6 Financial Must Dos for Women

Written by Jane Nowak Tuesday, April 27 2010

Get ready to read some staggering statistics compiled from various sources that you may not already know or have not experienced.

Some time in their lifetime, 90 percent of all women will have sole responsibility for their personal finances. Read on:

• 50 percent of all marriages end in divorce.
• 75 percent of all second marriages end in divorce.
• Over their working lifetimes, women often earn less than their male counterparts.
• Due to family responsibilities, women work fewer years than men.
• Women live an average of five to seven years longer than men.

These statistics spell a huge financial challenge for most women. Essentially, women are beginning the race 10 feet behind the starting line. And, adding to the challenge, in the race, women normally have to run much farther.

So, what’s a woman to do?

Start now to set yourself up on a solid financial foundation. No matter what stage of life you are in or who in the house has day-to-day responsibilities for handling the money, there are six “must dos” that should be the financial mainstays of every woman’s life.

Must Do No. 1: Pay Yourself First – Make Savings a Budget Item
One of the oldest maxims practiced by successful wealth accumulators is saving. After you have paid for your monthly budget essentials of food, housing, clothing, transportation, and medical, save a non-negotiable amount every payday. If you are like many people, an auto draft out of your paycheck directly into your savings account really works. If you don’t see the money, you are not likely to miss it.

Must Do No. 2: Establish an Emergency Fund
With the money you are saving, set aside three to six months of expenses in a separate savings account.

Have any of you ever had that proverbial financial “rainy day?” This emergency money is for when the car breaks down, you have an unexpected medical bill, or you lose your job, etc. This money is not for vacations, expensive cars, a new pair of shoes, or something else that you just have to have. As much as we may want them, the “extras” are not emergencies.

Must Do No. 3: Insure for Risks
Take advantage of economical insurance products to provide you and your family with an appropriate level of medical, life, heath, home, automobile, umbrella, and long-term care insurance. Huge bills (especially from medical expenses and long-term care expenses) are two of the biggest enemies of successfully sustaining wealth accumulation.

Must Do No. 4: Invest Your Assets
Once you begin to accumulate money above and beyond your emergency fund, begin investing. Initiate an investment plan. And first use your 401(k), 403B, IRA, Roth IRA, or any other tax-advantaged savings plan to begin to accumulate your wealth. Don’t forget to save the amount needed to get the entire employer match. Employer match spells “free money” for you.

Must Do No. 5: Invest in Yourself
If you don’t know about dollar cost averaging, asset allocation, or how to come up with an investment plan, begin by reading about personal finance online, in money magazines, and in your local newspaper. And when you need help, don’t be afraid to seek investment advice from a professional. It’s OK to “know what you don’t know.” You don’t have to be an expert in everything.

Must Do No. 6: Don’t Be Afraid to Plan with the End in Mind
Make sure you have guardians named for your minor children and have provided for them via a will. Name beneficiaries for your 401(k), 403B, IRA, Roth IRA, or any tax-advantaged savings accounts. Check your beneficiaries every couple of years or after a death, a divorce, etc.

Powers of attorney, health care powers of attorney, and living wills are also very important. Seek professional advice and prepare for the unexpected. Your loved ones will thank you.

No matter what is going on in your everyday world, building a solid foundation for your financial life is never out of style. While it may not be fun, exciting, or glamorous to live within your means, to make savings a priority, or to drive an older model car, wealth accumulation is often a turtle’s race of slow, steady progress. Implement the 6 Must Dos for Every Woman as touchstones to anchor you to goals of wealth accumulation and greater financial security.

Jane Nowak is a financial adviser with Kring Financial Management in Atlanta, Ga. Her practice focuses on women’s retirement and financial planning for women.