Ten Financial Tips for Women

[jeffrey]

By Sandra N. Salter

On average, women earn 76 cents for every dollar men earn in the workplace. Because women typically spend approximately seven years out of the work force to have and raise children, their earnings are even further curtailed. With lower pay and less time spent in the work force, women are generally left with smaller retirement portfolios, lower company pension benefits and lower Social Security benefits than men.

Despite the fact that women earn less money than men, they generally need a larger retirement nest egg. On average, women live seven years longer than men and must finance more years in retirement. And although a woman may share her husbands savings, those assets may be depleted quickly if he becomes ill and dies first, which considering life expectancy, is often the case.

In addition, 50% of marriages end in divorce, and the average age of widowhood is currently at 56 years. Therefore, most women are solely responsible for their finances at some point in their lives. What can women do to overcome these financial challenges? Here are 10 tips:

1. Take control. Despite the stereotypes, studies show that most married women actively participate or take the leading role in managing family finances. Moreover, women outnumber men in participation in investment clubs across America. However, some married women still leave the financial decision making to their spouse and may wind up ill equipped to handle their finances if they divorce or outlive their husbands.

2. Invest more. To make up for discrepancies in retirement benefits, women should consider investing more than their male counterparts. For example, a woman who takes seven years off from a 40-year career can expect to receive only half the pension benefits of someone with 40 years of uninterrupted services. The good news is that the U.S. Department of Labor reports that in an economy where the earnings of almost all other groups have remained the same or decreased, earnings of women have increased. Higher earnings for women should mean the potential for more investments.




3. Know your risk tolerance. Consider how much risk you are willing to take in exchange for the potential to earn higher returns. Historically, equity investments have provided higher returns over the long term than less-risky investments, such as money markets and short-term bonds, although past performance is no guarantee of future results.

4. Participate in employer plans. Collect information about the retirement benefits that are available through your employer and actively participate in any plans offered, taking advantage of all possible company matches and tax-deferred contributions.

5. Do not depend on pensions or Social Security. Fewer years in the work force, fewer years with a single employer and lower pay all may contribute to a lower average pension for female retirees. Women also tend to receive lower Social Security benefits than men. Benefits are calculated based on a persons highest 35 years of earnings. If the benefits recipient doesnt have 35 years in the work force, the Social Security Administration will add zero-earnings years to the record to equal 35 years. This will lower the average monthly earnings figure and may significantly lower your benefits.

6. Get out of debt. Debt is a serious issue for men and women. However, credit counselors report, that women are more likely than men to take the first step toward becoming more disciplined and reducing their debt. First, understand your spending and reduce spending so you dont continue to add to your debt. Then attack your existing debt by paying off high-rate debt first and if possible transferring high-rate debt to lower rate credit cards.

7. Do tax planning. With more female business owners and more single women buying homes and qualifying for mortgage interest and property tax deductions, tax planning is becoming an integral part of womens financial lives. If possible, always contribute the maximum amount to your IRA and/or 401(k) and maximize your tax deductions.

8. Keep retirement top of mind. Although women have made many impressive strides toward financial independence, they report having only half as much for retirement as men ($40,000 in annual retirement income for women vs. $80,000 for men). Generally, because women live longer than men, they should save 12% of their gross income for retirement, rather than just 10%.

9. Use resources. There is a wealth of helpful information easily accessible on the Web, including sites such as:

womensinvest.about.com
ivillage.com/money
wife.org
advancingwomen.com
momsbudget.com
msmoney.com
womens-finance.com
womensleadershipexchange.comamericanexpress.com/financial

10. Seek help. Meet with a qualified financial advisor to create a financial plan specifically designed to help manage your personal economy.


*************************************
Sandra N. Salter, Personal Finance Expert, is an American Express Financial Advisor and owner of American Express Financial Advisors Branch Office in Newark, NJ. She focuses on providing comprehensive financial planning services paying close attention to the long-term financial health of their clients, building customized financial plans that help clients achieve both short-term and long-term goals. The types of services she offers clients include: Income Tax Planning, Saving and Investing for Retirement, Working with Retirees, Financial Strategies for Small Business, Domestic Partner Planning, Risk Protection Planning, Estate Planning, Charitable Giving , Investment Strategies for Education , Asset Allocation and Comprehensive Financial Planning, among other areas. They can be reached at sandra.n.salter@aexp.com.

[The Budget Man]

Would you like to know three secrets about why women are so good with their money?

