Monday, February 23, 2015

Top Money Tips for the Ladies

By Kimberly Palmer | U.S.News & World Report – Wed, Feb 18, 2015 

Women face some unique financial challenges in their lives: On average, they earn less than men, and studies also suggest they save and invest less, too. They also are more likely than their male peers to take breaks from the workforce to care for children and aging parents, and at the same time they live longer, which makes it even more important for them to store up a significant nest egg. Here are 10 top tips for women when it comes to managing their money:
1. Manage your own money.
Kathleen Grace, a financial planner and author of "Prince Not So Charming," says women often make the mistake of ceding control of their money to the men in their lives. Then, if they end up single later in life, as most do, they're not in a good position to take control of their finances. That's why she recommends continuing to manage your own money, at every stage of life.
2. Focus on earning.
Personal finance author Barbara Stanny, author of "Sacred Success," says women, herself included, often earn less money than they could be. She recommends shifting your thinking so you start saying "yes" to more lucrative opportunities. Even if something makes you nervous, like a new speaking gig, high-earners welcome the opportunity, she suggests.
3. Don't let relationships sabotage your finances.
Manisha Thakor, co-author of "On My Own Two Feet," says women often make the mistake of keeping money secrets early on in relationships, such as hiding credit card debt or an overspending problem. She recommends talking about money early and often in a relationship. "When you're willing to take your clothes off in one way, you should be willing to get financially naked," she says.
4. Focus on your retirement at every age.
Thakor recommends that women dedicate 10 percent of their income to retirement savings, starting in their 20s. Saving 10 percent of a $50,000 salary beginning at age 25, for example, would result in $2.2 million at retirement. (That calculation assumes that investments grow at 10 percent a year, gains are reinvested and annual salary increases offset inflation.)
5. Pay off debt.
Thakor notes that debt, especially student loan debt, continues to weigh women down. "After years of being considered 'good debt,' and something that could be easily digested in almost any portion size, millions are now struggling with student-loan-induced financial indigestion," she says. She suggests reviewing options such a loan deferment, loan forbearance and income-based repayment plans.
6. Save more.
The Women's Institute for a Secure Retirement recommends that women develop three sources of money: Social Security, a pension or retirement savings plan like a 401(k) and individual savings. Partly because women frequently take time out of the workforce to care for children or parents, their Social Security benefits and retirement savings tend to be less than men's, making it more important to store up additional dough.
7. Overestimate your money needs.
Since people live longer today, particularly women, and inflation erodes the value of money, it's important to save even more than you think you'll need for later. Taxes and health care costs can also eat into nest eggs. The Women's Institute for a Secure Retirement says that women, given their longevity and lower savings, may want to consider replacing 100 percent of their income during retirement to keep up their lifestyle.
8. Consider a spousal IRA.
Nonworking spouses, like those who take time out of the workforce to care for children, can still contribute up to $5,500 a year to a retirement account. While in most cases wives are entitled to at least part of their husband's retirement savings, in the case of death or divorce, pensions often decrease when the working partner dies.
9. Build your financial confidence.
Reading up on financial news and investment basics can help you feel more comfortable when it comes to making decisions about your own savings and investments. If you have friends who share your goal, then you might even want to consider creating a money club, Stanny suggests. She says that because women are so relationship-oriented, working together can help.
10. Embrace your power.

Once you start making money decisions that help grow your wealth, you will start feeling more powerful in all aspects of your life, Stanny adds. She says the women she coaches often note how empowered they feel, and when they embrace that feeling, it can also contribute to the pursuit of what they want out of life.