Financial Planning for Women
Starting long before the teen years, young women and those who are responsible for them should employ many strategies to confront adulthood’s impending financial challenges. Given the high percentage of children now raised by divorced or never-married single mothers, one would think that today’s girls would grow up without expectations that their financial roles in adulthood will be secondary.
Key Points
Yet a combination of political, religious, media and peer sources champion and perpetuate the stereotypical notion that the ideal family is one where mothers are the sole caregivers for children and the fathers provide for them. The notion that girls who act and look right will land a man who will give them a fairytale ending continues in society.
In this article, we’ll take a look at a few issues young women face and give you tools to help these girls fight back and become self-sufficient adults who can choose the right life arrangements.
Learning, Earning and Returning
Higher-education costs have become such a disproportionate part of American budgets that, in choosing a college, one should focus on how well students “learn to earn,” even though ratings emphasize how well students “learn to learn.” Evaluate a college’s costs as an investment in a future income by considering these factors:
Private Might Not Pay
Everybody’s Business
Female liberal-arts college grads, aged 30 to 50, play a vital role in small-business growth. However, even those who are now pursuing degrees that will lead them to structured careers as scientists, physicians or other professionals should consider that a future desire to balance work and family might lead them to become future business owners (who have the ability to work from home).
Boomerang Budgeting
After college independence, it’s hard for both parents and kids to imagine graduates moving back in for an extended time.
But if it doesn’t limit career possibilities – for example, a job with a national or global company that involves a lot of travel – and is handled well, it’s a great way to pay off college debts and build strong savings before leaving the family home for good.
Building Wealth and Taking Credit
Making budget-conscious college and career choices is a good start, but Generation X and Y women must still navigate numerous wealth-threatening waves as they prepare to drop anchor away from familiar family and friends.
Unlike their mothers, today’s young women have easy access to credit at a time in their lives when expenses can run amok if the plastic is treated as play money. Of course, both male and female college students today increasingly graduate with substantial debt.
According to “The Project on Student Debt” survey, in 2020 students averaged more than ,000 in student loans. In a similar study done in 2009 by Sallie Mae, students were graduating with up to $4,100 of debt in credit cards.
On the Job
It’s easy, and dangerous, to feel prosperous when going from single-digit-dollars per hour for part-time student work to tens of thousands annually in a first professional job, so here’s how to not end up pauperous:
Compensation
If you’re fortunate enough to garner multiple offers, don’t be swayed by salary alone. Get details on the benefits, particularly the healthcare plan, including employee contribution amounts and trends, as well as the co-pay, deductible and maximum out-of-pocket costs.
Also, because you’re likely to change employers several times during your career, examine the 401(k) plan features to determine investment options and fees, and the employer contribution and vesting policies; a high employer match won’t help if you lose it upon leaving. Also, weigh growth prospects that could quickly multiply a lower starting salary.
Advancement
That first salary is the base from which percentage raises and bonuses are computed, and it’s crucial that women learn to negotiate more assertively, aggressively and effectively for pay and promotion. These
negotiating tactics can include using available resources (such as salary calculators) to gauge their compensation versus national or local trends, both when getting a job offer and once on the job.
Furthermore, they must mimic their male colleagues’ sometimes greater willingness to relocate for better internal and external job opportunities.
Assessment
It’s equally important for women to gauge their overall financial progress, independent of their financial growth within their careers, to determine whether they’re falling short of their ultimate financial goals and needs given their current skill sets and job situations.
This could mean modest investment in further education related to their current careers, or a more substantial investment in preparing for a new career.
Residences and Relationships
In the USA Today article, “It’s time to grow up – later” (2020) social observers differ on both the legitimacy of a Generation Y “quarter-life crisis,” and whether it is nothing more than a coddled generation delaying adult responsibility or the front end of a permanent societal change.
Regardless, today’s young women can exploit the independence of deferring the establishment of residential or relationship roots by taking wealth-wise steps to build their own solid financial foundations:
Paycheck Priorities
Make sure your budget includes significant monthly credit-card pay-down, and at least enough 401(k) contribution to get the full employer match. Nurse whatever car you have as long as it’s still running; if you must replace it, avoid borrowing and pay cash for a no-frills, highly reliable, fuel-efficient used vehicle.
Make someone else pay the full price for a new vehicle and pick up that used vehicle a few years later when the depreciation slows its huge down curve.
Student Loans
Delay paying off more than is necessary, so that you can take care of other priorities.
However, if your loan payments are still high, explore the possibility of a one-time consolidation opportunity that could lower your interest-rate substantially. It is very important to make sure you understand complexities and potential pitfalls of consolidation and the predatory traps lurking from less-reputable private lenders.
Additional Savings and Investing
Try to squeeze additional cash to more fully fund your 401(k) and IRA. Unless you’re lucky enough to have a salary that puts significant income in the 25% or higher brackets, reject the potential current deduction and choose Roth options for both so that you’ll ultimately pay no tax on your withdrawals, and get an early-withdrawal tax-free bonus toward your first home purchase.
