In past generations, it was the social mentality of men and women that the latter did not need an understand of finances. Women generally relied on their husbands to manage the financial plan of the household.
Those days are well and truly gone with women running workplaces and fighting for equal pay. Every now and then though, that old mentality creeps through. It is subtle, but signifies that those stereotypes are still ingrained in society.
Kathy Longo, a financial professional and author of Flourish Financially- Values, Transitions, and Big Conversations gets it totally right by saying: “A man is not a plan”.
With over 25 years experience, she has served clients with extensive knowledge and wisdom as wealth manager, financial manager, firm manager and business owner. She has earnt many awards include being named one of the top 50 Women in Wealth Management by Wealth Manager Magazine.
“Statistics show that all women are going to have to take the reins of their finances at some point in their lives- it has never been something that they should just hand over to their husband.”
I’m not saying that you shouldn’t accept a gift from a partner or refuse his offer to buy you dinner. That is all a part of a relationship. There is however a difference between accepting these gestures, and being dependant on another’s income. It is important for young women to understand the significance of financial stability.
Here are 5 key things we should be instilling in our young women:
Longo advises that all spending can be divided into two categories- critical spending and “nice-to-have” spending. Simply put, critical spending are things like your rent, weekly groceries etc, and nice-to-haves are those guilty pleasures like uber eats (#guilty). Understanding the difference between these two expenses will help you budget and know where you can cut back your spending.
Don’t be shocked, but there is a thing such as ‘good debt’. Things like a mortgage, or student loans to further one’s career are classified as ‘good debt’. Bad debts include a debt with a high-interest rate, such as a credit card debt for things you don’t really need. It is important to beware of bad-debt purchases and have a plan to pay off this debt as soon as possible.
Building an emergency fund
Rule of thumb is that whenever you are short on money, that is when you’ll run into an emergency. Your car will suddenly blow a tire or your washing machine will stop working. Having an emergency fund is a must for these situations. According to Longo, you should have 3 to 6 months of living expenses stored away in an emergency fund.
It is never too early or late to start saving. Not only are you building your personal savings, but you are also getting growth on that money. The sooner you can build a habit to “pay yourself first” the sooner you will see that savings balance grow which creates possibilities for the future.
Gain confidence around your finances
Put your foot down and take control of your finances. Women in particular, need to understand that the sooner they grasp their true financial picture, the sooner they can start managing their finances to create the future they want. It is much better to take an active role and interest in your finances than to wait for a transition such as divorce, inheritance, or being widowed. Focusing on the goals and possibilities your investments bring maybe more comfortable than thinking about the dollars and cents and equally effective.