Whether single, married, or divorced, women are less likely to feel comfortable with their financial situation than men are. According to the Bureau of Labor and Statistics, women’s salaries tend to be 18% lower than their male counterparts.
Single women could miss some of the financial benefits of marriage such as shared expenses, better health care, tax deductions, and earlier building of assets such purchasing a home. Women who are married may not be aware of where all of the family assets are located and may have left financial matters in the hands of their spouse. In the event of a catastrophic event such as the death of their husbands, married women could be unprepared for becoming the sole breadwinner in the family. Divorced women are more likely to shoulder the expense of childcare. Nicholas Wolfinger, sociology professor at the University of Utah, claims women experience a decline in the per capita household income when they divorce. The decline can be as much as 15%. In addition, according to Wolfinger, divorced women are more likely to experience poverty than divorced men.
First, assess financial outlook
One of the smartest things women can do is fully understand their own finances. This includes having a solid understanding of the personal or couple’s income and expenses, assets, and debts and obligations. One of the first steps in dissolving a marriage is to take time to complete boilerplate financial worksheets that give a clear view of financial health. While this may be one of the early steps in getting a divorce, having a good understanding of the financial outlook can help all women set goals and make decisions.
Second, examine credit status
All women should examine their credit history on an annual basis. Reports from the three major credit reporting agencies are free and available once a year. Viewing credit history will illuminate acts of identity theft which can damage credit history and cause lower credit scores. By monitoring credit, women can actively raise their credit scores. Having a higher credit score means paying lower interest rates for loans.
Third, create a plan for retirement
How, where, and when a woman retires can partly be determined by financial health. According to new research by Wider Opportunities for Women (WOW), 60% of women over the age of 65 have trouble meeting basic expenses. According to research by 1World Online, 71% of women do not save for retirement at all. Setting aside money for retirement can be difficult, but it is imperative that women of all ages make steps toward preparing for the golden years. One good place to start is to examine monthly expenditures. Are there spending items that could be reduced or eliminated? Do you really need that landline, that daily double mocha nonfat decaf latte, or that cable subscription? Little expenditures add up. Sometimes the idiom “death by 1000 cuts” does apply.
Fourth, get out of debt
There are some types of debt that are necessary like a mortgage for a home or a car loan, but credit card debt is positively debilitating. One tip for eliminating credit card debt is to pay off completely the card that charges the highest interest rate. First cut up the targeted card so that new balances don’t accrue. Then, once the card is payed off, cancel it before the cycle begins again. Meanwhile, use online banking to ensure your never miss a minimum payment for each of the other cards. Once one card is payed off, target the next card. Try to get down to owning only two credit cards–a Visa or MasterCard and an American Express. Use the American Express for regular purchases (but pay it off in full each month). Use the Visa or MasterCard as a backup for unexpected expenses. This way, you will have ample credit but not too many bills to pay.
As women, we need to make sure we can weather any financial storm. With a good understanding of our current financial status, and a great plan for the future, we can take the steps needed to sail smoothly into retirement.
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