By Michael Gold, CFP®, MBA Founder & CEO – Wealth Advisor
In my experience as an advisor, I’ve too often seen women held back in financial knowledge because they took years off to raise children or for whatever reason weren’t the financial decision-makers in the house.
Later on in life, if they experience a divorce, are widowed or become the primary financial decision-maker over time, they can be left to make financial calls without the know-how or confidence to make them. So I wanted to speak specifically to these many conversations I’ve had and offer a few helpful financial tools for women who haven’t yet taken a more active role in their financial lives.
Credit Cards and Credit History
America has over $900 billion in credit card debt. We’re almost all getting the bill every month, and that’s not necessarily a bad thing, but it’s the kind of debt we need to handle carefully.
In particular, women can find their financial options limited after a divorce if they never establish a credit history under their name during the marriage. Building up that credit history should be a priority if you suddenly find yourself at the helm of the finances.
If you pay off the statement balance on your credit card each month consistently, you create extra wiggle room without incurring finance charges. Also, look for credit cards that offer cash rewards or other perks that can offset regular expenses like groceries and everyday supplies.
Avoid credit cards that carry high-interest charges. Those can dangerously snowball over time. Many folks use credit cards to buy something they do not have the money for. If you don’t have the money for the item today, you probably won’t tomorrow, especially when you add 15-25% in interest.
Health Savings Accounts/Flexible Spending Accounts
Many employers allow you to make use of pre-tax dollars to pay medical expenses by electing payroll deductions and making automatic deposits. Different types of healthcare accounts come with different restrictions on the types of expenses allowed, and with some accounts, you may forfeit unused funds each year (or when you separate from your employer).
These accounts can be crucial tools to your overall financial strategy. The HSA, for example, is triple tax-advantaged – contributions, growth and qualified distributions aren’t subject to taxes. They’re also simple to set up, usually tied into your paycheck, and with fairly generous contribution limits even if you’re single.
401(k) and 403(b) Employer Matching Contributions
Tax-deferred retirement plans are not always advantageous in every case, but if your employer matches your contributions, you’re leaving money on the table if you don’t take advantage of the opportunity. See the IRS website for more detail on retirement contribution and deferral limits.
Even if you don’t have an employer-sponsored retirement plan or any other payroll deductions in place, you can still set up an automated method for setting money aside. You might consider opening an IRA for retirement savings and automate your contributions.
For savings, simply establishing a money market account or savings account at a different bank, separate from your main checking account, is ideal. Most banks provide a mechanism where you can schedule automatic transfers every payday so that the money moves out of sight. Many people find that when they don’t see money in their main bank account, they are less likely to spend it.
In the early stages of my marriage, when Giselle and I were starting our life together, we established a separate bank account from our normal checking that is used for bills, etc. We automated savings from our payroll strictly for savings into this account and did not accept the debit card from the bank. Why? Because we wanted it to be bothersome to access money from that account. This small step was instrumental in building the financial foundation for our life.
Knowing your numbers each month is foundational to financial literacy. Do you have a way to keep track of your family and household expenses from month to month?
In the complex rush of modern life, it is easy to slip into overspending. Small discretionary purchases like fast-food meals, Uber Eats or Starbucks can add up over the course of a year.
Accounting software like Quicken or Mint will help you establish the discipline of watching your expenses each month and help to create awareness of where your money is going.
We know there is a pay gap, and there are consequences for women via lost wages over time. When you start behind on the pay scale, it’s hard to make that up. This impacts your retirement savings and other assets. While you can’t control a company’s hiring practices or their salary offer, you can focus on what you can control. If you’re not already, do your research to better negotiate your salary and benefits.
Conducting solid research before an interview can help keep you from undervaluing yourself. For example, several years ago my wife was interviewing for a position at a large pharmaceutical company. Coming off her second pregnancy and being out of work for some time, she was eager to get a position.
However, instead of simply jumping at an offer, she prepared for the negotiation. She researched and found the range of salary bonuses and benefits for this type of position industry-wide. She was able to successfully use this information as leverage when negotiating, which ensured she got a deal that was good for her.
A Financial or Wealth Advisor In Your Corner
Lastly, it’s important to remember that you’re not alone. Working with a seasoned wealth advisor can help you gain financial clarity and confidence. Our team at Gold Family Wealth is here to walk alongside you on your financial journey. These are just a few of the helpful financial tools that we can implement in your financial strategy.
If you would like to explore how we can help you combine the right mix of tools to help build your financial future, get in touch for a complimentary and confidential discussion.
Michael Gold is the Founder and CEO and Wealth Advisor of Gold Family Wealth, an independent wealth management boutique and named one of the Top 100 People in Finance. Michael has 20 years of experience in the financial industry, serving business owners and entrepreneurs by stress-testing their financial plan to identify red flags and missed opportunities. When he’s not working, you can find him spending time with his wife, Giselle, their three children, Sebastian, Aria, and Pierce, and their dog, Charly. To learn more about Michael, connect with him on LinkedIn.
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