Are you a woman who tosses and turns at night, worrying about money?
Insurer Allianz surveyed women in 2019 found that 67% of female survey respondents reported worrying about their current financial situation versus 57% of males interviewed.
Nearly 40% of women surveyed reported thinking about money on a daily or least weekly basis. A majority of those (81%) reported having a lot of stress when thinking about retirement planning. This survey and others like it have brought some issues to light.
For one thing, women are typically more concerned about risking their nest eggs than their male counterparts. Even younger women tend to avoid taking risks. Risk aversion, especially in the productive earning years of a woman’s life, can mean that she won’t accumulate enough savings to last her through her retirement years.
In the US, the typical woman reaches her peak earnings at the age of 44. At that time, she will be earning, on average, $66,700, according to Payscale.com. Black or African-American women earn even less, around $61,100.
If you are a woman in today’s workforce, your peak earning years are closer than you think, a fact that undoubtedly contributes to the stress women feel when it comes to money. It might also be a factor in why many women prefer the safety of low-interest traditional bank accounts and CDs to investing on Wall Street.
If you are a woman planning to retire, what steps can you take to ensure that you don’t run out of money when it’s time to retire?
What can you do to lessen the stress you feel when you think about money?
Have a money chat (or chats) with your spouse or partner. If you are married, engaged, or in a committed relationship, you should discuss your concerns about finances. This talk should not be a forum for judgments or accusations about earnings or spending habits.
Instead, use this time to discuss your and your partner’s attitudes toward saving, debt, retirement, and other key money issues. Talk about how your backgrounds helped shape those attitudes and how you can use your strengths and weaknesses to create more financial peace.
Become more money-savvy. Sadly, many Americans lack the basic financial literacy needed to make optimum money decisions. If this is the case for you or your partner, then it’s a good idea to learn at least some basic money concepts. Fortunately, as the problem of financial illiteracy has entered mainstream consciousness, online courses and videos (many are free!) have popped up. Take advantage of these and others offered by your workplace, college, or financial advisor.
Keep a daily log of expenses. If you find yourself saying, “Wow! What happened to my paycheck?” it might be time to start writing down your daily, weekly, and monthly expenses. Much as it does for dieting and exercising, journaling creates a deeper awareness and can emotionally connect you to your money in a way that leads to better habits. You’ll begin to see patterns and weaknesses and can address those more effectively. Plus, you will discover “fat” that you can trim and use to grow your retirement accounts. As financial literacy expert Christine Luken points out, it takes just $24.70 a day in unnecessary spending to add up to $10,000 for the year!
Practice diligent self-care. So, what does taking care of your physical, spiritual, and mental well-being have to do with money management and retirement planning? EVERYTHING! The links between your financial well-being and the rest of you are well-established by psychologists. For one thing, taking care of your body and mind can help you work longer if you want to do so. When you feel in shape, you will be more inclined to tackle the tasks associated with money management and retirement planning. You will also find more energy to work side gigs to make extra money, participate in social activities, or spend time with friends and family.
Establish a contingency fund. Emergencies happen to even the most well-planned, money-wise individuals. A few months of cash stashed away to see you through the unexpected helps you achieve a sense of well-being. An established emergency fund can rid you of the anxiety your brain creates around uncertainty.
Set (reasonable) goals. Write down what you expect your money to do for you. Are you saving for the down payment on a house? College tuition? Pay off debts? Start or add to a retirement fund? Setting measurable and realistic goals is one way wealthy people attain success. It’s something anyone can, and should, do.
Lose the black cloud of debt. One of the most common things contributing to money stress is having a lot of high-interest consumer debt. Imagine how much money you’ll free up when you make a concerted effort to reduce this debt.
Think about retirement NOW. It is never too early to think about retirement. I know of a young lady who started her first retirement account at 19!
When asked why she said, “If I start early, I can retire or start another career at 40 instead of waiting until I am 70.” She’s right. By starting early and choosing the correct financial vehicles, you create options for your life that you wouldn’t otherwise have.
Consider using professional services No matter what stage of your economic life you are in, it’s always good to find a guide for money matters. An advisor is vital as you move from making money to where you will have to spend it down. Not all advisors have expertise in counseling new retirees or those within 5-10 years of retirement. If you find yourself in one of these categories, look for someone with the right skills and training to show retirees how to make their dollars work harder in retirement.