Financial Fears in 2023: These Are the 4 Top Money Stressors for Women
GOBankingRates’ 2023 Women & Money survey asked over 1,000 American women about their biggest sources of financial worry and stress — and the No. 1 stressor wasn’t saving for retirement or paying for emergencies, but merely having enough money to get by on a day-to-day basis.
In this “Financially Savvy Female” column, we’re exploring all of the top money stressors women face. We also chatted with Lisa Jones, managing director and financial advisor at Prime Capital Investment Advisors, about how women can tackle these fears and stressors head-on.
Money Stressor #1: Inflation/Not Being Able To Afford Everyday Expenses
The survey found that not being able to cover the costs of day-to-day living expenses is a top stressor for 39% of women. These feelings of stress are having ripple effects on other aspects of women’s financial health as well.
“We have witnessed a trend of women who have begun to reduce their overall savings rates to manage rising expenses due to inflation,” Jones said. “Most have extended this reduction to their 401(k) contribution. Many women are even considering delaying retirement because they are choosing to financially support a member of their family who cannot stay afloat due to rising inflation costs.”
Rather than cutting savings for the future, Jones recommends looking for ways to cut costs now.
“Women should focus their spending on the basic necessities of their household and in turn, change their shopping and spending habits on the non-essentials,” she said. “Don’t lose focus on saving for the long term while still meeting the current short-term needs of the household.”
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Money Stressor #2: Not Having the Money To Pay For an Emergency Expense
Eighteen percent of women fear not being able to pay for an unplanned emergency expense, the survey found. The best way to be prepared for these types of expenses is to build up an emergency fund.
“We recommend that you create a savings account that can take care of at least three months’ worth of your basic living expenses,” Jones said. “This will create a financial buffer during periods of transition: the loss of a job, the loss of a marriage or partnership, etc.”
Jones also emphasizes the importance of building a budget, or spending plan, to make sure that you are saving enough.
“Creating a spending plan for yourself is a key element of financial well-being,” she said. “We all spend money, but true financial wellness comes when we create a plan to do so. We have found that the large majority of households that are managed by a single female don’t have enough savings to continue their households for more than one month when a job is lost. This leaves many women’s households open to catastrophic financial risk. But the good news is, with a few small changes, this does not have to be your story.”
While building an emergency fund should be your top priority, if you need to pay for an emergency and don’t quite have enough in savings yet, you can explore other options. These may include making a hardship withdrawal from a 401(k) or 403(b) plan, or taking a loan from a cash-value life insurance policy. Both options have drawbacks, so be sure to weigh the pros and cons before paying for an emergency this way.
Money Stressor #3: Not Having Enough Money To Retire
Not having enough money to retire is the biggest money fear for 15% of women. The only way to eliminate this fear is to be disciplined about saving for the future.
“There are three basic steps to build retirement savings: prioritize yourself, push yourself and put your money to work by taking advantage of compounding,” Jones said.
- Prioritize yourself. “In the simplest of terms, women must make the decision to pay themselves first by putting money away, beginning with a short-term savings account,” she said. “After reaching three months’ worth of basic living expenses in your liquid savings account, you can then begin adding to a long-term savings vehicle, such as an IRA, Roth IRA or 401(k)/403(b) plan.”
- Push yourself to save more. “In my area of the country, the average cost of a cup of coffee is $5.90. If you multiply that by five days a week, that is $29.50 spent on the average cup of joe a week. Over 40 years and invested in a growth portfolio in a 401(k) plan averaging 8%, making a cup of coffee at home could equal $449,231 in your account! Small changes make a huge difference when it comes to saving for a secure retirement.”
- Put your money to work. “Saving early has a huge reward: the effect of compound growth. Just like rolling a snowball downhill, compound growth is a product of growth on growth on growth. This will be realized when you reach retirement and reap the rewards.”
Jones notes that women often have a harder time saving a sufficient amount to retire compared to men due to several factors, so the fear of not having enough to retire is not unwarranted.
“Many times, women enter retirement with a smaller nest egg than men,” she said. “They are typically out of the workforce longer acting as a caregiver for children, grandchildren or aging parents. Women are also saving for retirement on a smaller income. Each of these factors emphasizes that women must create clear goals for retirement.”
As for how much to save for retirement, women should aim for around 15% of gross pay every year.
“The good news is that this 15% goal includes any contributions received from an employer,” Jones said. “Remember that an individual’s personal target saving rate may vary depending on a variety of factors, including retirement date, retirement lifestyle, savings rate and how much has already been saved so far. There are also savings ‘checkpoints’ that can be referred to throughout your career. The target should be to save at least 1x your salary by the time you are age 30 and 3x by the age of 40.”
Money Stressor #4: Potential Job Loss/Layoff
With major companies making massive layoffs in recent months, it’s no wonder that 8% of women rate losing their job as their biggest money stressor. Once again, building an emergency fund is the best way to remove some of this fear.
“Creating an emergency fund is crucial because it can completely change a woman’s financial life when an emergency arises and a financial buffer is already in place,” Jones said.
It’s also smart to create a backup plan in case you lose your primary source of income. Look for other ways to bring in money and to be prepared for finding a new job if need be.
“Women should consider the possibility of consulting work or part-time employment to keep their job skills sharp,” Jones said. “Continuing to network with others in a particular career field or industry will provide a network of colleagues to reach out to if a job loss occurs.”
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Methodology: GOBankingRates surveyed 1,016 American women ages 18 and older from across the country between Feb. 17 and Feb. 21, 2023, asking 20 different questions: (1) What is your primary financial goal?; (2) What is the biggest barrier to achieving your financial goal?; (3) If you are actively investing, what is your primary investment vehicle?; (4) If you are not actively investing, what’s preventing you from investing?; (5) What’s the biggest obstacle you’ve faced in your career path?; (6) How much student loan debt do you currently have?; (7) How much credit card debt do you currently have?; (8) What is your biggest obstacle to paying off your debts (credit card, student loan, medical, etc.)?; (9) What is your biggest source of financial worry/stress?; (10) What workplace benefit is most important to you?; (11) What is your worst money habit?; (12) How involved are you in household financial decisions compared to your partner?; (13) Which of the following financial professionals have you utilized? (Select all that apply); (14) Do you consider yourself financially secure/stable?; (15) What is your biggest financial regret?; (16) Do you consider yourself bad with money?; (17) If you are a parent, which cost are you most overwhelmed by?; (18) If you are a parent, what best describes your current work situation?; (19) How would you describe your relationship with money?; and (20) Do you consider yourself to be financially independent? GOBankingRates used PureSpectrum’s survey platform to conduct the poll.