Being financially illiterate isn’t cute or feminine. Many women in the past got away with passing all financial responsibilities on to their husbands, but in this day and age, with more of us not getting married until later, it is about time we started becoming financially responsible from the beginning.
That means starting early, preferably with a first job. Are you passed that and into your 20s or later? Then, now is the time to seize control of your financial destiny by setting solid financial goals:
- Create a Budget. Don’t freeze in the headlights over this one; budgeting can be a truly liberating exercise if you let it. Budgeting isn’t a one-time thing, it should be an ongoing goal and tool you use to keep your finances in check and keep building your money IQ. Before starting your budget, drag out all of your financial documents and get real with yourself about how you’re spending money, your current spending habits, and what you consider necessities. Once you’ve evaluated your finances, you can then set long-term financial goals and start tracking your spending. The goal: live within the budget guidelines you set for yourself.
- Save Up an Emergency Fund. Financial guru and debt counselor, Dave Ramsey explains what an emergency fund is and why you need one, “An emergency fund is a rainy day fund, an umbrella. It is for those unexpected events in life: a job loss, an unexpected pregnancy, a car transmission going out, and so on. This is not an investment or a Bahamas fund! A fully funded emergency fund is 3 to 6 months of your personal expenses set aside in a savings or money market account.” Ramsey goes on to suggest you should save at least $1000 before attempting to tackle any debt you may have built up. The goal here is to have the time and means during these tumultuous financial times to get back on your feet should anything unexpected happen.
- Invest in Yourself. Depending upon your career and life goals, you could invest in yourself by going back to college to get a new degree or finish one up, starting your own business, or getting a new job. Other ways to invest in yourself include building skills, networking, and new life approaches, so when a prime opportunity for career or financial growth comes along, you’ll be ready. The next step you take in investing in yourself will lead you to a better financial place.
- Build Credit. This doesn’t mean going out and getting five new credit cards, think checking and savings account or a mortgage. Staying or getting out of debt in your twenties is much more important than caring about what your credit score is. Don’t go into debt or tempt yourself with credit cards simply to build your credit score. If you build a solid foundation of paying your rent on time every month, keeping a checking account that never overdrafts, and eventually saving enough money to put a good downpayment on a house, you’ll be able to get a mortgage based on your actual history of paying bills on time and having a pile of cash saved up.
- Be Financially Responsible. Paying your bills on time, living within your means and reducing debt should all be top priority when handling your finances. If you are in a hole now and trying to climb out of debt from financial irresponsibility, just try to do better each month. Financial responsibility affects every aspect of your life; if you are not taking care of your money, then chances are you are suffering in other areas such as your relationships and/or career. The goal to go for is ultimately making your finances a priority and getting them in order.
No matter what age you find yourself starting to get a grip on finances and become financially savvy, there is hope for all women. Professor Lusardi, director of the Rand Financial Literacy Center says, “One reason that women might be better financial decision makers, despite displaying, in general, lower literacy than men, is that women know what they do not know.” With that in mind, empower yourself with financial knowledge and set goals that will deliver you to financial health. Get going girl!
Do you have tips for how you became financially set in your 20s or are you struggling with certain aspects of financial literacy? Give a shout out and let me know what’s on your mind.
(photo credit: Josef Seibel)