Mortgage and Marriage
By prematurely or excessively falling into these “dual money traps,” you can potentially endanger your prospects of future financial security. Resist the rhetoric of not wasting rent and buying a house to build
equity until you’ve wiped out non-student-loan debt, have established solid savings, know where you want to live for at least the next five years and have a salary high enough to make the mortgage-interest deduction attractive for a tax reduction.
If you do get married, don’t borrow to pay for a wedding or honeymoon and, even if you have the funds
for it or parental subsidy, reject the lavish touches and toss the extra cash in the bank to save for a future house or other needs.
Finally, help is available for men and women of all ages to ask financial questions and get some answers. Here are a few of the places where help is available:
Non-Profit Organizations: The Girl Scouts, Boys and Girls Club and JA (formerly Junior Achievement) are
among those offering comprehensive financial-literacy educational programs.
Schools: The NEFE High School Financial Planning Program, National Coalition of Girls’ Schools and
Financial Fitness For Life are among curricula offered for in-school use. As of early 2020, half of the states had some kind of financial-literacy course requirement.
For-Profit Organizations: Practical Money Skills stands out as the most comprehensive among numerous
financial-institution programs that vary widely in breadth and quality.
Best Financial Careers For Women
Women and men don’t always have the same wants and needs when it comes to careers. Women in particular may seek scheduling flexibility that allows them to care for their children and spend time with their families, assurance that they’ll be able to advance even in male-dominated workplaces; and the feeling that they’re making a positive impact on people’s lives.
While you might think of finance as an industry with long hours, lots of testosterone and too much stress,
many women have found it to be one that allows them to achieve success, satisfaction and work-life balance. Here are four finance careers that real women say allow them to achieve these goals.
Asset Manager
Melissa Joy, CFP, is the director of investments and a partner with the Southfield, Mich., Center for Financial Planning. Her firm manages more than $500 million in its discretionary investment program, and she develops and implements discretionary investment models for hundreds of clients. “As a partner, I also sit on the firm’s operations committee and help to run the business,” she says.
Joy says asset management is a great career track for women, especially when they work with boutique, independent companies like she does, where there are fewer gender barriers than in traditional wire houses. What’s more, while the asset management field is still male dominated, says Joy, “you can stand out as a woman, and if you can prove yourself, there are great opportunities for advancement.”
There are several reasons why Joy says asset management is a great career track for women:
- Boutique wealth management firms can offer significant flexibility. The workplace culture can be more family friendly and your merit is not determined by exorbitant hours worked.
- It’s a great creative outlet, which many women may enjoy.
- The need for asset managers to serve women is growing.
- The work is truly rewarding. “You’re helping people achieve their life goals. It doesn’t get much better than that,” Joy says.
- As a partner, Joy says she impacts the lives of the company’s clients and employees through her decisions.
Some women might find particular aspects of Joy’s job challenging. She says that working in a boutique wealth management firm has required her to wear many hats, but she looked at this situation as an opportunity to prove her value early in her career. “I really feel that the variety of projects and issues helped me in the long run even though it could have been intimidating,” she says.
Investment Advisor Representative
Diane Zing is the vice president of investments in the Denver office of Trilogy Financial Services. She is a fully licensed Investment Advisor Representative, holding her Series 6, 7, 63 and 65 securities licenses, along with health, life and long-term care insurance licenses.
Zing’s work focuses on comprehensive planning that involves investment management, protection planning and wealth-transfer strategies for individuals, families and small-to-medium sized companies.
For women seeking a career in the financial services industry, Zing recommends focusing not only on what skills they have, but also what kind of environment they want to be in. “Every firm within the industry has its own style; its own perception of integrity, client service and expertise,” she says. Women should consider what kind of work-life balance they need, then look for the type of position and the company that can meet those needs.
Zing sees advantages to being a woman in her field, particularly in the area of communicating with clients. She says a woman’s sensitivity and empathy can be more comfortable for many clients. The same traits that some see as an advantage, others might see as a disadvantage,
however. Zing says some clients might see a woman advisor as possibly unreliable if they believe they rank below a woman’s other priorities, such as her home, spouse or partner and children. “They believe we are trying to manage a business and manage a household all at the same time. And while many of us do,” she says, “clients sometimes measure a woman’s success at balancing both aspects of her life without her opinion or feedback.”
She says women can overcome these negative stereotypes by being professional to the utmost in how they dress, in their body language, in their speech and in their attentiveness to clients. “Casualness from a male counterpart sometimes gets considered as ‘confident’; casualness from a female in the same role sometimes gets labeled as ‘unprofessional’,” Zing says.
The Bottom Line
Most importantly, though, from the earliest possible age all children should be involved in the family finances.
That starts with them understanding their role in sharing limited family resources in earlier childhood, to increasing input in the family financial planning as they approach the teen years, to extensive involvement in and knowledge of the family’s financial situation as they start to think about cars, college and the years beyond.
All through that time, they should get an increasing responsibility and opportunity to earn and manage their own money first within and then outside the family.
