Paul Tarins, RICP®,WMCP®,CSRIC™
According to recent studies, a gender gap has been found almost universally in financial knowledge between men and women. However, although women have admitted to not knowing the answers to many financial questions compared to men, the reason behind it wasn’t just a lack of knowledge when it comes to finances. Rather, it stems from a lack of self-confidence in decision-making for financial matters.1
Studies have been conducted that show that a large chunk of the financial literacy gender gap between men and women can be attributed to nervousness because of which women feel less confident in their financial knowledge and are more inclined to answer “do not know” when confronted with specific questions that test their financial knowledge. 2 This lack of confidence can also lead to missed opportunities when it comes to important financial decisions, such as retirement savings.
The lack of financial literacy can also impact women’s retirement savings with the average household retirement income for women aged 65 and older being $47,244, which is only 83% of their male counterparts. Studies have also found that women live longer than men which means they need to be more financially secure by the time they reach retirement age.
The good news is that women empowerment and financial empowerment go together and although women face financial hurdles that are unique to their gender, they are slowly overcoming them with time.
If you want to get closer to financial freedom, check out these expert tips to improve your confidence and financially empower yourself and other women in your social and professional circle:
#1: Set S.M.A.R.T Goals
When it comes to setting goals it’s important to avoid limiting yourself. However, instead of unrealistic goals that are difficult to achieve and can make you feel overwhelmed at the prospect, try setting some SMART (Specific, Measurable, Achievable, Realistic, and Time-bound) short-term goals that can be measured and achieved in a realistic amount of time. These goals can serve as stepping stones for a secure financial future, leading to greater long-term financial achievements. Making progress via these smart goals can give you the motivation to do better and serve as an essential factor for developing your financial decision-making abilities and confidence with time.
#2: Setting a Budget
Another smart strategy is setting a budget. One of the biggest reasons people spend more than they should is because they don’t have a proper budget. By creating a budget, you can have a clear idea of how your money is being spent and where it is going, what necessary expenses you have in a given month, and avoid any nasty surprises at the end of the month.
Creating and standing by a realistic budget with a reasonable percentage set aside for savings can also help you avoid the stress of managing money.
Seeing your money being spent on things that you had planned on over time and being able to cover your expenses in the budget you have created can also help you develop feelings of financial reassurance and confidence. It’s also essential that once you create a budget, you stick to it and avoid temptations or triggers that might encourage impulsive spending such as sales.
According to studies, one of the key reasons why women are less confident than men when dealing with money is because they are less likely to invest in the stock market compared to men1. Unfortunately, being hesitant about investing in stock can be a big mistake and put women at a distinct financial disadvantage. When planning for your retirement, diversifying your portfolio is key to maximizing your savings and is a smart and inclusive long-term strategy with better potential payout.
If you aren’t consulting with an experienced wealth management advisor already, you should get in touch with a qualified financial advisor who can guide and support you to develop a diverse portfolio and help you create a solid and comprehensive financial plan. Doing so will also help you increase your comfort level while dealing with different investment options and enhance your capacity to make better future investment decisions by yourself.
#4: Don’t Hesitate to Ask and Respond to Questions
Almost everyone feels insecure about their lack of knowledge in some field or the other. Not everyone knows the answers to everything and even some men face difficulty making complex financial decisions. The important thing is to ask questions and increase your knowledge. By speaking up and consulting with people with extensive experience in the financial sector you can grow your financial knowledge and confidence and improve your ability to make better financial decisions for your life.
Once you feel comfortable with your financial knowledge, you can also pay it forward by helping others with the same financial concerns. This will help empower other women as well and create a culture where asking questions about finances and money doesn’t feel embarrassing or wrong. If you have children and dependents, especially daughters, you should take out some time to educate them about money and finances while encouraging them to ask and respond to questions that will help them improve their financial decision-making abilities.
#5: Support Other Women
Advocating for women’s financial security, equality, and confidence by using your voice is important in today’s times —no matter which gender you identify as. Speak up where you can and also encourage other women in your professional and social circle to do the same. By creating meaningful and intellectual conversations around money and finances and its implications for your future and retirement, you can help build awareness about financial concerns that cause discomfort amongst your peers, address common financial issues, and expand your financial knowledge.
An important point to keep in mind is that it is essential balance your decision-making and plans rather than aim for perfection with regards to your financial future. Always ensure that you know that what you are doing is best for your situation. Don’t let any fears, the possibility of failure, or your lack of financial knowledge prevent you from taking control of your finances and hold you back when it comes to reaching your main financial and retirement goals.
For more information and details about retirement planning and investment management for women, get in touch with the financial advisors at Sovereign Retirement Solutions. We offer financial planning services in Orlando as well as other areas all over the state of Florida.
Paul Tarins is an investment adviser representative of and offers investment and advisory services through Portfolio Medics, a registered investment adviser. Nothing contained herein should be construed as a solicitation for investment advisory services. Sovereign Retirement Solutions and Portfolio Medics are not affiliated.