If you are a woman and have financial accounts that you manage in your own name, take a moment to say thank you. It wasn’t that long ago that we, as American women, had this right; The passage of the Equal Credit Opportunity Act in 1974 made it possible for us to open financial accounts without discrimination based on gender.
ECOA predates my life, though, by less than a decade, which makes it even more remarkable that I was able to write about personal finance as a career – it would be pretty difficult to do a job like mine if I wasn’t allowed to earn. First hand experience with what I write.
On that note, from one woman to another (you, reader!), here are a few smart money tips you can use: Right now putting your money to work for you.
Maximize your savings
If you don’t have a high-yield savings account yet, this is a sign that it’s time to open one. According to The Ascent’s research on savings, only 31% of Americans have a savings account that pays at least 4%. Those of us who do this earn passive income; Our money makes us more money. Personally, I made over $1,000 extra in my savings account this year — the bank I work for is currently offering a 4.25% APY.
Check out our list of the best high-yield savings accounts; You’ll see APYs of 4%, 5%, or more. Online banks tend to offer the best APYs because they don’t have the expense of maintaining physical bank branches like brick-and-mortar banks. Choose what’s best for you (pay attention to fees because they will affect your earnings) and start saving.
Invest for your future
The percentage of women investing is increasing — according to The Motley Fool’s research on women and investing, 67% of us invest outside of retirement plans; this rate was 44% in 2018. Unfortunately, our retirement income remains at just 83% of men’s retirement income. This is due to several factors, including a lack of financial education, diminished confidence in our abilities and judgment, and the gender pay gap (more on this below).
What can you do? The best brokerage accounts make it incredibly easy to start setting money aside for your future. Don’t assume you need to have all the knowledge to start investing; It’s okay to start slowly and build your knowledge over time. We cover many investing topics at The Ascent, so check out our investing-related articles.
Don’t think that a successful investor needs to know a lot about different companies to be able to choose stocks. If this worries you, try investing in an S&P 500 index fund instead. These track the performance of the broader stock market, which has returned an average of 10% per year over the last 50 years. Start as soon as you can take advantage of compound interest.
Get professional help
I thought financial advisors were only for rich people, but I was so wrong. I started seeing a Certified Financial Planner early last year and it changed my life. At the time, I had a lot of debt, no savings, and was feeling pretty hopeless about my financial situation. Additionally, I wanted to buy a home but had unrealistic expectations of what doing so would entail. Thanks to the wisdom, encouragement, and support of my CFP, I spent 2022 turning my finances around. As 2023 comes to a close, I feel more confident than ever about managing my money.
If you haven’t met a financial advisor before, I encourage you to find one. Find someone who is a fiduciary (which means they must put your financial interests ahead of their own profits) and check their credentials. FINRA’s BrokerCheck database.
Learn your value
You may think that the gender pay gap is a thing of the past, but unfortunately it is not. According to the Pew Research Center, in 2022, American women earned, on average, just $0.82 for every $1 a man earned. If you’re a queer woman, LGBTQIA+ also have the pay gap to consider; Gay women earn $0.87 for every $1 a typical worker earns, the Human Rights Campaign reports.
The best way to find out how much you’re worth is to research salaries for your field (Glassdoor is a great place to start) and talk about money with all the women (and non-women) in your life. Yes, this includes discussing salaries with your co-workers — you have that right under the National Labor Relations Act of 1935, even if your employer tries to prohibit you from doing so. You may want to avoid talking about this topic while working. Still – save the conversation for outside business hours.
If for some reason you find that you earn less than your male colleagues, initiate a discussion and negotiation with management. And consult an employment lawyer if necessary.
As a woman, you are unfortunately at a financial disadvantage and no one can fix that for you — You must be the one to take the step. Consider using these smart money tips to get your finances in order. You can do!
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