If you’ve watched or read the news anytime in the last 20 years, you’ve likely encountered a heated discussion about a gender pay gap. Statistics indicate that women are making 77% of what men make in the United States–an improvement over years past. A number of things account for this–women are working in traditionally lower paying careers, taking time off for the birth of children, etc.
No matter the why of it, it stands to reason that women ought to be very aware of their finances, especially if they aren’t making as much as their male counterparts. Establishing financial literacy is especially important for women. Your ability to responsibly manage your finances will help determine your quality of living, your age at retirement, and your overall level of stress.
Financially literate women are those that know how to effectively manage their money independently. While bank accounts may eventually be shared (even that is becoming less common), it is imperative that each individual have the skills necessary to manage wealth. Reject the notion that women are bad at math–women are equally capable of financial literacy and equipped to be just as rich!
Studies have shown that women and men do differ in their attitudes about money. Women are typically less likely to take personal or business risks with their finances–which means that financially literate women know how to invest (as Jason Hartman recommends) wisely. Women can be more likely to save money and less likely to focus on amount of income being made. Men are more likely to feel confident in their financial literacy (even if it is unfounded) and research possible investments less thoroughly.
So what is the problem?
Part of the problem is that men make financial decisions that specifically contribute to a higher income. Women make decisions that will contribute to better lives, overall. But the two aren’t mutually exclusive–financial security and quality of life can certainly coexist.
Education and action can make sure that women are investing with the same level of vigor as men.
Currently, there are around 13.8 million women in the United States living in poverty. Most of these women are under 45 and living in households with no spouse–but they’re perfectly capable of obtaining financial freedom and living independently.
Unfortunately, many women to not recognize that they are financial illiterate until something catastrophic happens–a divorce, or the death of a partner. Then, women who recently viewed themselves as proficient in finance find that they are unable to manage the variety of accounts now before them. We, as humans, often don’t know what we don’t know, and that happens often in the case of women and financial literacy.
Women are in the perfect position to become financially literate and make good investments!
Women interested in becoming financially literate must first pledge to do something about it. We (meaning men and women) aren’t born knowing how to balance a checkbook or make our money work for us–these are learned skills. There are a ton of resources online, a wealth of books in the library, and an abundance of knowledgable people and public education courses meant to increase your financial literacy. Many are even directed specifically at women!
Next, begin investing. Many people learn by doing, so go ahead and make a smart investment. Real estate is a great investment because it lacks the risk of other types of investments. You’ll be making money on the side, which can lead to many more investments.
It will be important, as you become a wise female investor, to set goals and continue to update them. Perhaps your goals have to do with income, and perhaps they’re more geared toward number of properties or bill paying. No matter the type of goal, write them down and get ready to achieve them!
As you achieve your goals, remember to reward yourself. Spend some of your money, but do in in accordance with a goal and not when you’re simply feeling like it. If you’ve got X amount in passive income, perhaps you allocate half of it for a vacation fund.
Finally, don’t forget to network with other financially literate women. Many communities have investor groups and even all women investor organizations that go a long way in establishing a sense of community. These groups can make you feel more confident, give you a place to build your knowledge, and even provide recommendations for financial services you might need.
Never forget that financial literacy, for women or men, is a lifelong process. Educating yourself will need to happen over time (though it may happen in larger increments in the beginning) with no end in site. It will require that you are adaptable and excited about the future.
As you progress through various stages of life, your financial needs, goals, and wants will certainly change. And that’s okay–by focusing on an end desire for complete financial literacy, you’ll form an investment strategy that works best for you.
Best of all, you’ll have the opportunity to pass on the idea that women can also achieve financial literacy to future generations by setting a good example!
And there is hope, statistics that show promise in the area of women’s financial literacy. Teen boys are less likely than girls to expect to pay for college with scholarships or grants and fewer boys would consider attending college in-state to save money. Girls are more likely to seek out scholarships and 40% would study in state if it meant they saved a bit of money.
So, while women may still be struggling to become financially literate (we’re getting there!) girls are showing more promise than ever. Everything is a process, and it seems that we’re certainly getting there.
Do you feel like you are a financially literate female? Have you always felt that way? What could the world do to prepare women more effectively? Share your thoughts!
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The Young Wealth Team