What would happen if suddenly you found yourself single after being married for thirty years? Or what if you became widowed? Would you be prepared? What if you decided to move in with your significant other? How would that affect you financially, as a woman? These are realistic scenarios. According to the U.S. Administration on Aging, about 9 million women over the age of 60 are living the single life. How are they doing financially?
Financial independence is an empowering thing, and the good news is, more and more women are doing what it takes to become financially independent. Getting educated about money, spending and saving wisely and being financial partners in our relationships can all help us gain financial independence. Here are some positive ways women are gaining financial independence and tips for getting there yourself:
Have your own accounts – Even if you are married or living with comingled expenses, it’s still a good idea to have your own source of funds. You can contribute to the household expenses and manage the rest of your money on your own. Even if you have a strong relationship with no intention of leaving your partner, should an emergency arise, it would be wise to have your own money.
Have individual money goals – Women in relationships can still have individual financial goals, as well as goals with their partners. For example, your goal with your partner could be to pay off your car early by contributing a set amount of extra money to the loan. You could also have your personal goal of saving a set amount in your retirement plan before spending on discretionary items. Develop a strategy with your partner for your coupled goals and feel free to share your individual goals as well for added accountability.
Be aware of your money and how you spend it – Everyone has a particular way of managing finances. Often, we learn how to handle money by watching how our parents did it when we were growing up. Our family story plays into how we choose to handle our own finances. Some follow the example, while others will do the opposite. If you know you tend to be an over-spender, acknowledge that about yourself and work on it. Know where your strengths and weaknesses lie when managing money. Play to your strengths and work on your weaknesses. Be mindful of your money at all times. Create a budget and stick with it. Be sure to include your leisure activities, so you don’t feel deprived. Keep your cash flow “positive.” Measure your progress at the end of the month and see what you did right and what you could improve. The act of sticking to your plans can be empowering; success breeds success!
Live within your means – Spending more than you earn is never a good idea because it leads to excessive debt, poor credit ratings or even bankruptcy. It’s a good idea to develop the habit to share some expenditures equally in a relationship, such as vacations, dining out and entertainment. It also works with joint obligations. By managing money this way, each person can maintain independence in and outside of relationships and avoid being drawn into a standard of living they couldn’t maintain on their own.
Educate yourself – Have at the minimum a basic understanding of personal finances. One of the best ways to do this is to read up on financial matters or talk with a financial advisor on the best ways to understand financial terms, money and how to manage it. A trusted financial advisor can help.
Both men and women need to be financially prepared for what life has in store. Consider how you can stay independent no matter the circumstances. The earlier you start, the better. If you need help, contact your financial advisor.
Wood Smith Advisors, a Registered Investment Advisor (RIA), is a fee-only financial services firm that partners with its clients to simplify their financial lives. We focus on women, entrepreneurs and individuals with complex financial situations, providing objective and competent advice, education and services to help them develop and build their businesses and reach their financial goals. We can be reached by clicking here.
“Finance Made Simple” blog posts are intended for educational purposes and not for specific advice. Each person’s situation is different. Consult your financial advisor for advice relating to topics discussed.