Finance is indeed personal. Like a fingerprint, every woman has a unique financial blueprint.
Women have different resources and starting points, earning capabilities, and money values. And all women have different life goals and circumstances that will shape their priorities.
This is why your best friend’s financial plan won’t work for you.
It is why at Saij Elle, through our Strictly Money program, we teach women how to create their personalized financial plan based on their life, not someone else’s.
Here are my go-to financial planning tips for your personal circumstances. One or more of these categories may apply!
Table of Contents
- Personal Finance Planning for Beginners
- Personal Finance Planning for Debtholders
- Personal Finance Planning for Single Women
- Personal Finance Planning for New Moms
- Personal Finance Planning for Career Women
- Personal Finance Planning for Newly Divorced Women
- Personal Finance Planning for Pre-Retired Women
- Personal Finance Planning for Retired Women
- Personal Finance Planning for Widowed Women
Personal Finance Planning for Beginners
If you’re new to financial planning, putting a “money strategy” in place may feel overwhelming but let me assure you, it takes only a few small steps to take your financial well-being to the next level.
1. Recognize that personal financial planning is more than just saving
The first step is to recognize that financial planning encompasses several pieces:
- Managing Debt
- Retirement Planning
- Estate Planning
This may come as a surprise to you because most of us are taught how to make money, but not to manage it.
2. Pay yourself first
Create a system so you’re automatically transferring 10-20 per cent of your bi-weekly or monthly salary into a separate “life goals” account. By doing this, you will get out of your own way and ensure you’re saving for your most important objectives.
3. Automate your investments
Set it up so you’re investing with a robo-advisor, or in a few low-cost index mutual funds on a regular basis. When you do this, you will take the pressure off yourself in trying to time the market, and deploy dollar cost averaging instead, a brilliant investment strategy to build wealth.
Personal Finance Planning for Debtholders
Being dependent on debt, especially if it’s used to fund a lifestyle you can’t afford, can be a slippery slope. Remember, any interest owed to someone is taking away from your future earnings, so it’s important to get debt under control.
4. Create a budget
It may seem tedious to create one, but having a plan on how you intend to spend your money and comparing it to how you actually spent money is the only way to bring awareness to your spending habits. You can’t change what you can’t see, and you’ll be surprised at the patterns you discover because so much of how we spend is subconscious.
5. Only take on “good” debt and stay away from “bad” debt
Let me be clear – being over-leveraged with any type of debt is not ideal, however there are different types of debt. “Good” debt is a loan that you take and use towards things that help build wealth or increase potential income, for example mortgages towards property that increases in value, student loans to build a higher-paying career, or business loans to create a profitable company.
“Bad” debt refers to loans that are towards things that depreciate in value, don’t improve your financial outcome and often come with high interest rates such as credit card debt.
6. Create your debt repayment strategy
Make a list of all your outstanding debt, its corresponding interest rate and the minimum amount you have to pay each month. Pay down your debt by using either the snowball strategy if you’re motivated by seeing progress or the avalanche strategy method if you’re motivated by seeing savings. There’s no right or wrong way.
Personal Finance Planning for Single Women
There are many benefits to being single, but women who are, need to approach their finances differently and more meticulously.
7. Have a bigger buffer for emergency savings
A good rule of thumb for the average person is to have 3-6 months of household income saved in case something unexpected comes up. If you’re single, aim to save 6-9 months, especially if you lack a financial support network, your job is not stable, or you have a specialized job that might take a longer time to replace.
8. Get disability insurance
More than one in four working women will experience a serious disability at some point in their career, preventing them from working for a prolonged period of time. Yet over half of single female workers do not have this type of protection and are at a risk of much greater financial difficulty than those in two-income households if they miss work because of an injury or illness. Get disability coverage. You have some through work, but its unlikely to be enough so assess what you need and top up.
9. Prioritize retirement savings
Women are 80% more likely to live in poverty during retirement, will live on average 5 years longer than men, and yet save three times less than men for their golden years. I can’t stress this one enough – don’t put off saving for your retirement. Start putting away money today, take advantage of tax-shelters and invest the funds to build wealth faster.
Personal Finance Planning for New Moms
10. Get a will
More than 50 percent of people do not have wills and while every adult with assets should have one, and it’s especially important for new parents. Your will is a legal document that will state who you believe should care for your minor children and how. Without one, you’re at the mercy of the courts to make that decision on your behalf and it may not be what you want.
11. Purchase life insurance
The purpose of life insurance is to ensure your dependents have income that would be lost if something happened to you (or your partner). Even if you’re a homemaker, the work you do is important and would need to be outsourced at a cost, so don’t discount your worth. In most cases, term insurance is the best and cheapest option.
12. Take advantage of an education savings plan
Post-secondary education is getting prohibitively expensive. Many governments recognize this and have programs in place to support parents that are tax-friendly and often come with “free money”. Whether it’s a RESP in Canada, a 529 plan in the United States, a CTF in the U.K., or the Australian Unity Education Savings Fund, leverage it sooner than later. The earlier you start, the less you have to put away down the road.
Personal Finance Planning for Career Women
13. Negotiate your starting salary and raises
Women leave up to $1 million on the table over the span of their career compared to men because they don’t negotiate their pay. That’s a lot of money! Almost every organization expects workers to negotiate their wages unless they are unionized, so ask for more than you want and put the onus on them to bargain that figure down. Learn how to negotiate pay raises HERE.
