6 Smart Ways Women Can Save Money In Their Current Income Bracket
Written by
Yaël Bizouati-Kennedy
Edited by
Amen Oyiboke
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Saving money has been tricky, to say the least, lately. With inflation, rising rates, and the resumption of student loan payments, it has been difficult for many Americans to set some funds aside.
And for women, there are additional reasons which compound the problem- the gender pay gap, for instance.
Indeed, a new GOBankingRates survey found that 40% of women said their biggest roadblock in trying to save money is the fact that they don’t make enough money in the first place.
In contrast, that figure dwindles to 34% for men.
According to Michael Micheletti, chief communications officer of Unlock Technologies, the 40% figure is not surprising, as savings can be more challenging for women.
“On average, women are still earning less than men – looking at both specific jobs and overall lifetime earnings,” said Micheletti. “Women are still more likely to interrupt their careers more for family caregiving and are more apt to work part-time or work in lower-paying positions to maintain flexibility. Women typically have longer lifespans than men, too, and therefore must draw on retirement savings more.”
In turn, women have just 70% of the overall retirement income that men have, according to a TIAA study, which can be attributed to several factors, namely, the gender pay gap. Overall, women working full-time earn 83 cents for every $1 that men working full-time earn, and the gap is wider for women of color, the study found.
Other roadblocks to savings 23% of women cite that bills are too expensive; 11% have a tendency to impulse shop; 9.5% have too much debt; and 3% don’t know the best way to save money, according to the survey.
Yet, experts said that with a plan, this can be remedied. Several of them share their tips on how women can save money in their current income bracket.
Use the Numbers To Create a Roadmap
According to Bobbi Rebell, CFP, founder of Financial Wellness Strategies and author of Launching Financial Grownups: Live Your Richest Life by Helping Your (Almost) Adult Kids Be Everyday Money Smart, this begins by asking yourself a few questions.
For instance, are there subscriptions you can cut or at least put on pause? Where is your money going? If it is going to pay interest on debt- can you pay a lower rate?
In addition, ask yourself whether there are items in your home that you either don’t use and can sell or that are worth less to you than your goal and therefore worth selling.
“The proceeds can be a nice jump start to your savings,” said Rebell.
Start Small
The statistic that 40% of women say their biggest roadblock for trying to save money is making more money may be valid, however, you can save money no matter your income bracket, said Dr. Chris Courtney, SVP of science, risk, and analytics at Happy Money.
“A savings account is a good one to create regardless of the dollar amount, but key habits must be formed to build up that savings successfully,” said Courtney.” If you don’t already think of yourself as ‘a saver’, you’re setting yourself up to contribute less consistently because you’re viewing it as a burden rather than something you’re already capable of doing.”
Courtney added that you can start with small changes by shifting your everyday spending habits.
“This can help you build up an emergency fund and alleviate some of the financial burden of living paycheck to paycheck,” he said.
Automate Your Savings
Tanya Peterson, consumer finance expert and vice president of brand, Achieve, explained that many experts suggest saving 10% of every payment received, more if possible, and less if need be – but make it consistent.
“Choose a percent or amount you can do with every paycheck, and then set up direct deposit into a savings account, or set up a regular transfer from checking to savings,” she said.
Courtney echoed the sentiment, saying that automation can help you stay motivated, as it takes some of the decision-making effort out of the process.
“Whenever you skip this step of the savings process, manually moving the money to your savings account feels painful rather than something done without you having to think about it or weigh your options,” he said.
Stop Impulse Shopping
To that end, Maura Madden, CFP and financial planner at Maura Madden Financial Planning recommended that when making any discretionary purchases wait 24 hours between deciding upon the purchase and executing it.
“Spending activates your endorphins. Allowing for a cool-down period will help you to make sure that you are making a prudent purchase and not just chasing a spending high,” said Madden.
Eliminate Debt
If you carry any credit card debt or personal loan debt, determine if you can pay it down on your own with a solid budget, and use the avalanche or snowball strategy, said Achieve’s Peterson. Once you pay off the debt, you’ll have what you were paying each month available to save.
If you can not pay off debt on your own, look into other options. These can include personal loans.
“If you have accounts with high-interest rates, a personal loan may offer a rate lower than on your credit cards. The idea is to consolidate your other debts into one with a lower rate, and pay that one loan off faster,” she said.
Balance transfer is another option, as these are credit cards with low or zero interest, however, she noted, that these are usually available only to those with good credit, and are harder to come by.
“If you do find one and are eligible, keep in mind that the promotional interest rate will expire, usually in 6-12 months, but sometimes up to 21 months. However, you must pay off the balance in full before then. Do your calculations to be sure that total fees do not exceed savings from the transfer,” she added.
Finally, you can also look into debt resolution and debt management plans, she said.
Celebrate Your Progress
Finally, as Courtney explained, if you’re feeling anxious about your finances or facing a situation where you may be in debt, it can be helpful to set goals for spending.
“Make sure to celebrate each goal along the way, no matter how big. Even small savings wins are worth celebrating,” he said. “The ‘future you’ will thank you down the road.”
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