6 Steps for a Woman's Financial Self-Defense
Women account for over 80% of consumer spending, and at the same time elderly women make up over 80% of this country's impoverished. How can that be possible?
As a consumer buyer, it appears as though women are spending their money to satisfy the immediate needs of the household. According to Mindshare/Ogilvy & Mather, women's spending accounts for:
- 91% of new homes
- 92% of vacations
- 93% of food
- 80% of healthcare
- 93% of over-the-counter pharmaceuticals
Looking at the above categories, women aren't saving for themselves to ensure their financial survival down the road; they are spending for the present, for their families. And all of this household money that's being spent isn't coming from an overall increase in women's earnings. In terms of employment income, women are still at a disadvantage. On average, women make .78 for every $1 earned by a man.
There was a report out recently from the Pew Research Center proclaiming that over the last forty years women have made great strides in their careers and employment income. In 2009, women were the major breadwinners in 22% of all married couples. Well, it may be true that women are the major breadwinners in more marriages today than in 1970, and that women have made progress in the workplace; however, a significant portion of unemployment over the last 3 years has occurred in the manufacturing and construction sectors — which traditionally have been male-dominated. Yes, a woman may be making more money relative to her spouse, but it's probably because he has lost his job or received a pay cut.
Women make up the majority of the so-called "pink collar" workforce, with jobs that don't have high salaries and frequently little or no benefits, and they are still leaving their jobs and careers during prime wage-earning years to raise children. So women aren't dominating consumer spending because they have a ton of extra dough to spread around. They're taking care of the household and doing the bulk of the family shopping for basic goods. Since most people can't afford to buy luxury or expensive items these days, spending on basics makes up a bigger percentage of overall spending.
The key question is, how can we get you, a woman, to refocus some of this spending power toward your own long-term financial survival? Here are 6 ways to financially defend and save yourself.
1. Change your mindset and realize what's at stake.
Understand that only you are responsible for saving for your own retirement, and recognize that using your money to save for your financial future is just as important as paying for other priority expenses or large household purchases.
2. Take an active role in overseeing the household's monthly budget and cash flow.
Make sure that your financial needs are met, as well as your family's.
3. Create a priority expense line in the monthly budget for "My Retirement Savings."
Have that amount automatically transferred into a retirement savings account.
4. Set up a Non Wage-Earning Spousal IRA.
If you are a stay-at-home mom, your husband has earned income, and he is eligible to set up an Individual Retirement Account (IRA) for himself, he can set up a Non Wage-Earning Spousal IRA for you, up to the qualified amount ($5000 per person this year and an additional $1000 if you are over 50).
5. Know what you are worth individually.
Have an annual financial check-up: make a list of all assets, including cash, investment, retirement accounts, valuables, real estate, and all debts, individual and joint and keep a file of all monthly account statements as well as IRS returns.
6. Do a yearly review of your progress.
Keep track of your progress toward your long-term goal of financial security. Make adjustments in your big ticket spending and monthly budget to keep up savings and harness the power of compounding. (Use a retirement calculator or compounding chart at Bankrate to see how your savings can grow.)
The three biggest long-term financial goals are buying a home, saving for college tuition, and saving for retirement. You can put off buying a home and rent until you have saved enough to afford it; there is no timetable. A college education can be funded in a variety of ways: grants, scholarships, loans, work-study programs; the money doesn't have to come from you. But, there is only one way to pay for your retirement — you must save for yourself. The clock is definitely ticking, and your long-term financial survival depends on it.
This is a guest post by Hollis Colquhoun. Hollis has over twenty years experience in the financial industry, is an Accredited Financial Counselor and co-author of Women Empowering Themselves: A Financial Survival Guide. Read more articles by Hollis: