5 Ways Women Can Take Control of Their Finances in 2023
Women have come a long way in the last several decades toward financial independence. Up until the 1970s, a woman couldn’t get her own credit card without a male co-signer, and couldn’t get a business loan by herself until the 1980s.
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The confidence women have in understanding, owning and advancing their financial health, however, still lags. A 2022 Bank of America survey found that a majority of women feel comfortable managing their day-to-day finances, but struggle with longer-term actions like paying down debt, saving for emergencies or retirement, and building wealth.
Ninety-four percent of women in the survey believe they will be personally responsible for their finances at some point in their adult life, though only about half (48%) feel confident about their finances. And just 28% feel empowered to take action.
“Not being involved or allowing somebody to have control over their finances is ultimately eroding women’s confidence around money, and they start to believe the narrative that they can’t do it,” said Rhonda Noordyk, CEO of the Women’s Financial Wellness Center.
“There are a couple of things [that women can do to] feel more confident around finances. One is having the knowledge, and the other is having the experience,” she said.
No matter your financial situation or goals, a combination of shifting your mentality along with taking practical steps can position you to gain control over your finances.
Building knowledge all starts with asking questions. Too often, though, women are afraid to ask questions because they don’t want to sound ignorant. That’s true for both novices and women with more financial experience, Noordyk said. But asking questions, whether it’s of your CPA, a banker, an investment advisor or a friend, is essential.
“The only way we’ll get answers is if we ask, and there’s a lot of power in that,” Noordyk said. If you’re not sure where to start or what questions to ask, one of Noordyk’s favorite phrases is: “Help me understand how this works.”
“That phrase is golden,” she said.
It’s also OK to ask questions first and come back later when you’re ready to make decisions. When women walk into a car dealership or a bank, Noordyk said, “you can tell them, ‘I’m just here today to gather information. I want to do a little research and then we can continue the conversation.'”
Savvy Ladies is a financial wellness organization that runs a free helpline for women seeking guidance. It has seen a major increase in calls to the helpline over the last year, from 176 in January 2022 to 306 in January 2023. Executive director Judy Herbst said that’s good news.
“A third of the women are asking questions about starting a small business and how to develop various income sources. Many women seek ways to generate additional income, build emergency funds, and fund their retirement,” Herbst said. “The trend that women are seeking additional revenue sources clearly shows that since COVID, and in this current environment of layoffs, side hustles and passion projects can become income sources to help cover daily living expenses. We love that we can match women with pro bono financial advisors to do just that – give guidance and help put a plan in place.”
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Find Your People
When asking questions and seeking advice, finding people you trust is key. “If we get static from them, they’re not our person,” Noordyk said. Women can stay in the driver’s seat by shopping around, avoiding people who aren’t helpful and finding advisors who listen as well as they talk.
It’s worth it to seek out a fiduciary, which is a specific type of financial advisor who is legally bound to act in your best interest, said Rose Niang, director of financial planning at Edelman Financial Engines. Advisors who are not fiduciaries may earn commission and thus have a conflict of interest in steering you toward one financial product or another.
“Seek out someone who is used to working with people in similar circumstances, someone with the heart of a teacher,” Niang said. “Make sure to be involved in the process of selecting a financial professional and build your own relationship. Do not leave it solely up to your spouse or partner.”
Use the Resources You Already Have
You may have more help (and money!) at your fingertips than you think.
Employers can be a great resource for financial guidance tailored specifically to female employees. Niang suggests taking advantage of employee resource groups (ERGs), where guidance is evaluated by the employer acting as a fiduciary. “ERGs can be inclusive, judgment-free communities where women can feel comfortable talking about their own unique needs, and employers can provide curated, relevant content to their female employees,” she said.
For your 401(k), make sure that you’re not leaving money on the table when it comes to an employer match. And remember that if you can direct any extra money from your paycheck into your 401(k), that’s money that will grow without being taxed.
Make Big (and Bigger) Decisions
Making big financial decisions like purchasing a car, a home or another major investment can be intimidating. Noordyk’s strategy for building that financial muscle is to get comfortable making smaller — but still significant — purchases.
When her family needed a new car, Noordyk left her husband at home and went to the dealership by herself. She chose the vehicle, negotiated a price and secured the loan, all on her own. Having gone through that process, she felt empowered to tackle larger decisions, such as purchasing an office space, which she also did independently, and ended up making more money on it as an investment.
“I put myself in situations where I was forced to make financial decisions, but I did it with a safety net, knowing that I wasn’t really alone. But I was still putting myself out there,” Noordyk said.
Play To Your Strengths
Men tend to put more focus on growing their wealth, while women typically don’t invest as much of their money as men do.
But data shows that women actually make better investors than men: Their portfolios outperform men’s by up to 1.8%, which can accumulate significant wealth over time.
“Many women don’t consider themselves to be knowledgeable investors, and they hesitate to jump into the market,” Niang said. She points out that women may be more attuned than men to the qualities of successful investors. According to a report by BlackRock, women are generally more cautious and risk-averse, and more inclined to seek professional advice.
“The advice, ladies? Jump in,” Niang said.
An important first step is to educate yourself on the basics of investing, learning the difference between the various types of investment funds, from stocks and mutual funds to real estate. From there, the previous items in this list can serve you well: Ask a lot of questions of the people you trust, and lean on the resources you have to get started.
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