It is important for everyone to become financially savvy as it ensures that you are in charge of your money. The most common concerns that result in money problems are a lack of budgeting or poor budgeting, impulsive spending and no particular investment strategy. Still, there is one thing that most of the women experience – a gender pay gap. Being able to stay on top of your money in the face of a gender pay gap is not a cinch. There is no denying that our society has a long way to go to achieve gender equality.
Not all women are unlucky to have been offered less pay than their male counterparts. In fact, it has been noticed that many women in some sectors are earning more money than men. Well, whether or not you are the victim of pay inequality, you should understand financial concepts so you can make the most of your money.
Unless you know the basics about money, you cannot be in control of your spending. Just being able to save money is not enough to ensure that you are organised. Before you adopt any habits, bear in mind that it will take some time for you to take it in your stride, but such habits will help you in the long run.
Financial habits that you should develop in yourself as a woman
Here are some of the habits you should try to learn if you want to be back in the saddle.
- Know your worth and ask for it
The first thing you need to learn is not to resign yourself to the consequences of gender inequality. For instance, if you have qualified for an interview and you know what you are offered is less than the industry standards, you should fight for it. You should never be willing to accept a low-wage offer. Try to pitch your employer. Negotiation does not mean to bring down the price.
Even if you are struggling hard to get a job, you should negotiate for a good salary. There is nothing wrong with asking for more. However, it is likely that the negotiation will break down. Since you are in dire need of money, you will have to accept a lower price.
But if you can wait for more offers, you should go ahead because there will be a compounding effect on your pay increase. Accepting a low offer will result in compound loss, and you will rue the day down the line. This is not just suggested when you are to grab a job. You should rather use your negotiation skills when you are buying something. Sellers charge different prices from different customers for the same item. They normally charge higher prices, leaving room for negotiation. If you think that you are being asked for higher prices, you should try to negotiate.
- Create a plan for your money
The next step is to create a plan for your money. It means you should figure out how much you should save and invest. You cannot manage your money unless you know how much you are making. The first thing is to evaluate your budget. Look at how much money you are earning and how much you are spending. Then determine whether you are consistent with your savings. Having an emergency cushion is a must for a rainy day, so you do not have to hinge on bad credit loans from a direct lender all the time. And then you have to see how much you can invest your money.
If you have not been doing all that, you should start now. There is no better time than now to save and invest money. Understand your budget and figure out how much you can whittle down. Chipping away at your expense will help you build an emergency cushion.
Before you start investing your money, carefully analyse your risk-tolerance capacity. Make sure that you invest in a variety of assets so you do not lose your money. Seek advice from an investment expert before dipping your toe.
- Avoid keeping up with the Joneses
You need to keep in your mind that financial situation varies from person to person, so you cannot make your lifestyle up to the level of others. If you try to do so, you will end up overspending money and this will result in falling into a debt spiral.
Accept the fact that your financial situation is different from others, so you will have to spend as much money as your budget allows. Set realistic and achievable goals and try to live within your means. If you compare yourself with others who have deep pockets, you will have a sense of melancholy. You will regret that you do not have the lifestyle they have. You will feel depressed and desolated.
- Automate your savings
You should be consistent with your savings because they will help you meet planned or emergency expenses. It can be quite difficult to be able to be able to stash away manually, so the best thing is to automate your savings.
It is always advisable to open a separate savings account and link it to your pay account. Set a particular limit that every month is pulled from your pay account. Make sure that you build your emergency cushion separately from savings for your planned expenses like vacation, home improvement, etc.
Your emergency cushion should be worth three months of living expenses. In case you lose a job, you can fall back on it to cover your monthly expenses. However, remember that sometimes it might not be possible to meet all of your expenses through an emergency corpus when you are in a difficult situation.
Loans for the unemployed can come in handy. However, it does not mean that you will be out of the woods. A rule of thumb says that you should carefully assess your needs. Borrowing does not make sense at all if you cannot repay the debt. You can fall into a debt trap if you fail to meet your obligations on time.
- Focus on growing your net worth
Do not think that you do not need to plan around retirement as it is far off. You should start stashing away as soon as possible if you want to live the golden years of your life with peace. Do not just rely on an IRA or 401(K) account. You should think about ways to build your net worth.
Invest money in a diversified range of assets so you can earn returns. Investment is necessary to make money from money. Make sure that you invest in assets that increase in value over time. Property, stocks and bonds are the best way to increase your wealth.
Your net worth is the amount that you owe less (the total value of your assets, including your house) minus debts you are to pay off (including the mortgage on your house).
The final word
It is easy to make money work for you. You will have to be careful with your money management strategy. The aforementioned tips can help you become a financially savvy woman. Understand your current financial situation and how you can make it better.
