Womens’ Day Special – Why Women Must Manage Money

Why Women Must Manage their Money

Women’s week has commenced. As a person, I have always found these “days” sort of ridiculous. My reasoning – so, women do not matter rest of the 364 days?

 

However, for the first time, Women’s Day and Women’s Week are very very special to me. 6 other female Personal Finance bloggers (Melanie, Liz, Kristine, Penny, Ms. Financier and Emilie) join me for a very special series of 3 posts (all of this week) to discuss women, money and what got them so interested in it. Before reading ahead, I urge you to read more about all the contributors right here.

 

The post today, talks about the basics – why women should manage money, the personal finance basics they must know about and some personal finance habits to cultivate.

Read on…

 

Do you manage your money? Why is it so important to you and to all women?

Melanie @ Dear Debt says:

Yes! I am newly single and manage my finances on my own. I think it’s important for women to manage their finances for so many reasons! We’re living longer, making more money and have to manage relationships and family life. Having our finances together gives us options

 

 

Liz @ Chief Mom Officer says:

Yes, I manage my families money – and I always have. Throughout my sixteen plus years of marriage, my husband has never really been interested in all this financial stuff. He always listened politely while I would talk about Warren Buffett, or wisdom from the Bogleheads, or whatever the financial news of the day was – but he never sought it out. In fact, when we married he was a financial bobble-head – the kind of person who never saved a dime, lived paycheck to paycheck, and even sometimes bounced checks. It was my good financial management that brought him out of that and into the savings-conscious person he is today.

 

It’s important to me because I’ve always had big financial goals and dreams. Even back when I was in community college, working full time and going to school full time, I dreamed of becoming a millionaire before I was forty. Since I only made $22k US dollars per year at the time, it seemed impossible. But I had read the books, done the math, and I knew it most certainly was possible. So, I focused on my education and job – eventually obtaining an MBA and my current position as an IT program manager for a very large company.

 

I feel strongly it’s important for all women to at least be involved with the financial decisions, even if they’re not interested, and even if they think their spouse has a good handle on things. I’ve heard too many horror stories from women who know nothing about the families financial situation – then their spouse passes away and they learn their fancy lifestyle was built on a house of debt and is now gone forever. Or their spouse deceives them or leaves them, and they’re financially helpless.

Don’t be financially helpless. Get involved in your money.

 

Kristine @ Frugasaurus says:

Yup. My partner and I have what we call “shared, but separate” finances. Which means we have one shared account from which we pay into, and from that, we pay all shared bills, rent and electricity.

 

Groceries, for instance, has been my partner’s responsibility lately because work has been busy. In that case, we do a quick scan of receipts at the end of the month and I transfer roughly half to his private account, so no one is left “worse off” for being the one to go to the shop or paying for that night out or whatever. It is not as if we are very nitpicky about this and walk around with spreadsheets everywhere. I am the higher earner at the moment, so I will often chip in more, especially on large expenses.

 

I have always managed my own money, so to be honest, I can’t imagine not having some idea or control of what’s going on. On the other hand, this dual system keeps us both accountable and responsible. We hear so many stories about how one partner took control of all the finances, and the other partner had no idea that they had racked up tens of thousands in debt. This is not just a strain on family finances, but also on the relationship. By separating things, we know that at least half our savings will be safe, should one of us suddenly just go mad and hoard credit cards.

 

The latter is very unlikely at this point as we are so focused on our goal, but we figure, why even take the risk?

 

 

Penny @ She Picks Up Pennies says:

I do! My husband and I have been married for almost five years, and I’ve always been more interested in our finances. I am the one who does a lot of the spreadsheet work, but we do have conversations every month where we decide what we want our money to look like.

 

Even if women aren’t all passionate about finances in the same way that female personal finance bloggers are, it is so important for every woman to understand her money. Money is a tool for us to leverage to get what we want out of life. To do that effectively, you have to keep an eye on numbers. Plus, no one cares more about your money than you!

 

 

Ms. Financier @ Feminist Financier says:

I do manage my own money, and have been doing so since I started working as a teenager. While personal financial advisors can provide a valuable service, I believe that every woman should have an active role in her finances.

 

A recent Fidelity study found that 92% of women want to learn more about financial planning, but eight in 10 “…confess they have refrained at some point from talking about their finances with those they are close to.” Women report that talking about money is “too personal.” Ownership of our personal finances, and talking about money more frequently, will improve our collective confidence when it comes to money.

