When it comes to managing money, women face unique challenges.
Women tend to live longer than men, which means they need their money to last longer, according to Kamila Elliott, Certified Financial Planner, Co-Founder and CEO of Collective Wealth Partners in Atlanta.
Many women also tend to take time off from the workforce to care for children, parents or significant others, noted Elliott, a member of the CNBC Financial Advisor Council. Being out of the workforce for any period can affect women’s financial and retirement security, she said.
Working with a financial advisor can help women plan through these difficult times.
“I think it’s important for women to feel empowered, and part of feeling empowered is having the financial resources and having financial stability,” Elliott said.
Elliott, who was the first black person to chair the CFP’s Standards Council, said the industry is working to educate women from an early age on “how finance, budgeting and investing can be fun.”
Still, women of any age can get ahead financially by pursuing several strategies, Elliott said.
1. Negotiate your salary
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Research has shown that there is still a gender pay gap that results in women having lower incomes. That means they could save less than men for retirement as well as for other goals, Elliott noted.
Women can help reduce these gaps by negotiating their pay, especially when they’re starting a new role, Elliott suggested.
New pay transparency rules in effect in some places can work in favor of women, she said, by eliminating the need to disclose current salaries and showing the pay ranges roles can offer.
2. Make investing a priority
According to Elliott, women may refrain from investing their money for several reasons. They may think investing is too complicated or they don’t have the funds to invest.
Yet when women invest, they actually tend to outperform men, she said. A Fidelity Investments’ 2021 study found that women’s returns tend to outperform men’s by 40 basis points, or 0.4%, based on an analysis of annual performance across 5.2 million accounts.
It is important for women to feel empowered, and part of feeling empowered is having the financial resources and financial stability.
CEO of Collective Wealth Partners
The current market volatility can be an opportunity, especially for those 10 to 30 years from retirement, as they have time to ride out those ups and downs, she said.
As average market returns rebound, significant progress can be made over time, Elliott noted.
3. Establish a “Financial Freedom Account”
To feel empowered, women need financial resources and financial stability. That means having an emergency fund is “essential,” Elliott said, with three to six months of your monthly operating expenses in a liquid savings account.
Beyond that, Elliott works with clients to also create a “Financial Freedom Account”, which can help provide a cushion to make changes when they feel stuck in a relationship, job or life situation. .
“It gives them the freedom to live on their terms, to do what they want, and empowers them to make the right decisions for themselves and their families,” Elliott said.