5 Ways Women Can Take Charge of Their Financial Futures

Women’s financial influence is growing, but they may not be making the most of their increased financial power.

According to recent research, women currently control more than $10 trillion, or 33 percent, of the nation’s total financial assets, and that number is expected to grow to $30 trillion by the end of the decade. The same report showed that 30 percent more married women are making financial and investment decisions as compared to five years ago.

Yet the FINRA Investor Education Foundation's 2021 National Financial Capability Study (NFCS) found that only 27 percent of female respondents have non-retirement investment accounts, compared to 43 percent of men. More women than men also reported feeling anxious about their finances, 59 percent versus 52 percent.

Investing can seem intimidating, but it doesn’t need to be. Here are five ways women can take charge of their financial futures.

1. Set Financial Goals

Often, getting started on a financial plan can be the hardest part. As a first step, write down three financial goals you want to accomplish, such as purchasing a home, starting a business or funding a child's college education. Setting your own goals helps put you in the financial driver's seat, and goal-setting and goal attainment tend to go hand in hand.

Here are a few goal-setting tips:

• Prioritize your goals and set timelines for when you want to accomplish them. For longer-term goals, set interim goals along the way to keep yourself on track.
• Estimate how much each of your goals is likely to cost. Use tools such as retirement and college savings calculators to help.
• Create separate savings or investment accounts for each of your major goals, and then choose saving and investment options suited to meeting those goals based on your time frame and risk tolerance.

2. Start an Emergency Fund

Only 48 percent of female NFCS respondents report having an emergency fund with three months of living expenses set aside, compared to 58 percent of male respondents. In the event of an unexpected illness, job loss or other emergency, a financial reserve can help you avoid having to take on debt and interest payments to pay the bills.

Start by mapping out your cash flow and expenses, and then build a spending plan that includes regularly putting money in an emergency fund. If you set aside just $10 each week, you’ll have saved more than $500 in a year.

The best place for your emergency fund is in a liquid (easily accessible) account. That might be a regular savings account at a bank or credit union that provides some return on your deposit and from which your funds can be withdrawn at any time without penalty. To earn a slightly higher interest rate, some people choose a certificate of deposit, or CD, for part of their emergency fund.

3. Get Involved in Family Finances

Life doesn't always go as planned, so it pays to be prepared. Communicate openly about money matters, and familiarize yourself with key investing concepts, such as diversification, asset allocation and investment risk. A basic understanding of these major concepts will serve you well throughout your investing life and is essential if you suddenly need to take over your household’s finances, such as in the case of a divorce or a spouse’s death. If you haven’t been involved with the management of your family’s finances and investment portfolio, these events could leave you dealing with both financial and emotional repercussions.

Data from the 2020 U.S. census revealed that 35 percent of people who divorced that year were over 55, more than any other age group. This trend, often referred to as “gray divorce,” is of particular concern for women. Researchers at the National Center for Family and Marriage Research have found that women suffer the most economically in gray divorce, showing an average decline of 45 percent in their standard of living, while men see an average decline of 21 percent. And 27 percent of gray divorced women live below the federal poverty line, compared with 14 percent of men.

4. Know Your Investing Options

The many ways to invest your money continue to grow with new technologies and offerings by financial firms. And the increased availability of zero-commission trading online and through mobile apps makes it easier than ever to get started.

To make the best financial decisions, you might decide to work with a qualified investment professional. These professionals can help you evaluate investment products and strategies, assist with financial goal setting, and keep you informed about how the economy and financial markets are affecting your portfolio.

Before signing on with an investment professional, use FINRA BrokerCheck to research the background and experience of registered financial professionals, advisers and firms. And ask the right questions, including the type of advice the professional is licensed to provide, any costs and fees associated with their services and how they’re compensated. Your goal is to be an informed investor.

5. Start Saving for Retirement Now

Saving for retirement is one of the most important aspects of personal financial management. According to the NFCS, though, only 33 percent of women have tried to figure out how much they need to save for retirement. That’s significantly behind the 44 percent of men who've done so. But the earlier you start saving, the better off you’ll be, since savings can compound over time.

Numerous types of retirement plans are available, with many offering tax benefits that can make them smart choices for retirement savings. However you choose to save, it's essential to understand the investments in your retirement portfolio, including how you can make or lose money and how accessible this money is if you need it. As you get older, how you choose to invest will likely change. You might find it necessary to change your asset allocation into investments that are less subject to market ups and downs.

Once you retire, the way you manage your income and benefits such as Social Security can mean the difference between living comfortably in retirement and running short of money down the road. Take the time to get a firm handle on living expenses, spending priorities and how to make the most strategic use of your sources of retirement income. The sooner you do, the more financially comfortable you’re likely to be in retirement.