Women have gained a lot of financial freedom over the past century. Thanks to the Equal Credit Opportunity Act passed by Congress 40 years ago, we can now hold our own credit cards, manage investment accounts and demand equal pay for equal work. In short, women have the power to be completely financially independent, if we so choose.
We’re certainly interested. According to the 2013 Women, Money and Power Study conducted by Allianz Life Insurance Company of North America, women ages 25-34 are eager to learn about even complex personal finance topics, such as market capitalization and bond ratings.
Yet the women surveyed by Allianz Life also said they feel that they lack the knowledge and guidance to move forward with major financial decisions. Eight of out 10 respondents said they hadn’t consulted with a financial professional and four out of 10 said they didn’t know what to ask if they were to look for more information.
This isn’t the only study revealing a lack of financial confidence among women, either. A 2012-2013 Prudential Research Study found that although younger women expressed defined financial goals for the future, they did not feel well-prepared to make the major financial decisions that would help them reach those desired goals. They are also twice as likely to describe themselves as “financial beginners” as men in similar situations.
As a young female who has just started dipping my toes into the sea of financial planning options, I completely understand feeling overwhelmed and unsure about what actions to take. But I also know that as long as I stay focused, there’s no reason I can’t become just as financially literate and prepared as my male counterparts. At the end of the day, financial control falls on the individual.
What’s pretty neat is that women already have a huge amount of financial power.
A consumer study by Nielsen reports that women have a total purchasing power ranging from $5 trillion to $15 trillion annually and will control two-thirds of the consumer wealth in the U.S. over the next decade. Women are also more likely to have control over big-ticket purchases and day-to-day spending in a household.
With that much consumer buying power, there’s little reason we should feel like inadequate financial planners. It’s time to start letting go of our fears and confidently take charge of our finances, regardless of age or relationship status.
Based on my findings and personal experience, here a few financial confidence-boosting tips:
1. Start dashing those fears by educating yourself.
Fearing the unknown isn’t unreasonable and, in fact, it’s a pretty natural human reaction. I wouldn’t feel at ease selecting a retirement plan without completely understanding all my options. Whether that means reading articles online or visiting a financial planner, educating myself automatically makes me feel more comfortable.
If you’re itching to build your knowledge, a good place to start is with the resources right around you. Sit down with a representative from your bank or talk to your human resources department. Remember, there’s no such thing as a stupid question.
2. Make a budget and stick to it.
One of the biggest financial fears expressed by the women in the Allianz Life survey was losing all of their money. A good way to combat this fear is to build a retirement nest egg – and that starts with budgeting your money so you have some left over to save. Sit down and figure out what your necessary expenses are and then allocate the rest accordingly, based on your financial goals.
The idea of living off a budget may sound (and feel) constricting and unappealing, but I’ve found that it’s much easier when you let yourself indulge every once in a while. For example, allowing myself a specialty coffee drink once a week is a good way to reward myself for staying financially in control.
3. Start saving money.
As a 22-year-old who is slowly adjusting to living with larger monthly bills and student loan payments, I know what it’s like to feel as if you have too many expenses now to worry about what may come later. At the same time, I also fear not being able to take care of myself if an unexpected situation occurs so I’m slowly starting to build an emergency fund.
Every little bit counts. Whether you are putting away $5 a week or $500 a month, it’s a step in the right direction. Knowing you have money tucked away will also help give you the confidence to work on expanding the wealth you are building.
4. Focus on your goals and values.
This may sound cheesy but at the end of the day the only thing stopping women from being financially assertive is ourselves. In an ABC News column aimed at helping women gain financial power, Laura Mattia of Baron Financial Group said it’s time to shed the mindset that women are “not supposed to” deal with financial matters and that money is not something that just the men or parents in their lives should manage. It’s time to shake off gender stereotypes and focus on what you want to get out of your money.