 

 

Emilie @ Wise Mind Money says:

Yes, I manage my money, and I’m the money manager in my household between my partner and me. Money management is important to me because money is a tool for freedom and opportunity. It’s important for women to manage money, or at least to understand money and understand what is going on with their own finances because it’s empowering to have a sense of control over your money. It leads to a more active path to reaching your goals (whether they are financial or not – money is a factor in most goals and decisions) when you are able to see and direct your finances.

 

 

My Take:

As I mentioned in my recent post, the time for financial feminism is here. The onus of financial independence and financial responsibility lies with us ladies, and us alone.

 

 

What are the 3 personal finance basics every woman must be familiar with?

Melanie @ Dear Debt says:

  1. Knowing how much you earn after taxes.

2. Knowing your bare-bones budget — what you need to live. How much money do you need to make each month to survive?

3. How to open a bank account

 

 

Liz @ Chief Mom Officer says:

  1. How investments work. Everyone should know the major types of investments available and the pros/cons of each one. This will help you make wise decisions, or easily spot when someone else is making poor decisions.

2. The power of compound interest. Teach yourself how compound interest works, and use that to inspire yourself to save early and often.

3. The importance of a good (financial) foundation. Before tackling investments, make sure you have a solid financial foundation. That means getting out of debt, saving an emergency fund, and having the right insurance lined up. You don’t want to build your financial freedom on top of a crumbling foundation, or it will collapse at the slightest life event.

 

 

Kristine @ Frugasaurus says:

  1. Using internet banking. So many banks (I don’t think I know of any who don’t) charge pretty high fees to pay bills by post. This is money you’ll never get back and that will never go towards anything useful. It is just an administration fee, and they add up really fast.

 

2. Realise that money is just maths, and treat it accordingly. For many people, money is deeply emotional, and it is difficult to separate ourselves from it. By pulling out a good old spreadsheet or calculator, and sitting down to do the math on any given topic (be it getting a loan, paying down a loan, or buying something expensive) makes it so much easier to reach the right decision. Learn  to do the maths for compound interest and percentages in general. If you always keep that in the back of your mind when spending or saving money, you’re in for success.

 

3. Set up automatic saving every month. And treat it like you would any other bill. Don’t allow yourself to cancel it or postpone it. This is your present self funding the financial peace of mind and resilience of your future self. Set it at a place you are comfortable with. Once you know you can manage it easily, you could try to increase it bit by bit. Just don’t you dare cancel it, you are more important than that.

 

 

Penny @ She Picks Up Pennies says:

  1. All of your log-in information and how to read your account information (online or on paper)

2. How to make a basic budget

3. How to pay bills (by check, online each month, automatic payments).

 

 

Ms. Financier @ Feminist Financier says:

  1. Spend less than you make. If you’re consistently spending more than you’re taking in, it is incredibly difficult to feel in control of your finances and turn money into a source of power.

 

  1. Avoid credit card debt. Credit cards make spending feel easy, and many people are regularly in credit card debt. I fell into debt four times, and am so glad I finally changed my habits and paid my cards off.

 

  1. Understand how the stock market works. It sounds complex, but it’s not. Financial experts like to use lots of fancy jargon so you get confused, but the market is quite simple. If you understand it, you’ll feel more confident about investing in order to build wealth.

 

 

Emilie @ Wise Mind Money says:

  1. How checking accounts and debit cards work.

2. How to manage your banking and bill pay online.

3. What makes up your credit score, and know what your credit score actually is.

 

 

My Take:

  1. Operating a bank account

2. Knowing that stock markets can be deciphered and are better in the long run

3. It is never too early to start saving and investing for retirement

 

 

What are 3 money habits that every woman should have or cultivate?

Melanie @ Dear Debt says:

  1. Know your values and only spend money on things that bring you joy.

2. Put your savings on auto-pilot.

3. Always ask for more — more money, more time, etc. We need to speak up for what we need!

 

 

Liz @ Chief Mom Officer says:

1 Spend less than you earn. It’s simple but effective.

2 – Save early and often. Don’t waste time kicking yourself over not starting sooner, or thing it’s “too late”. It’s never too late, but the earlier you start the better. And don’t worry if you feel like you can’t save “enough” – save what you can and work on increasing it over time. Starting early with small amounts is better than starting later with large amounts.

3 – Make it automatic. The more you can automate good financial decisions, the less likely you are to make financial mistakes – and the more likely you are to be financially successful.

