12 Financial Planning Tips For Women Seeking Financial Independence
Why is this focused on financial planning tips for women, and not for people in general?
Because according to the latest figures, men still earn an average of 9.6% more than women do.
Although women have a longer life expectancy, they tend to have a smaller pension than their male counterparts. At 65, the average woman has around £35,700, while the average man has £142,000.
And from my own personal experience, I’ve witnessed how many women are not taught how to make or manage money; learning this is something a man is responsible for. They unknowingly hand over all their financial power to their partner, and become completely financially dependent.
And this is not a strong or safe place to be.
Because it doesn’t give you the freedom to make your own choices with money. It doesn’t let you easily leave a toxic or abusive relationship. And it doesn’t make you feel in control of your life.
This is why I’ve written this article on financial planning tips specifically for women.
More women are emerging as business leaders, entrepreneurs and innovators in our world. There’s still an imbalance, yes, but a woman’s earning power has never been as high or as valued as it is today.
Regardless of how much we’re earning, we need the right tools to manage this money; so that it fully supports us and our families, today and in the future.
On top of this, we have natural skills as women that lend themselves well to making decisions and planning for the future. Gifts like our intuition and compassion. And it’s time we recognised this and started using them.
Here’s our top 12 financial planning tips for women.
1. Let go of money mistakes from the past
In the past, I’ve been an out of control spender. I’ve wasted money on so many things, and not respected it.
Maybe you’ve done the same, or you built up credit card debt, you invested in a dodgy stock or business, or you took on a partner’s money problems.
But this doesn’t mean you’re incompetent when it comes to managing money. It just means you made a mistake, and we all make them.
Don’t beat yourself up over it, or allow this to leave you burying your head in the sand and ignoring your finances completely.
Today is always a fresh start. You get to make new choices and let go of anything you’ve been holding onto.
2. Figure out what your money blueprint is
Usually, our spending habits are inherited from one or both of our parents, or whoever raised us.
If we see someone managing money well, we’ll probably manage ours well too. But if we see someone mismanaging their money, then it’s likely we’ll follow suit—often subconsciously.
As a girl, I saw my dad mismanage his money. No matter how much he earned, there never seemed to be enough. My parents would have bitter arguments over money, which are still etched into my memory.
Without realising it, I became my father. I would spend money before I’d earned it, and would laugh it off by saying ludicrously flippant things like, “it’s only money,” and “fuck it, you only live once.” I never saved a penny until I reached the age of 25; and even then, I was still in a toxic spending habit.
What did you witness around money growing up? And how has this influenced your relationship with money?
The answers to these questions will show you your money blueprint.
The great news is, we can change our blueprint whenever we want to. You get to create a new story today.
One book I would highly recommend reading on this is Secrets of The Millionaire Mind by T. Harv Eker.
And when you’re done reading it, read it again and again until you start living the principles he teaches!
3. What emotions do you have around money?
Our money issues often stem from problems in other areas of our life and our relationships.
If we hate our job, we may spend money on things like alcohol, gambling or clothes to make ourselves feel better.
If you grew up hearing your parents always argue over money, it may be a source of pain for you; which is stopping you from receiving it and/or holding onto it.
If you were in a controlling relationship in the past where your access to money was restricted, you may see money as a form of power or control.
If money has continually been a struggle in your life, then you might have resentment or anger towards it.
When we pinpoint what the root cause is and work on addressing it, our money problems will often take care of themselves, or vice versa.
4. Understand that money is an energy
If you haven’t heard this before, it may sound a little wild. But stay with me on this one. You could have all the financial planning tips in the world, but without grasping this concept, they don’t mean much.
Money is an energy. Everything in our world is energy. The laptop I’m writing on now is made of energy. The chair I’m sat on is made of energy. My body is made of energy. And money is energy.
All things we can see, touch, hear, taste and smell are energy. And energy can feel other energy and vibrations.
If I mistreat the money in my bank by frittering it away on junk like it doesn’t matter, that energy will learn it is not loved or respected when it’s with me.
So what will it do?
It’ll go elsewhere.
Similarly, if I choose to love and welcome money, it will want to come to me.
So ask yourself, is you vibration welcoming or repelling money?
5. What motivates you to save and spend money?
When you understand what motivates you to spend and save money, you can be more mindful with your daily choices.
What motivates you to spend?
Do you use money to chase that instant high you get when you buy a new dress or handbag?
I’m sure you know by now that this feeling is temporary. And what usually follows it is guilt, then more frivolous spending to try and ease the guilt of buying things you don’t really need or want.
This is the vicious cycle I didn’t know I was trapped in for at least a decade.
On the other hand, when you spend money on your learning and your growth, you’ll create long lasting impact and change. This type of spending builds self-respect and nourishes creativity.
What motivates you to save?
Do you want to buy a house one day, be able to provide more for your kids or give yourself the gift of total financial freedom?
Do you want to save for your future wedding, be able to move into a bigger house or quit your job and go travelling?
Think about something you really want, and let this be your motivation to start saving.
6. Be financially independent
For me, this one tops the list of financial planning tips for women.
Women are more likely to either work part time or completely sacrifice their career to raise children. In addition, women still earn less than men on average for doing the same work.
This leaves too many women feeling trapped in bad relationships, because they are unable to financially support themselves on their own.
