By Kimberly Palmer,
Finance advice geared toward women
Whether you’re building your own business or trying to shore up your family finances, personal finance experts have some targeted advice for women. In addition to managing your own money and beefing up retirement savings, experts suggest looking for creative funding sources and learning the basics of marketing. Here are 11 tips for women:
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, as a result of either divorce or death, 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.
Focus on earning.
Personal finance author Barbara Stanny, author of “Overcoming Underearning,” 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, she suggests giving it a try.
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.
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 re-invested and annual salary increases offset inflation.)
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.
The Women's Institute for a Secure Retirement recommends that women develop three sources of money: individual savings, Social Security and a pension or retirement savings plan like a 401(k). 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.
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.
Look for creative money sources.
If you have an idea for a new business or venture, stretch your startup dollars by turning to crowdfunding sources, suggests Karin Abarbanel, coauthor of “Birthing the Elephant,” a startup guide for women. By self-funding or pursuing seed money through sites such as Kickstarter, Indiegogo, MoolaHoop, Plum Alley and Nap Time Startups, it’s easier to save on initial startup costs, she adds.
Women business owners can also reduce their startup costs by offering their own services in exchange for others’ expertise. Abarbanel points out that Stroller Strides founder Lisa Druxman gave workout sessions to a lawyer in exchange for getting help setting up her company. Abarbanel calls it the “brains for bucks” strategy.
Do your own marketing.
Abarbanel says many women entrepreneurs struggle with the marketing aspect of their business. “Successful launchers think of marketing as sharing rather than selling – and focus on finding cost-effective ways for getting the word out about their businesses,” she says. That means skipping advertising in favor of social media and community events.
Abarbanel says women tend to undervalue their expertise and underprice themselves compared to their male peers. “This is a serious hot button issue for women, and one where mentors, industry trade associations and resources like the Small Business Administration can be especially helpful,” she says. The same advice applies to women in traditional jobs who need to negotiate higher salaries for themselves.