Empowering Women: Taking Charge of Your Financial Future

Women face unique challenges when it comes to financial planning. Despite progress, the gender pay gap persists, and women often save and invest at lower rates than men. According to a 2023 study by UBS, even women who are primary wage earners in their families are less engaged in financial decision-making than their male partners. However, taking charge of your finances can help you make the most of your money and alleviate some of the stress that comes with financial uncertainty.

Among the 9 in 10 women who reported feeling financially stressed in Fidelity’s 2024 Women’s History Month Study, taking financial action made the biggest difference in decreasing stress levels and increasing financial confidence. Here are five actions you can take to help take charge of your finances.

Boost Your Earning Potential

Women in the U.S. earn 16.4% less on average than men in comparable positions, according to 2023 data from the Bureau of Labor Statistics. If you compare women’s median weekly earnings ($1,005) with men’s ($1,202), the median gender wage gap translates to $197 per week, $10,244 per year, and a hypothetical $409,760 over a 40-year career.

Maximizing your income is key, and it can have an exponential effect. A higher salary becomes the basis for bigger raises (based on a percentage of income) and creates a salary history that can help you justify a bigger leap in earnings when you get a promotion or change jobs. More money can also improve your standard of living, allow you to save and invest more, and prepare for financial emergencies.

How to Start

• Boost your income by asking for a raise, finding a better-paying job, adding new sources of income, or starting your own business.
• Negotiate a better salary package.
• Update your resume for your next job hunt and use pay transparency to size up salaries.
• See which states have the lowest gender pay gaps.
• Find a side hustle to generate additional income.
• Consider the value of going back to school.
• Get a business loan to start or grow your own business.

Plan for Emergencies

Plenty of things can go wrong. When they do, having an emergency fund and a plan in place can help you avoid turning a life emergency into a financial one. Setting aside three to six months’ worth of expenses in emergency savings helps ensure your finances aren’t derailed by a medical emergency, unexpected home repair, sudden job loss, car accident, or other crisis.

Being prepared financially may also help you increase your financial confidence. According to Fidelity’s survey of 3,008 adults, 81% of women who had no emergency savings reported high stress levels, compared with 26% of women who had three months’ worth of emergency savings in the bank.

How to Start

• Create an emergency fund. Aim for at least three months’ expenses, but consider saving more if you’re the breadwinner or a single parent.
• Decide where to keep your emergency fund. Savings accounts that you can access easily tend to be a good option. Consider high-yield savings accounts, which offer interest rates up to 10 times higher than traditional savings accounts.
• Choose the best health insurance, auto insurance, and life insurance for your needs and budget.
• Take these steps if you get a large medical bill.
• Know what to do if you lose your income.
• Make a plan to pay for major home repairs; learn more about home equity loans and home equity lines of credit (HELOCs), which can be valuable tools.
• Have a plan to defend against financial abuse.

Begin Investing Early

Investing can help you grow your money to meet long-term goals like retirement or building wealth. Because returns are typically higher for investments than for traditional savings, investing can help you maximize your money to compensate for wage gaps or career gaps for parenting or caregiving.

To gain the biggest advantage, start investing early. Additional time gives your investments a chance to compound, so that $10,000 invested in 2024 is worth more in 2054 than $20,000 invested 10 years later: $109,357 versus $98,536 with an annual return of 8%.

Even if you start small, learn the basics of investing and consider starting sooner rather than later.

How to Start

• Many people start investing through a 401(k) or other retirement plan at work, but opening your own account through a brokerage firm or investment app is easy and fast.
• Choose an IRA, Roth IRA, or brokerage account to get started.
• Don’t fall into the gender investing gap.
• Find out how women can overcome investing disadvantages.
• Consider finding a financial advisor for personalized investing advice.

Pay Off Debt

Paying off high-interest credit card debt can save you money in interest charges, help lower your credit utilization rate (potentially raising your credit score), and free up valuable credit you might need in the future.

Create a plan to pay off credit cards, student loans, and other debt that may be weighing you down. Once your debt load is reduced, you may have more money to devote to saving, investing, or paying for essentials like housing, food, or your kids’ education.

While you’re thinking about it, make sure you establish and maintain your own good credit, even if you share finances with a spouse or partner. Pay your bills on time and monitor your credit score and report to stay on top of any changes to your credit file.

How to Start

• Take on your high-interest debt with a systematic plan to pay it off. Improving your credit utilization and keeping your credit score high may give you better options if you want to refinance debt or take out new loans for a home or car.
• Learn how popular strategies for paying off credit card debt work.
• Use debt consolidation to streamline your debts and potentially lower your interest costs.
• Maintain good credit so you can access loans and credit cards at the best rates.
• Repair your credit if you’ve had a setback.
• If you’re feeling overwhelmed, get more information about nonprofit credit counseling.

Actively Manage Your Money

Playing an active role in your own finances is essential, even if you work with an advisor or manage money with a partner. It’s the best way to stay engaged and aware so you can meet goals, respond to challenges, and take advantage of opportunities to improve your financial health.

According to a Fidelity study, these are the top five financial stressors facing women today:

• 40% think they should be doing more with their finances
• 39% stress about saving enough to retire
• 37% worry about paying off debt
• 29% are concerned about the cost of health care in retirement
• 24% are stressed about how to invest their savings to reach financial goals

In each case, being an active financial manager puts you in the driver’s seat. You may not have instant solutions for big-picture issues like saving for retirement, but understanding your own financial position, setting goals, and taking action are the skills you need to be an effective money manager.

How to Start

• Master the basic skills of money management and take an active role in planning and decision-making.
• Be a budgeting whiz. It can help you in every phase of life.
• Get comfortable talking about money, especially with the core people in your life. Make money part of your dating conversations.
• Whether or not you have joint checking, check in on family finances (as well as your own) when you’re married.
• Plan for a long retirement. Women outlive men by nearly six years, on average.
• Learn how to manage credit in a divorce and, if necessary, survive as a single mom.

The Bottom Line

Taking charge of your finances can be daunting: There’s a lot to learn and a lot to manage. You may want to take advantage of financial planning resources that offer fresh tips and strategies for women looking to manage their money, generate income, save, and invest.

At O1ne Mortgage, we understand the unique financial challenges women face. Whether you’re looking to boost your earning potential, plan for emergencies, start investing, pay off debt, or actively manage your money, we’re here to help. Call us at 213-732-3074 for any mortgage service needs. Let us help you take charge of your financial future.