Cash Savvy Basics: What Every Woman Needs to Know About Money

No one said making money is easy, and knowing what to do with it once you have it can be a bit overwhelming. All women–single, married, working or widowed–should have a basic understanding of money management. With a general knowledge of finances and the emotional awareness needed to overcome challenges, we can achieve a long-term grasp on financial security and have a little fun while we’re at it.

Although it’s not as exciting as spending or investing, budgeting is the first step to keeping sound finances. If you want to save money, knowing where your hard-earned cash is going each month sets the tone for the more fascinating financial decisions down the road.

With that in mind, how can you tell how much money you are truly spending unless you track it? Use paper and pencil to review your spending or take advantage of one of the many tech-friendly tools such as online banking or smartphone apps to review your accounts and carefully track (can you say spreadsheet?) where every dollar goes. The key is finding a system that works for you.

Saving
Just as you know you are going to get older, you know you will need money in your golden years, so start planning now. Even if you are a bit financially behind from what you imagined you would be at this point, participating in a 401(k) plan or other type of employer-sponsored retirement program is a solid way to start saving money long term. Deferrals are set up as payroll deductions and you’ll never miss the dollars. If you don’t have a 401(k) option where you work or are self-employed, consider an IRA to save for your retirement.

Investing
While deemed the most exciting part of finances by some, the job of investing can leave some women fiscally flailing. Follow a few simple strategies to keep the cash flow moving and your financial future secure.

Invest directly. This can be as simple as buying a home or vehicle. Perhaps you would prefer to buy shares of stock or put your money in a CD. When you purchase assets directly, whether it be property, shares of stock or bonds, you directly own your purchase and the income from the investment goes straight back to you.

Purchase a managed fund. While you may not be ready for property or a portfolio of shares, buying a managed or mutual fund offers a sound investment opportunity that is carefully managed by a professional. Typically a mixture of stocks, bonds, cash and other securities, a managed fund is held by multiple investors and is a simple way for women to get in on the investing track.

Emergency Fund
Most experts agree that you should keep between three and six months worth of your living expenses set aside in an emergency fund in case of job loss or an unexpected financial issue. Depending on your situation, you may need more or less. Even someone in extreme debt should have at least $1,000 saved to cover unforeseen expenses.

Lending
As much as we think money can’t interfere with our relationships, it almost always does. If a friend or family member asks you to lend them money, consider the issues and make your decision on sound principles. Loan the money only if you’re comfortable with the idea that you’ll never see it again. And put everything in writing; this is an absolute must for both personal and tax reasons.

Borrowing
As with lending, borrowing can be just as harrowing. Before you borrow, consider if you can take on the additional debt and if the product or service is absolutely necessary. Then determine if you can afford the purchase without having to borrow the money at all. If not, make sure to do your homework to obtain the best possible rate and fees.

Need Help?
No matter how much investigating and researching you do, financial decisions can be scary. Many people don’t realize that hiring a financial planner can be a good investment. If you are unsure of yourself or finding that you are letting certain financial decisions go unmade, hiring a financial planner for even a few hours can bring years of peace of mind.

Of course, when it comes to money, women can tackle this issue just like anything else. Combine a bit of research with your undeniable quest for getting it right, and basic finances won’t be intimidating but stimulating! And it doesn’t matter if you have a little or a lot. The important thing with money is to make a plan, track the results and make adjustments as necessary. ■

Sources: bankrate.com, and nfcc.org.