Financial Planning for All Decades of Life

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“A man is not a financial plan.” Women have been hearing this since the 1960s, when the women’s movement defined the term “liberated” once and for all.

But how many women actually have their own financial plan? Furthermore, how many women know how to craft a plan for their 20s, 30s, 40s, 50s, 60s and beyond?

In each decade of a woman’s life, it’s important that vital financial decisions are being made for both financial health during a woman’s life and freedom in retirement. To do that, planning must start early.

Cary Carbonaro, author of the highly successful book, Money Queen’s Guide: For Women Who Want to Build Wealth and Banish Fear, says, “Most women do not consider the crucial relationship between what we do today and how it WILL impact our life tomorrow.” She continues, “Every dollar we save and every dollar we spend has a meaningful impact on our financial stability and security as we age.”

The 20s
Even though women in their 20s may not feel particularly grown up yet, they need to take on the responsibilities of financial planning when they land their first job. Making contributions to a retirement savings plan, even a small one each month, will result in a healthy sum at retirement.

Being careful with credit card spending is an understatement. Paying the full card balance each month and not racking up debt is the key, especially if she has student loans to pay off. Crafting a budget will help a young woman to see exactly where her money is going and how to allocate her income appropriately.

Making financial mistakes is easy to do, but learning how to move forward strategically and unemotionally is what matters.

The 30s
This is the decade when even more responsibility comes along. More income, marriage and children usually result in the desire for owning a home. If she was careful in her 20s, obtaining a good mortgage on a house will be easier because of her good credit. In addition, she must continue the retirement savings program she started, and, if possible, boost the amount per month.

Setting up an emergency fund is paramount to financial security, since life can and usually does throw curveballs. Not only that, she will probably be living longer than her spouse, and her money will have to last longer. Also, her wages will most likely be lower, since the U.S. Census Bureau states that women earn 78 cents for every dollar that men earn. So not only does she have to stretch her money farther due to a longer lifespan, she may have fewer dollars to use.

Caregiving can interfere with these dollars as well, since most women assume that role for their parents, giving up a significant portion of their potential income, which in turn will affect how much Social Security the woman will earn in retirement.

The 40s
Here comes the hard decade. By this time, she probably has a firm career in swing, is with a partner, and may have several children. It’s easy to get caught up in overspending now, but strict budgeting will still allow monthly saving.
Posting a budget on the refrigerator for all the family to see will engage and teach them to appreciate goal-setting, especially when they can see just how much money the family needs for a vacation.

The 50s
This isn’t the decade to relax yet. Financial security may be right around the corner, but paying down quickly on debt and mortgages, and making sure college expenditures for the children are set, truly are the best moves here.

As Carbonaro says, “A woman is responsible for her own financial life and NO ONE else will be.” Avoiding pitfalls and dangerous financial situations is a smart course of action. If an investment seems too good to be true, it probably is. Purchasing a larger house may cause a financial strain. Retiring too early may not be the best move. Examples are plentiful, but the key is sticking to the financial plan.

The 60s
Now is the time for our smart woman to plan for blissful retirement because she has been diligent in saving and investing throughout the decades.

She has achieved financial peace of mind as well. National surveys have shown that for women, peace of mind is more than seven times more important than just accumulating wealth. Women think of their finances in a larger context of life and family situations, their loved ones, their values and their future hopes. In their 60s, they can reflect on the key life events that affected their finances, such as marriage, children, divorce, career, widowhood, caregiving and other choices, and know they have done their best along the decades.

Hopefully, their financial wisdom will be shared to help other women prepare for life’s challenges. ■

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