Remember that old episode of Sex and the City – the one where Carrie had to purchase her apartment but had no money? It spurred the infamous quote, “I like my money where I can see it, in my closet.”
It’s all fun and games, until Carrie ends up homeless. In the show, reality didn’t set in like that because, well, it’s a television show. In real life, personal finance is among the most overlooked topics with women, however in recent years, the financial literacy gap is getting smaller.
Detailing every single piece of personal finance for every single situation isn’t possible to accomplish in one blog post, however, there are basic tips that you can institute today to gain greater control of your personal finances.
Before you dive in, sit down and write out what finance success means to you. Even if its on a scrap piece of paper, just do it. This is the single most important part of taking control of your finances. When you have a plan and a goal, it makes all the other pieces fall into place. It’ll also help you prioritize financial tasks and help you reach your goal faster. Try not to focus on what other people are doing (or worse, what they’d think). Is your goal being debt free? Purchasing a home? Paying down credit card debt? No matter what your goal is, define what financial success means to you. Also, don’t be worry about being cornered into one grand goal. It’ll change over time – just focus on the here and now.
It may seem basic, but there is a reason why this old adage still rings true. Saving 10% of everything you earn should be something you strive for whether you’re working freelance or have a salaried job. Do it as soon as your paycheck hits your checking account. Push 10% of that money into your savings account and don’t touch it unless there is a real need for it. It may be tempting at first to use that money, but you’ll be thankful in the long-run when life happens and you find yourself calm, cool and collected because you’re a woman in charge of your bank account and you got this covered.
A 401K is a retirement savings plan sponsored by your employer. If you work for a company with a salary, chances are your employer has a 401K program that you can enroll in. The best part? Most companies offer 401K matching to make your retirement savings even more lucrative in the long-run. Think of a 401K like paying yourself first before any taxes get taken out and before your company pays you. You can’t access the funds now, but you’ll be thankful when retirement rolls around.
I know – YOLO, right? Who cares about saving? Why put money in a 401K when that Gucci bag would look so great on your arm now? Plus, life’s too short not to spend your money and treat yourself, right? Wrong. Invest in your 401K and you’ll be the one laughing yourself to the bank when others have a closet full of shoes and clothes and no retirement funds. It’s a tough, and sometimes scary thing to think about, but everyone gets old and social security simply isn’t enough to live off of anymore. Get it, woman.
Rent, mortgages and car payments are usually on the top of your mind, but it’s the small expenses that normally crashes any budget. Small expenses include purchasing too much clothes, having that extra cocktail at the bar, or buying one too many makeup products (yet again!) at Sephora. Develop a budget for everything, even your free spending, and you’ll be that much closer to meeting your goal.
It’s hard to accrue wealth when you have debt so paying it off should be a major priority for financial freedom. If you have student loan debt develop a goal to pay it off. The federal government has countless programs now to assist paying off your student loans at a pace and rate that matches your employment situation. Having credit card on the other hand is a very different type of debt and is less forgiving when it comes to repayment. If your credit card company isn’t willing to negotiate a repayment or lower your interest rate, consider signing up with a different company with a lower interest rate and transfer your balance to that bank. If you have student loans and credit card debt combined then you might consider using the Debt Snowball Calculator as a starting step.
Each month, either at the beginning or the end, make it a goal to review all of your finances for at least 1 hour. Just do it. Take out your written goal from step one to help guide you. A monthly finance review is more than simply logging online to check your checking and savings account. It is meant to review your expenses and whether you’re moving towards your goal or not. Based off of the previous month’s expenses, you can act accordingly the next month. Online banking has come a long way in terms of showing you your spending, but if you’re not sure, you might try Mint.com. It’s online platform, ease-of-use and delightful graphs makes money management a snap.
Money isn’t always an easy topic to discuss, even among the closest of friends. Perhaps your parents never taught you about money, or you have had bad experiences with it. Maybe you have a lot of debt and are embarrassed, or maybe you just don’t feel confident with your financial literacy. It’s often a topic most women, and people in general, avoid because of the delicate and personal experiences that you face in life.
Whatever the case is, you should work towards having a positive mental relationship with money. Living a life set on your own terms requires financial literacy and freedom. In order to do that, facing your finances head-on will give you peace-of-mind and make you feel more empowered.