Achieving Financial Freedom: Advice For Women
When I was a kid, my mom strongly advised me to never depend solely on anyone financially, be it an employer or a partner.
That became my definition of financial freedom.
With all the societal advancements and progress, are women feeling more financially independent?
According to a recent Bustle survey of more than 1000 Millennial women, over 50% said they never discuss personal finances with friends, even though 28% reported feeling insecure and worried about money every single day.
Money is still a taboo: we don’t want to talk about it, we have never learned about it, so we
prefer not to think about it too much.
Lack of education in money management makes women feel poorly prepared to make sensible financial decisions, and they find it hard to take the first steps.
Compared to men, women are more risk-averse with their financial planning.
According to Freedom Debt Relief, a company that helps women to achieve their financial goals, managing your money should feel empowering, not intimidating.
What is financial freedom?
Financial freedom is a state of mind and means different things to different people. It also changes in time.
For some, financial independence means having enough money to pay all the monthly bills, for others – it’s owning multiple properties.
Just a few years ago, financial freedom for me meant having enough money saved up in case I wanted to leave my job. I didn’t want to sell my soul at a job that I detested only to be paid.
I wanted to have enough money to be financially okay for at least 6 months, and not have to desperately rush into any available job just to pay my bills.
Today, financial freedom means not having to depend on a single source of income (i. e employer). My goal is to diversify my income streams through different endeavours, like freelance, part-time employment, passive blogging income, and investment shares.
Ultimately, I want to have the freedom and flexibility to work for pleasure, not money.
Hard Bacon has put together an excellent list of The 50 Best Financial Independence and Early Retirement Blogs, where you can learn directly from people who are already where you want to be in life.
When it comes to financial planning, women are more vulnerable than men.
Below are just a few of the unique challenges we face:
Longer life with lower pay
Women live longer (72% of those who live to 90 are women), yet we earn 17% less than men working the same full-time job.
Odds are that our work lives will be interrupted by extended periods spent caring for young children, aging parents or both.
That interrupts our career path and is one reason women are more likely to have jobs that offer more flexibility but lower salaries.
As a result of the sacrifices women make, we must adequately prepare their finances for the future.
Know & demand your worth
Women see the pay gap statistics and learn to normalise them.
As a confident and competent woman, you should know your value and demand you are compensated fairly. If you perform a task better than others, you should be rewarded for that.
This confidence will result in respect and compensation in line with your true value.
The gender pay gap is a problem. It is never okay to underpay someone just because of their gender.
Save 20% of your income
If you’re in your early twenties, start saving at least 20% of your monthly income for any emergencies.
A general rule is to have at least three months’ worth of bills covered by emergency funds, but in reality, six months or more is better.
Emergencies always happen at some point in your twenties – losing a job, breaking up with your partner, changing careers, becoming sick etc.
Emergency money means you aren’t living from paycheck to paycheck, worrying that any setback means that you’re instantly going to lose everything.
Life is fickle. Circumstances beyond our control suddenly change our lives. Sadly, many women can’t support themselves in the event of divorce or the death/illness of a spouse.
Woman should have a plan, just in case they need it.
Start investing early
Millennial women are known to be very conservative investors. Investing is seen as something only “important wealthy men” do, so many women prefer to keep their money in cash.
In reality, everyone with any amount of cash can invest in whatever they like.
And the sooner you start, the better because cash won’t keep pace with inflation. It won’t grow by itself. Money as a currency is fluid, its value changes over time.
You can look into investing in new markets like cryptocurrencies. If you take a look at a Dogecoin value chart, you can see that its price (in terms of dollars), is going up all the time.
Millennials love cryptocurrencies because they offer an exciting alternative to regular money. They want to hold cash outside of the banking system but don’t want to ride the ups and downs of the stock market.
Investing in new currencies can be a little scary. But the evidence suggests that they will continue rising in value long-term. And that’s exciting for people getting into the market.
But as a rule of thumb, you should invest for at least 5 years. This allows enough time to ride out any bumps in the market that might see you make a loss on your money.
Being proactive and understanding the effect of working toward your financial goals as early as possible is crucial for financial independence.
Grow your money
With smart investing, you can grow your money even further.
You can end every year with more money than you had at the beginning of the year, without trading your time for it.
It is important to have an investing strategy that matches your current financial situation and the goals you have for the future. Many women tend to be overly conservative in their investing.
Working with financial advisors, may help you get these details straightened out and maximise your investment by making sure your portfolio is fully diversified with different assets.
And finally …
What does financial freedom look like to you?
To me, it’s waking up and not having to go to work to earn money …