When it comes to financial planning, women and men have the same core financial goals such as funding a retirement, paying for a child’s education, protecting loved ones and more. So do we really need separate financial planning? Absolutely not.
According to Madison Sharick, Manager of Financial Planning for PNC Investments:
A customized financial plan should be just that – customized to my financial situation, goals, and concerns – regardless of my gender.
All of the non-gender-specific investment and retirement planning advice you hear applies to you. However, you'll want to view it through a gender-specific lens - one that recognizes a few realities of being female - and plan accordingly.
- You're likely to live longer. It's just a fact that women outlive men. More years on the planet mean you'll need more money set aside.
- You're likely to earn less. Statistically, women start out earning less than men, tend to get smaller raises and may pass (or be passed) on promotions more often. It adds up.
- You're more likely to take time away from the workplace. Staying home with kids or deciding to work part-time to raise a family or care for aging parents can place you further behind.
Here are 7 ways you can improve your financial outlook.
#1: Close the Learning Gap
PNC research has shown that while growing up, women who are now between the ages of 21 and 35 were talked to differently by their parents, compared to their male peers. Young men were more often taught about building wealth outside the workplace and to think in terms of “investing” rather than “saving.”
Read, work with a financial professional or do both in order to increase your financial literacy and gain confidence in your decisions. If you are raising daughters, make it a point to educate them on the benefits of investing and starting early to help set them up for future success.
#2: Get Real About a Budget
More than 25% of Americans don't follow a budget, but it's the simplest way to know where you stand. In fact, one survey found that most people saw an improvement in their financial well-being after they started using a budget. Determining how your income will cover everyday essentials, debts, saving for the future and, of course, extras, can help prevent cash-flow problems and the stress of flying blind. Plus, when you get in the habit of having more money coming in than going out, you can build up your emergency savings or invest more toward your goals.
#3: Don't Outsource to a Partner
A recent study found that 58% of women leave financial decisions to a male partner. This can be especially risky, should you someday divorce or if your spouse dies. While it's natural for one member of a partnership to take the lead on various aspects of the household, initiate conversations and ask questions so you're not in the dark.
If you’re a single woman, responsible for funding your own financial future without the aid of dual incomes, there’s even more of a need to take a proactive stance towards your finances and achieve a certain comfort level with the concept of investing.
#4: Increase Your Contributions While You Can
This advice applies to everyone, but it's especially important if you think you might take time away from the workforce, resulting in years without retirement contributions to an employer-sponsored retirement plan. Even small amounts invested early and left to compound over a long time horizon have the potential to grow significantly.
Challenge yourself to bump up the percentage of your income that you invest every year and open an IRA for additional windfalls you might receive from a bonus, raise or tax refund. A Spousal IRA is another solution that can help couples boost their retirement savings when one spouse isn’t working. Whatever investment vehicles you choose, plan for a bigger cushion than you think you'll need to help offset rising healthcare costs over what could be decades in retirement.
#5: Don't Be Too Shy About Risk (Especially in the Early Years)
In PNC’s study of millennials’ attitudes and behaviors towards investing, women were less comfortable with risk than men. However, when you have a longer time in which to accumulate assets for retirement, you generally have the luxury of taking on more risk and potentially achieving greater returns. Don't let staying in your comfort zone cost you. Ask a financial professional about striking a balance between risk and reward based on your financial goals.
#6: Recognize the Increased Potential for Long-Term Care Needs
Because we live longer, women in nursing homes outnumber men two-to-one. With nursing homes averaging upwards of $100,000 per year, and in-home care potentially costing tens of thousands of dollars, it's important to plan for the expenses that Medicare won’t cover. A long-term care plan or disability coverage may be the answer for you. Talk to a financial advisor about your options.
#7: Talk to a Professional
Financial well-being is too important to go it alone or trust armchair advice. Research has shown that working with a financial advisor to create a plan may add value to your portfolio by helping you take on appropriate levels of risk, choose investments that drive toward your goals, rebalance your holdings to keep you on track and more.
My financial plan gives me confidence that my decisions are the right ones. It can be motivating to see how making simple changes adds up over the long haul. The first step is knowing what those changes are!
Contact Us Today
A PNC Investments Financial Advisor can work with you to gain a thorough understanding of what it is you wish to achieve financially and develop a customized financial plan based on your unique situation and needs. Take the next step towards increasing your confidence and achieving financial well-being by calling 855-PNC-INVEST or visiting a local PNC branch today.