Historically, women were not allowed to handle their own financial needs. In 1848, the Married Woman’s Property Act was passed in New York. This act served as a guide for other states, which eventually passed their own versions by the 1900s. With this act in place, a woman was no longer liable for her husband’s debts, could enter contracts on her own, and was able to collect rents or receive an inheritance in her own right.
Charlestien Harris
Financial knowledge is financial power. As a woman, empowering yourself to take control of your finances is an important part of ensuring you are economically and financially healthy. According to U.S. News and Money, a survey found that 51 percent of women consider themselves the “CFO” of their household. In addition, 54 percent said that they either have complete control or take a very active role when it comes to managing their household’s long-term savings and investments. Despite maintaining a dominant role with household finances, 63 percent of those same women wish they knew more about financial planning and investing. There are several ways you can ensure you keep your personal finances on track. Here is a list of steps you can take as a woman to stay on track with your financial goals.
Set your financial goals. Having a target to aim for can go a long way in helping you achieve the financial goals you set at the beginning of the year. Goal setting can be achieved in several different ways, and several models are available for you to follow. The S.M.A.R.T. (Specific, Measurable, Attainable, Relevant, Time-related) model is the most familiar and is widely used to create a financial plan. The S.I.G.H.T. (See, Information, Gradual/Graduate, Hard, Time-related) model is fairly new and may not be as familiar but can offer you a different experience in achieving the goals you set. Setting goals helps you develop a roadmap to better manage your finances.
Educate yourself! Financial knowledge is financial power. You should look for quality financial education information from credible and reliable sources. Government and non-profit organizations are two sources that often offer unbiased information and can go into great detail so you can get enough information to make an informed decision about your own finances. When making financial decisions, be sure to compare alternatives, fees, services, and other factors that might affect your finances in a negative or positive way. When it comes to financial planning, the stakes can be higher for women. Women tend to earn less on average than men do, and they are more likely to take breaks to care for their families. Arming yourself with knowledge can propel you to the forefront when it comes to managing your finances.
Learn to save as much as possible early. Everyone needs a “nest egg” for the future or for a rainy day. The easiest way to start saving is to start small and add to it as you can. Make it an “on purpose” habit so you will have money to fall back on when times get tough. You can begin by regularly depositing a small amount into a savings account separate from your other bank accounts. Saving money doesn’t have to be hard; it just has to become a habit! Another way to tackle this is to save your “snack” money, such as the money you spend on a bag of chips and a soft drink. That can add up to a nice little sum at the end of the year. The chips alone, priced at $1.50, will save you at least $504. When you add the soft drink at the same price, it doubles your original savings to $1,008!
Try to reduce your debt as much as possible. Reducing your debt can increase your net worth. Just remember that not all debt is bad, and it helps to know the difference. Debts such as mortgages and student loans can offer tax write-offs and can be beneficial later, especially in the case of a mortgage, which can build up equity as you make payments. Obtaining a higher degree can often lead to an increase in pay, which could eventually lead to having more money to pay your debt down. Try to make more than the minimum payments on your credit cards, which will reduce the amount of interest you pay. You don’t have to tackle debt all in one big swoop. Taking the smallest debt first and paying it off is known as the snowball method. Starting with the highest interest account and paying it off is known as the avalanche method.
Build your own credit history. Your credit history is your track record of how long and how responsibly you’ve handled your debts – and a strong predictor of how well you’ll do so in the future. All that information is detailed in your credit report and formulated into a three-digit number called a credit score. You can request a free credit report from each of the three major credit bureaus at the government-authorized website annualcreditreport.com. Anyone from mortgage lenders to landlords to prospective employers might pull your credit report or score. The most important factor they consider is whether you’ve made on-time payments for your debts, including student loans, a mortgage, car loans, and credit cards. Try to keep your credit usage ratio below 30 percent. For example, a $500 credit limit on a credit card should not have more than $150 charged to the account at one time. Anything higher begins to lower your credit score.
As a woman, you should consider the “three P’s” of finances: Be proactive, be present, and be prepared. Taking care of your finances yourself can build your self-esteem and create a history of wealth for yourself and for generations of young girls to follow in your footsteps. Learning all you can about the financial world can help you advance your personal finances in many positive ways.
For more information on this and other financial topics, you can email me at Charlestien.Harris@banksouthern.com or call me at 662-624-5776.
Until next week – stay financially fit!
Charlestien Harris is our financial contributor, a financial expert with Southern Bancorp Community Partners whose articles are seen in a number of publications around the region.