If you’re in this position today, think about what you can do to increase your income so you can start saving money in case of an emergency—network marketing and any kind of work from home job are good places to start.
And make sure you’re involved with your family’s day to day finances—do not allow yourself to be shut out from this.
If you’re not financially dependent on anyone, that’s great and it means you have time.
Time to educate yourself on money and investing, and to ensure you don’t put yourself in a position where you’re financially trapped with your boyfriend or husband.
The power of a financially independent woman is real.
7. Don’t take on debt from your partner
Don’t be in such a rush to get married until you’ve got a crystal clear map of your partner’s finances. And I mean everything:
College debt, credit cards, other loans, credit rating, income, savings etc.
And if you aren’t ready to have that conversation, then you’re definitely not ready for marriage.
Having your own debt is one thing. You are solely responsible for managing it and gradually paying it back. But you don’t need to take on responsibility for somebody else’s debt too. Things can get really messy if you head down this route.
When you get married, all of your partner’s finances legally become your finances. So err on the side of caution and wait to make it official, or protect yourself with a pre-nup.
8. Get clear on where you stand financially
You can’t take control of your finances until you know exactly what’s coming in and what’s going out.
So, sit down and look at your bank statements over the past few months. Set up a simple excel sheet, and plot in all those figures. Calculate what’s coming in and what’s going out.
This will help you see where your money is going, and if you’re happy about the choices you’re making. A lot of the time, we underestimate how much we’re spending on junk we don’t really need or value.
Make a list of what your necessities are—rent, bills, food etc. If you’re spending money on anything else, it’s because you’re choosing to, not because you have to. Set a monthly budget for yourself and stick to it.
Minus your necessary expenses from your income, and you’ll be left with your disposable income. This is the amount you have to spend or save however you choose.
9. Financial planning tips for women: Set financial goals
The secret to setting any kind of goal is to be specific, because this will help you be more accountable and increase your chances of reaching it.
You also need to be realistic, and that means taking your current income and expenses into consideration.
If you’re paying off debts right now, then perhaps that should be your main focus until you’ve cleared it, and then you can think about saving.
If your goal is to save a deposit for a house, then think about how much you can realistically put towards that each month. Next, calculate when you should have reached your target, and use this as motivation to keep you going each month.
10. Get help from a financial planner
A financial planner can help you get clear on your finances, help you set up a budget and stick to it, and also shed light on investment opportunities that could help you grow your wealth in the long run.
I’m all for people investing in experts to help them learn and grow in all areas of their lives. Financial planners are similar to coaches in the way they hold you accountable, and give you tools and advice to help you get from A to B.
Always be mindful of who you’re taking advice from. If someone doesn’t have their own finances sorted, and you wouldn’t want to trade places with them, those are giant red flags.
11. Start saving now
In Secrets of The Millionaire Mind (seriously, you need to read this book), Harv suggests setting up six separate bank accounts, along with a percentage of your income to put into each account every month:
- Financial freedom account (10%) – for investments and buying/creating passive income streams
- Play (10%) – for fun, extravagant/lavish things, which must be spent each month
- Long term savings for spending (10%)
- Self-growth (10%) – education, online courses etc.
- Necessities (50%) – bills, food, rent etc.
- Give (10%) – charity/causes.
Try and do this all with the same bank so you have easy access to all of the accounts, and can move money around. Many banks allow you to automate this process now, which makes it even easier.
Even if you don’t have much to put into these accounts, don’t worry. It’s more about getting into the practice of managing your money responsibly, while still allowing yourself a treat now and then.
Building up a long term savings fund is crucial. This means that if you unexpectedly lose your job, you get sick, or you want to leave an dysfunctional relationship, you will still be able to financially support yourself in the short run.
12. Start investing
I’ve noticed a lot of women (including myself) tend to dismiss the ides of investing money because it’s something we’re not familiar with, but it’s one of the best financial planning tips out there.
You don’t need to be an investment genius to get started.
There are four main areas to invest your money in. These are:
- Real estate
- Business (starting your own business, or investing in someone else’s)
- Stocks & shares
- Passive income streams (from book royalties, music royalties etc.)
The great thing about investing your money (instead of keeping it in a savings account) is it isn’t tied to a fixed interest rate. That means your return is not limited, and you can potentially watch your money grow and work for you, without you doing a thing.
A study by Barclays Equity Gilt found that any stock kept for a period of 10 years since 1899 has had a 91% chance of creating a higher return than cash savings.
When it comes to stocks and shares, I’d encourage you to take educated risks and invest in the companies you already buy from and love and can see growing. I was shopping with companies including Amazon and ASOS, and using Facebook back in 2006. If I had invested some of my part time income in those shares back then, they’d be worth a lot by now.
If you’re new to this, then real estate is probably the safest bet. House prices have always continued to rise over the decades, regardless of downturns.
As your wealth starts to grow, enlisting the help of a financial advisor will enable you to make more informed decisions about where to invest your money.
Be in control of your finances
If you take anything away from this list of financial planning tips for women, let it be this: you need to be in control of your money.
Because when you’re in control of your money, you’re in control of a large part of your life. Money is not everything, but it’s a big deal, and we all need it.
Managing your money in a way that supports you will mean you no longer have to worry about money, and you won’t have to rely on other people for it. It means you can make choices you really want to make, instead of feeling pushed into them.
This is a powerful place to be.