We’ve been helping women build wealth and own their financial future for a LONG time. Some common themes we see when it comes to women and building wealth are:
- They don’t make it a priority.
- They worry about being judged.
- They’re not sure where to go to get the help they need.
- They’re afraid of having a conversation with their partner.
We get it – wealth building is a process, but we’re here to help! Here are five steps that every woman should take to build her wealth:
1. Spend intentionally.
It’s not what you make but what you keep! Are your spending habits in alignment with your plans to build wealth? Are there things that could be more intentional or targeted towards what matters?
When it comes to spending, it’s important to be intentional and make sure that money is being allocated to the areas of life that are most important. Too often, people fall into the trap of spending on what they want in the moment rather than what they want most out of life.
Instead of succumbing to the temptation of spending on immediate wants, you can consider the consequences of each expenditure and how it contributes to your overall financial plan. A spend plan is an awesome tool to use to put your spending into perspective and realize where you can and need to make adjustments to your spending habits.
2. Have an emergency fund (roughly 6 months of your EXPENSES)!
Life Happens! When it does, you want to be prepared. Having adequate savings if you get hurt, sick, lose your job or have an unexpected home repair or vet bill is huge. If you have debt, you need to save at the same time you’re paying debt off!
Establishing an emergency fund is one of the most important steps in managing your finances, and can help you avoid going into debt when an unexpected financial expense arises.
To start a fund, it’s important to first determine how much you need for your particular situation. This can depend on various factors such as your income level, any existing debts, housing costs as well as other expenses like food, transportation and entertainment.
It’s recommended to have an emergency fund of roughly 6 months of your expenses saved up. This money should be used to cover unexpected costs, such as a job loss, medical bills or home repairs. Having this reserve can help keep you from falling into financial hardship if something unexpected occurs in your life.
Putting your emergency fund in a high-yield savings account is the best way to see your money grow. A high-yield savings account works just like a regular savings, but you get to earn around 3% in interest (aka FREE money).
Saving for an emergency can be a daunting task, but it’s essential for financial security. It’s important to plan ahead and create an emergency fund that is large enough to cover any unexpected costs that may arise over the course of your life – and you can continue to build wealth because you’re not mired in debt.
3. Diversify where you’re investing and the tax perks.
Think about money making money! Cash above your emergency reserve that you don’t plan to spend within the next couple years should be invested. You can set up a non-retirement investment account if you may need the money before 59.5 OR look to maximize tax efficient accounts for retirement. This can be your 401(K) plan, ROTH IRA or IRA. Talk to a professional to see what is best for you and your specific situation as each account has different rules, pros + cons!
PRO TIP: Automating your savings and investing is a powerful tool to build wealth over time. It helps you to save consistently and invest in a diversified portfolio, so you can work towards achieving your financial goals. By automating these processes, you’ll be able to take the guesswork out of saving and investing, allowing your money to grow consistently, and you can increase the amount as your income grows.
4. Ensure you have adequate insurance for when sh*t happens
No one likes spending money on insurance or talking about it, but it’s an important aspect to consider when trying to build wealth. The last thing you want to worry about during a traumatic time is money! If someone is counting on you to live, chances are you need life insurance, make sure you’re covered!
Life insurance is an essential part of financial planning and is designed to ensure that your loved ones are provided with the much-needed financial security in case of your death or disability. It can help cover expenses such as mortgage payments, college tuition for your children, medical bills, daily living costs and funeral expenses.
Disability Income Insurance
Having adequate insurance for when life throws you a curveball is essential for minimizing the financial stress of unexpected events. Disability income insurance is an especially important form of insurance, as it provides protection against the risk of lost income due to an illness or injury.
Disability income insurance works by providing the insured with a tax-free, recurring benefit payment based on a percentage of their normal salary or wages. In the event that an individual becomes disabled and unable to work, disability income insurance can provide much-needed financial security for them and their family.
Ask questions, get the facts, and understand the different insurance options available to you. We are here to help you with this!
5. Have a Will, Power of Attorney + Health Care Proxy – Estate Planning is FOR everyone!
Having an up-to-date will, power of attorney and health care proxy are essential to any estate planning. These documents are legally binding and provide a clear direction on how to handle your assets, debts and other affairs in the event of your death or incapacitation.
A will is a legal document used to specify how you want your assets, debts and other affairs handled in the event of your death. It outlines who will receive your property, who will serve as guardian for any minor children, and any other details related to your estate.
Wills can be customized to meet individual needs and preferences, but it is important to ensure they are created properly, with all the specific details that apply to each individual’s situation. A will should accurately reflect a person’s wishes and provide guidance in the event of their death.
Power of Attorney (POA) is a legal document that gives one person the authority to act on another person’s behalf in various circumstances. It can provide limited or broad powers, depending on the scope of the POA. Powers given to an individual through a POA may include financial decisions, decision making for healthcare and other matters.
Healthcare Proxy is a legal document that allows one person (the proxy) to make decisions on behalf of another person (the principal) in matters related to healthcare. In the event that the principal is unable or unwilling to make decisions for themselves, or has been declared legally incompetent, the proxy can step in and make decisions concerning their healthcare.
Don’t leave a hot mess for your loved ones. These documents make it easy and you don’t need to be old or wealthy to require them.
BONUS TIP: Be Your Own Advocate!
Speak to your value and pursue what you’re worth. If you’re negotiating your salary (whether you are just signing on with a company OR it’s time for a raise) don’t forget to advocate for what you want. If you want to actively build wealth, you need to speak up. Remember – you’re more powerful than you think!
Need help to build wealth?
We’d love to help! Book a Money Coaching Discovery Call and learn more about how we can help you shift your money mindset. If you are looking for more in-depth financial services, check our sister company, Wilcox Financial.