1. Women are often great with their money because they are close to the reality of no money in the purse, no food. This means that they have a sound footing for organising the budget.

2. Women are often good at stretching food and other household resources simply because they have had to do it. They already know from experience and have the confidence that they can make money work for them.

3. Women talk! The communication about everything is at a level blokes just can't imagine. This means that a woman will talk to another woman about anything and surprise surprise it also means that women can always find the answers.

So next time you're thinking I don't know about budgeting. Use your strengths and smile.

Enjoy your money
The Budget Man

www.PersonalityBudgeting.com

[flash]

With all due respect, that's not necessarily true. As Liz Pullman wrote in her recent book, women are MUCH less likely to discuss money or finances than men are. The psychological aspects of finances for women are fairly complicated.

[The Budget Man]

Originally Posted by flash

With all due respect, that's not necessarily true. As Liz Pullman wrote in her recent book, women are MUCH less likely to discuss money or finances than men are. The psychological aspects of finances for women are fairly complicated.

What you say is very interesting. Many women find discussing "FINANCE" difficult. What they will discuss and feel comfortable with is discussing money and budgeting issues.

We find over 70% of the people who take the Personality Budgeting Quiz are women. When we have asked people this figure seems to reflect the operation of the household budget. The figures run true in the UK, USA, Canada and Australia.

We've been told that as soon as you move to discussing share investments or taxation the numbers swap the opposite way. Women are not as happy to talk investing.

There is another layer that has a bearing as well. As age increases so to does the number of men happy to talk about money as well as investing. The highest rates of people interested in both money and investing are for those people within 5 years or so of retiring.

I guess the bottom line is that both men and women are interested in taking about money and investing when they are most affected by it.

Enjoy your money

The Budget Man

http://www.personalitybudgeting.com/quiz.php
The quiz that shows how you see money

[MairGrif]

Interesting article and discussion. David Bach states in his book Smart Women Finish Rich that women tend to do better on their investments than men because they tend to buy and hold rather than jumping from investment to investment in search of better returns.

[chai]

yes.. mostly more women women tend to do better on their investments than men...

[Wilsonparker]

Hi,
Don't know about women psychology but can surely say that Lothamer.com offers genuine taxation related help. Be it IRS, tax filing or offer in compromise, its staff has vast experience in offering genuine help.

[christopherp552]

I should ask my wife to read this.

[LuxLiving]

I'd increase that amount needed to save - at the very least women (and men) should be saving 20% of their income for retirement and ideally it should be 25%. The 10% figure is out-dated and clearly not enough in these trying times and should the Social Security system collapse? We better have some extra money-beans hidden in our back pockets!

What? Some now say save 15%?

I say, that's not enough!

That 20-25% is not inclusive of the other things we should be saving for in our household budgets. That's just for retirement. Things like once a years - property taxes, or the unforseen water heater worn-outs, need saving for as well.

This applies to men and women alike.

[sgfinancialfreedom]

Women like to save. Men like to invest.

Women like to know where to find good deals and bargain. Their "savings" involve spending money.

Men don't like to spend money. They only want to use money to grow more money.

I think that 25% is a good amount to be saving. The higher the better actually

[LuxLiving]

Baaah! I am a woman who likes to invest.

[Joan.of.the.Arch]

Originally Posted by sgfinancialfreedom

Women like to save. Men like to invest.

Women like to know where to find good deals and bargain. Their "savings" involve spending money.

Men don't like to spend money. They only want to use money to grow more money.

I think that 25% is a good amount to be saving. The higher the better actually

You know, sgfinancialfreedom, this proclamation could be taken as cultural "permission" to be a spender if, for a woman, saving involves spending. I think it is better not to repeat such myths so bluntly. bIt would be better to get people (regardless of sex) to look at themselves and ask themselves if they need to revamp their personal view on what saving really is, or more especially, to evaluate whether they are saving enough money for future use, whether through investments of some sort or simply holding it in a piggy bank or bank account whose interest is paltry. The point of saving is to provide for the future, whether that is done through investment or otherwise.

And since when do men not like to spend money? I don't see men living solely on beans and water so that they can grow, grow, grow that money. What you have said is an over generalization.

To be taken seriously in advising people on saving, I think you would benefit from having a more nuanced understanding of what people's money related motivations are. They are not definable so simply along sex lines.

[zakity]

Men don't like to spend money. They only want to use money to grow more money.

Not my husband... He likes to spend. I am the saver. We have a list of "wants" and they are all his and they are all expensive. Some are "household needs" but most are just toys.