6 Principles Every Woman Can Implement To Reach Financial Success
In today’s world women are busier than ever. Whether they are working full-time, staying at home with the children, or taking care of the house, they are constantly juggling.
Did you know that 42% of all women lack financial security? (Analysis of U.S. Census data by Wider Opportunities for Women) It’s important that women are very involved in their financial journey.
Fewer than 2 in 10 women feel “very prepared” to make wise financial decisions. Half indicate that they “need some help,” and one-third feel that they “need a lot of help.” (Financial Experience & Behaviors Among Women, 2010−2011 Prudential Research Study)
Here’s how take the first steps in reaching financial success for yourself and for your family.
Protect your economic value.
Whether you are a stay at home Mom or a working woman, you should make sure you have the proper protection in place to protect your income and value to your family. Everyone has an economic value. Protecting that value through disability and life insurance should be an important part of any financial strategy.
Pay yourself first.
Putting aside 15% of your money first before paying for lifestyle related expenses is critical to achieving financial success. Saving 15% of your gross income gives you the best chance to offset future taxes, market fluctuations, planned obsolesce, technological change and inflation.
Having access to capital is an important step to avoid going into debt. By maintaining an adequate amount of money in savings (six months of income), you will also be more apt to not alter your other financial strategies when you need money.
Avoid compounding interest in taxable accounts.
Compounding taxable interest creates a compound tax, which substantially erodes your wealth. At some point, this tax bill could exceed your contributions to other savings and investment plans. To avoid this, have your interest redirected to a wealth coordination account to determine the best and most efficient use of that money.
Contribute to Your Retirement Accounts.
While many tell you to contribute to retirement plans first, if proper savings hasn’t be accumulated and you need money, you will likely have to go into debt or dip into your investments, which can undermine your financial plan. Contribute to retirement only after you have properly protected your economic value and accumulated six months worth of income in liquid savings.
Invest in Growth.
Once you have completed your full protection and savings goals, you are ready to position money in growth. Balancing between income, capital appreciation and hard assets is essential to creating balance in your investment decisions.
*This material is for informational use only. The views expressed are those of the author, and do not necessarily reflect the views of Penn Mutual or any of its affiliates. This material is not intended to be relied upon as investment advice, and it is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy.