A few months back, a member of a ladies and money online group I’m part of worried because her fiancé wanted a prenup. I’m not sure how I feel about this, she posted. Does he even love me?
While some members called out the soon-to-be husband for being heartless and calculating, others reasoned that he was merely being cautious. At the risk of sounding unromantic, I’d have to side with the latter group.
Here’s the thing: Coupled folks should create financial plans as if they were single. This rings particularly true for women. Why’s that? In many ways it may feel like the financial cards are stacked against women. Here’s why we ladies need to stay on top of our money and what to do about it:
We live longer.
According to data from the National Center for Health Statistics, the average life expectancy for females in the U.S. is 81.1, whereas it is 76.1 for males. And living longer means we need more money in retirement.
We take more time off from work.
Women take more time off from work to care for children or aging parents. According to the Family Caregiver Alliance, 75 percent of caregivers are women. What’s more, 43.5 million caregivers are tending to a child or adult without getting paid.
The gender pay gap persists.
While the gender pay gap has narrowed since 1980, for the last 15 years it’s pretty much flatlined. That being said, in 1980 women earned 85% of what men earned, according to the Pew Research Center. Another way to look at it: Women would need to work 39 more days than men to earn the same amount.
We feel shaky about being able to retire.
Per a Transamerica Center for Retirement Studies(TCRS) survey, only 12 percent of women are very confident they’ll be able to retire comfortably. Fifty-five percent of women expect to retire after 65 or don’t plan on retiring.
We carry more student debt.
Not only do women make less money and live longer, but we’re saddled with more student loan debt. Per the AAUW, we hold nearly two-thirds of the outstanding student debt in the U.S., which equals nearly $299 billion.
It’s evident that when it comes to money, there are quite a few societal barriers against us. While it’s easy to get frustrated and feel powerless, it’s best to focus on what we can actually do:
Focus on Earning Potential
I’m all for cutting expenses to make your money go further, but you really can only cut so much. I used to be incredibly frugal, and while living cheaply did help me shore up some savings, that amount remained flat for a handful of years. What really made a difference in reaching my money goals was when I switched jobs and started earning more. That $10,000 bump in pay, plus extra money from side hustles, accelerated my savings and retirement goals.
Save for Retirement Now
If you’re barely squeaking by, tucking away money for a nest egg is probably on the bottom of your list of priorities. If different retirement options feel overwhelming, consider starting by contributing to an employer-sponsored plan such as a 401(k). Or if you can afford to, invest enough to get the employer match. Otherwise, that’s money left on the table.
Interestingly enough, while women tend to be less risk-averse than their male counterparts, a number of studies reveal that women tend to outperform men in investing. Need some motivation? Consider the value of a dollar today versus in 10 years. You can play with an online money tool such as a compound calculator.
You don’t need a ton of money to get your feet wet with investing. There are micro-investing platforms where you can get started for as little as $5. And if you’re feeling unsure about investing, you can always watch and study the stock market before you buy some shares.
Get Your Knowledge On
If learning about money seems like a real snoozefest, remember this: What you don’t know can certainly set you back financially. Sure, investing can be scary and overwhelming, but as that adage goes: How do you eat an elephant? One bite at a time.
Home in on a single topic, and commit to cracking the books —or scouring the interwebs for informative articles. For instance, maybe you want to dig into every single perk of your credit cards. Or if you want to get your head around investing, pick up a primer on how to get started.
Practice Financial Vigilance
Some of us would much rather have our partner handle all money matters. While your significant other might be more financially savvy and the household CFO, it’s a good idea to keep an eye on your goals and know how much money is in the bank.
What’s more, it’s important to prepare for the worst. Should your partner fall ill or get into an accident, will you be able to take over? You’ll want to be in the know with the basics of your insurance policies, bank and retirement funds, and so forth.
Because there are so many challenges to getting ahead financially, women can’t afford to ignore their finances. To grow our money and have ample funds in retirement, we’ll need to focus on financial education, saving for retirement now, and staying on top of our money management.