 

 

Kristine @ Frugasaurus says:

-1- Track your spending: I know it is repeated everywhere, but it is so, so important. I have a neat little app where I just write what goes in and out of my checking account. As a student, I had a tiny notebook that went with me everywhere. This way, I never have to wonder if I have enough to pay for something, I always know what is in my account, and I cannot lie to myself about what I actually spend money on.

 

-2- Money can either work for you or against you. Lending money is stealing from your future self, while saving does the exact opposite. If you cultivate a habit of saving a solid chunk of your paycheck when you get paid, you are investing in the happiness and security of your future self. If you are saving for 10 years or more, find some index funds with good reviews and invest in those. Ideally, try to automate it so that you don’t even see the money. Some of the best investors are those who forgot they even invested anything!

 

-3– Get organized. It doesn’t have to be hard, and it doesn’t have to take a long time. I have friends who, in a very real way, are afraid of walking to their mailbox to check if there are more bills to pay. When that hurdle is overcome, they have another terror of actually opening up those bills to see what they owe.

 

 

Penny @ She Picks Up Pennies says:

My mom modeled this for me growing up: save (and invest), meet your obligations (bills), THEN spend. Aside from those three habits, I would add that women also need to get more comfortable talking about money with other women. Knowledge is power, and it’s more powerful when it is shared.

 

 

Ms. Financier @ Feminist Financier says:

  1. Automate your saving and investing. Humans are creatures of habit, and if we set up regular, automatic transfers to our savings accounts and investments, we put ourselves in a position to build wealth more quickly. This can also include savings for travel, fun money to splurge on shoes or gifts, and charitable contributions.

 

  1. Understand how investing works – and invest. Investing appropriately is a powerful way to build wealth, yet women face an investing gap and generally invest less than our male counterparts. Research suggests that when we start investing, we are generally better investors than men – we trade less (saving fees and avoiding attempting to time the market, which is nearly impossible) and our investments perform better. So, if you aren’t investing – get started now!

 

  1. Grow your income consistently over time. This may not happen overnight, but it is the surest path to close your personal retirement and wage gap. At a minimum, you should ensure HR has verified that there is no wage gap between you and your male peers. But I know you can do even more than that to build your wealth over time, and having a higher income gives you more personal economic power.

 

 

Emilie @ Wise Mind Money says:

  1. Know your “why” – what do you want out of life? Being in control of your finances will help you get there.

2. Have a plan. Direct your money based on what your goals are for your life. The plan can certainly change as your situations change, you just need to know what you’re doing with your money and how that relates to your “why.”

3. Hold yourself accountable. Whether you see a financial coach or advisor, talk to your family or friends about your financial goals, or put some kind of system in place so that you will be accountable to yourself, when you’re held accountable you are much more likely to follow your plan and reach your goals.

 

 

My Take:

  1. As the ladies pointed out, you must automate your saving and you can always keep improving on it by gamifying your savings.

2. Automate your investments. There is a reason that SIPs (monthly installment Mutual Funds) in India have grown at such a rapid pace.

3. Invest time in financially educating yourself. Today with the available opportunities, there is no excuse for any of us to not be financially literate or aware.

 

 

So, there you have it from 6 enlightened ladies about why it’s so important for women to manage money and some starter ideas for you to start taking your finances seriously.

Watch out for the next 2 posts, coming your way on Wednesday and Friday.

 

 

Take your first step today. Sign up for the Elementum Money Weekly Newsletter to download the Financial Feminist checklist. Also,get nuggets of financial wisdom with our 3 posts every week, directly to your inbox. Have more questions, feel free to send any of them my way at aparna@elementummoney.com.

 

 

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Read the other posts in the series – Women’s day Special: Change your story

10 thoughts on “Womens’ Day Special – Why Women Must Manage Money

  1. We know we could go on for ever and ever as to why women should manage money. I liked the contributers’ points of view here. I particularly liked Kristine’s but i am not sure how many “Indian” husbands would be willing to participate in that kind of arrangement. But yes, women need to be aware of the financial affairs and participate actively in the matters. Until that happens, we are going to need a Womens’ Day.

    1. Hi Deepali! Interesting point. For a long time, till we were both salaried, me and the husband also used to follow the same way of managing money as Kristine. Only now that he is self employed, things have changed a bit.

      I think where we women can try to create the change is also by starting the conversation and asking for things, like Melanie said. Being passive players is not going to work any more.

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