The first step to managing your money is getting comfortable talking about it.
Women and men don’t have the same relationship to money. For one, women are likely to have less of it. While the wage gap between men and women is getting smaller. Women still earn less. As a result, women save less and are hesitant to take risk when it comes to investing the money they do save.
How can we get more women more excited about building wealth?
To address some of the unique challenges faced by women when it comes to their money here are 4 important pointers.
Get comfortable talking about your money
It’s good for women to talk with other women about finances. So find friends with whom you feel comfortable discussing finances.
The focus should be on building an environment where you feel comfortable asking those questions and where you don’t feel intimidated.
Whether you are talking to your friends or to a financial advisor, you need to feel comfortable enough to ask questions.
The gender of your financial advisor should not matter. What matters is you feel comfortable talking with her or him. Remember, no question about investing is too basic or too stupid. Asking questions is a great way to learn.
That goes for your home, too
For all the quarrels with your partner including whether the toilet seat should be up or down, finances are the #1 cause of discord between couples. You need to be very open about finances, and be as confident talking out financial priorities and issues, as you are discussing anything else. Talk about finances with your partner.
Prioritize your investments
While starting to save for your retirement is important, there are a few things that should come first.
It’s important to have an emergency fund saved to start. Then, think about what you are planning to spend money on in the next several years. Once you have your emergency fund and money for near term needs set aside, then you can consider money for long term investing.
Keep in mind that smart management of your money requires you to be an active participant. After all, your priorities will change over time.
You need to review what you’re doing on a regular basis. Your life changes: you get a new job, a bonus; get married; have a child. That changes your savings and investment objectives.
A little risk wouldn’t hurt
Women tend to be more risk-averse, which is both a good and bad thing.
We’re less likely to be tempted into getting involved in “get rich quick” schemes, and more likely to ask a lot of questions. On the other hand, that risk aversion can work against us when we’re taking sensible risks. Investing can always feel risky, but it doesn’t have to be as risky as it might feel.
Hopefully, the more comfortable you are talking about your money and asking questions, the more comfortable you will be taking calculated risks