent, bills, credit cards, and other debts, you can soon have none left, forcing you to borrow more money or spend on credit cards to make up the gap in your finances. This cycle is a very damaging one to fall into. Learn to live on a budget that actually fits your income. Spend less than you earn, and you won’t have to go short. Keeping a money diary can be a helpful way to do this, as you can track where your money is going every month and see where you can make changes to help you budget better and spend less.
Build An Emergency Fund
An emergency fund should be separate from your regular savings, and should not be touched unless it’s a real emergency. If you don’t have an emergency fund, you could get into real difficulties if you lose your income. Illness, redundancy, the car breaking down, the boiler blowing up, or other emergencies can happen at any time and severely drain your funds. If you have an emergency fund, you can survive a few months without earnings or take the hit of a surprise cost without damaging your ability to pay for things like the rent, a mortgage, or the bills. Aim to have at least three months of outgoings saved up, just in case. If you can do this, you won’t have to borrow money in order to survive an emergency, and won’t be in a financial hole afterward.
Talk Money
A lot of people don’t like to talk about money, but sometimes, it’s better to be able to be honest about finances. Your spouse, or a partner that you share a home or any financial responsibilities with, is someone you should always be able to talk honestly about money with. If you are able to discuss money, you’ll be abe to better manage the household finances, and one of you won’t be in for a nasty shock if they think the financial situation is different to what it actually is. You can also make big financial decisions together in a more informed way, whether it’s buying a new car or spending a lot on a fabulous vacation.
Don’t Take On A Partner’s Debt
Have a frank discussion about money before you marry. If your future spouse has debt, you need to know about it before you tie their finances to theirs. If you don’t know, you can’t protect yourself and end up saddled with somebody else’s debt, even if you have never been in debt in your life. If one of you does have debt, wait until it is paid off before you get married so you don’t damage the other’s finances or credit rating. If you really don’t want to wait, protect yourself with a prenuptial agreement. Pre-nups aren’t just for the wealthy. They can be used to protect anyone planning to marry when one partner has debts or significantly higher earnings than the other.
Learn From Your Money Mistakes
Everybody makes mistakes from time to time with their money. It might be a bad investment, overspending, or taking on a credit card you can’t afford. Try not to worry too much about past mistakes. Everybody makes them, and the important thing is to learn from those mistakes so you don’t make them again in the future. If you can learn from the errors you make, you won’t repeat them and can learn to be wiser with your money.
Only Loan Money You Don’t Want Back
Money can easily become a point of contention between people, even between people you love very much. If you lend friends money and don’t get it back for a while, resentment can build-up and spoil the friendship. For this reason, only ever agree to spend money that you’re happy to never see again. That way, you don’t have to worry about it, won’t feel resentful if the loan takes a while to be repaid, and when you do get the money back, it will come as a pleasant surprise. Whether you’re spotting a friend for lunch or investing in a friend’s business, give generously and don’t expect the money back, for the sake of your friendships. Never loan money to anyone if you can’t afford to go without it.
Don’t Bank On Money Until It’s In Your Account
Don’t rely on funds you don’t have yet. Whether it’s the promise of a raise at work, a big new order at your business, or a friend promising to repay that loan, don’t rely on money that isn’t actually in your bank account yet. People promise money all the time, but delays happen. If the funds haven’t cleared into your account yet, ignore it, so you don’t accidentally overspend and end up short because that promise of money didn’t pay off.
Being financially savvy is an important life skill to learn. If you can learn to better manage your money, you can earn more, save more, budget more efficiently, and be better protected from financial difficulties. All women should know how to manage their own money. Spend some time learning about finance, so you can understand how to make the most of your money. From your bank account to managing investments, financial know-how will always be useful and serve you well in life.
