I recently watched the new documentary, $avvy, which describes a multitude of financial challenges faced by women.
The film also repeatedly emphasizes how critical it is for women to understand and take charge of their personal finances. A partner/spouse is not a financial plan, and women should never abdicate financial control.
$avvy combines case studies of a diverse group of women with different financial “issues” (e.g., student loans and widowhood) and successes (e.g., debt repayment and a successful 37-year-old investment club) with expert commentary, compelling facts and research findings, and dozens of financial recommendations.
Below are my key takeaways for strategies to become a financially savvy woman.
Understand the Financial Hurdles
Women live longer than men, are more likely to go in and out of the labor force for caregiving, and earn less, on average, with lower Social Security benefits.
Stated another way: Women “have more years of retirement to save for with less money.” This is a formidable challenge.
Bite the Bullet
Several case studies showed women who simply “had enough” of living subpar financial lives with high debt, low savings, and lack of certainty about their future.
They all made major changes in their lifestyles and finances to turn things around.
One woman noted that “It starts with me.”
Be a Financial Role Model
One woman in the film talked about being the first one in her immigrant family to invest and repay debt. Another made difficult adjustments as a widowed single parent.
Children and other family members are watching, can learn from, and be inspired by, financially savvy women.
Frame Debt in Dollar Terms
People tune out when they see percentages, such as a 27 percent APR (interest) on a credit card. To appreciate fully what this means, turn percentages into dollar amounts.
For every $100 that you spend on that credit card that you don’t pay back that month, you have to pay back an extra $27. Dollar amounts get people’s attention.
Negotiate Interest Rates on Debt
One speaker encouraged “bullying back” your creditors by politely requesting a lower interest rate on your credit card and subtly stating that there are other credit cards out there with better terms to which you can transfer your balance. Clearly state the terms that you are requesting.
Have a Personal Emergency Fund
Even if it takes months or years, save three to six months of essential household expenses.
Earmark this as “do not touch” money in a special account. A lack of savings makes it difficult to pay for unexpected expenses, cope with income loss, or leave an abusive relationship.
Maintain a Good Credit Score
Bad credit can cost you hundreds or thousands of dollars per year. The two best ways to improve a credit score are to pay at least the minimum due (preferably the full amount) before the due date and to keep balances low.
Some credit scores now factor in on-time rent and utility payments.
Savings = Freedom and Options
One speaker called savings “take this job and shove it money” and “living your fullest life money.”
Another noted that financially secure women “don’t have to stay in scenarios that don’t serve them” (e.g., bad relationships or jobs). Investing is key to growing your money.
Shame Can Be Overcome
Talking about money can have shame associated with it (e.g., overspending, debt, abuse). Speakers advised women not to be ashamed of what they went through and, instead, to focus on how they can change their story.
Taking financial control can provide a huge boost to your self-esteem.
Have Your Own Accounts
Married women should hold some money in their own name and spouses should be transparent about each other’s finances (e.g., income, assets, expenses, debt such as student loans, and credit scores).
Avoid commingling assets and debts, and strongly consider a prenuptial agreement.
Name Savings/Investment Accounts
Naming an account (e.g., “[child’s name] college account” or “[your name] financial freedom account”) is a powerful emotional act.
It makes it less likely that earmarked money will be spent and more likely that you will delay gratification and set money aside.
To learn more about women and money, download my free book, Money Talk: A Financial Guide for Women.
For reprint and licensing requests for this article, CLICK HERE.