14. Maximize corporate retirement plans
If you’re fortunate enough to work for a company that offers a group retirement or pension plan, use it. Typically, these come with a matching option where your company will contribute additional money to your plan, and associated investment fees are lower than if you did this on your own. Both perks will help you build wealth faster.
15. Assess and top up your benefits
You will likely have a whole host of benefits – health, life insurance and disability benefits. These will save you a bundle but they may not be enough to cover you depending on your lifestyle and family circumstances. So, assess what you have and fill the gaps with private insurance. This will be especially important if you plan to move companies over your career.
Personal Finance Planning for Newly Divorced Women
16. Create your new budget
With potentially one full income source gone and assets cut in half, many divorced women find themselves facing an entirely new lifestyle. The most important first step is to account for your new expenses and adjusted income so you fully understand what adjustments, if any, will be needed.
17. Redo your wills
There’s a good chance that your beneficiary and even your executor will change post marriage. And yet many women procrastinate in getting their wills redone. Remember that the wishes in your last legal document will stand. Do you really want your ex to make life or death and care decisions if you become incapacitated?
18. Review your account beneficiaries
If it’s not accounted for in the divorce agreement, it will be important to run through all your bank accounts, investment accounts and life insurance contracts to ensure that your beneficiary is no longer your partner and you’ve replaced them with the appropriate person.
Personal Finance Planning for Pre-Retired Women
19. Picture your retirement
You need to visualize your retirement in both the early and later stages if you are ever to put a proper plan in place. Make some preliminary decisions as to where you’ll live and for how long, and how you’ll occupy your time. You’ll also want to account for changes in life circumstances (children’s marriage, grandchildren, potential illnesses and caregiving etc.). Make a list and discuss it with your partner if applicable.
20. Get a comprehensive financial plan done
I can’t stress this one enough. Consider paying a fee-only advisor to run reports using your net worth, potential retirement income sources and expenses, investment growth projections and much more to determine how well prepared you are for retirement. If you do this early enough and you find yourself financially behind, you still have plenty of time to adjust your plan and catch up.
21. Pay down your debt
Consider accelerating your mortgage payments, pay off your credit card debt and avoid new ones, and steer clear of car loans. By minimizing debt, you will reduce the amount of retirement income needed on interest payments – money that can be used towards a fulfilling retirement! Remember, when you pay off a credit card that charges 20% interest, it’s equivalent to earning 20% on an investment – risk-free!
Personal Finance Planning for Retired Women
If you’ve retired, my hope is that you’re enjoying the fruits of your hard-earned money. Retirement for women can be 25-30 years as the life expectancy for the average female is age 85. So here’s how to make it financially count.
22. Keep a portion of your portfolio in equities
Just because you’re retired doesn’t mean 100% of your portfolio needs to be conservative. In fact, it’s in the latter years that the magic of compounding amplifies and when you really grow your wealth. So while funds that you need to live on in the next 2-3 years should be safe and liquid, money that you won’t need for more than 5 years can still be invested in moderate growth investments such as high-quality dividend stocks, large-cap global stock ETFs, or balanced mutual funds.
23. Minimize taxes
In this phase of your life, you want to make the most of your money because the likelihood of you being able to go back to work if you find yourself short is slim. Keep more money for yourself rather than handing it over to the tax authorities. Meeting with a financial planner can help you structure your investments in such a way that you’re able to make the most of tax-shelters or tax-splitting options and therefore, minimize your taxes.
24. Make sure you have sufficient health insurance
Unfortunately, health issues are inevitable as we all age so it’s important to have reasonable coverage for medicine, health care visits, eye as well as dental care that you may have to pay for out of pocket. And remember, eating healthier, staying active and laughter are three of the best preventative measures women can take.
Personal Finance Planning for Widowed Women
Most married women will outlive their male spouse. Half of widows over age 65 will outlive their husbands by 15 years. That means there’s a 90% chance that when you’re older, you will be the sole financial decision maker.
25. Understand your net worth
Finding out how much you have in assets (value of home , investment and pension accounts etc.,) and liabilities (debt) will be important before you make any lifestyle or financial decisions.
26. Update your will, living documents and retirement accounts
If you’ve suffered the loss of a loved one, chances are your will and power of attorney are outdated. Be sure to update these documents to reflect who you want as beneficiaries of your assets, and to make care-giving and important financial decisions on your behalf in the case you become physically or mentally incapacitated.
27. Find two trusted financial confidantes
Unfortunately, there are many scam artists and dodgy financial salespeople who are ready to take advantage of women after their spouse dies. Some, believe it or not, are family members who let greed and entitlement get in the way of doing what’s right.
That is why it’s important to find not one, but two people you trust, who get along, are financially savvy and will help you make financial decisions and guide you if you’re unsure. If you’re lucky to have a financial advisor with fiduciary duties, then you can count them as one but if not, your children or close relative are options.
As I said, finance is personal.
Only you understand your circumstances better than anyone else. But that doesn’t mean you have to create a financial plan on your own. To learn how we help women like you build their money blueprint with easy to understand instructional videos, worksheets and a support group, learn more about my Strictly Money program below.