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Investing is a critical part of building wealth and surviving financially over the long term.
Unfortunately, many women defer investing to their husband or never invest at all.
I’ve seen the scary results of women not taking an active role in the family finances.
When I worked at a financial planning firm, we had a client pass away.
His wife came into the office for a meeting so she could be caught up on their accounts.
This was the first time we were ever meeting her. Up until now, she simply let her husband handle the investing.
Now she was alone and completely clueless as to their investment plan, her investments, and even account balances.
But this isn’t the only reason women need to take an active role when it comes to investing.
As a woman, you face unique financial challenges compared to men.
In this post, I will highlight these challenges and how you can take action so that you can become a successful investor.
3 Major Financial Challenges Women Face
#1. The Pay Discrepancy Challenge
Though strides have been made, women are still too often at a disadvantage versus men when it comes to equal pay.
While there has been improvement over the years, since 2000, the percentage difference has remained the same.
For example, if a man earns $100,000 annually, a woman in a similar role only makes $81,800.
It doesn’t take a math major to see the impact of lower earnings over the course of one’s life.
#2. The Family Challenge
Another challenge women face is working and having children.
While new moms will get paid a portion of their salary when on maternity leave, it is only a fraction of their full-time income.
Add in the possibility of wanting to stay home to raise their children or even needing to reduce hours to handle family duties, women lose income and potential promotions as a result.
#3. The Longer Life Expectancy Challenge
Finally, on average women live longer then men. As of this writing, the gap is 5 years.
This means women need on average 5 years more savings in order to survive financially.
And in some cases, they need a lot more!
As you can see, these challenges are significant. Earning less and living longer are a recipe for financial disaster.
So how do you go about investing so that you can survive financially?
Here are 4 tips to get you on the right path.
4 Steps To Overcome Financial Challenges
#1. Understand What Investing Is All About
Your first step is to get an understanding of investing. I am not suggesting you go back to college and get an MBA.
But you do need to understand the basics.
Read books, listen to podcasts, and check out online forums for information.
Books that I highly recommend include The Essays Of Warren Buffett, A Random Walk Down Wall Street, and The Intelligent Investor.
The more basic understanding you have when it comes to investing, the smarter choices you will be able to make going forward.
#2. Create An Investment Plan
Once you have a basic understanding, you need to create an investment plan in order for investing success.
This plan will detail your goals, your risk tolerance, your investments and more.
Think of it like a map. It is there to guide you on your journey.
Many times throughout your journey, when the market gets crazy, you will refer back to it to keep a sound mind and stick to your plan.
#3. Start Now
I was going to list this point second because it is so important.
You need to start investing now.
Not tomorrow or in a few years. Now.
The reason is simple. Every day your money will compound and grow.
The longer you put this off, the less time you have for your money to work for you.
This results in you having a lot less money than you otherwise could have.
So make it a priority to start investing as soon as possible.
#4. Hold Investments Long Term
The last point to investing success is to hold long term. Too many people get caught up in the hype of the market and buy and sell investments.
This will lead to disaster. You cannot time the market. No one can.
You have no idea what the market is going to do from one day to the next. No one does.
Your best option is to pick solid, low-cost investments, and hold them for many years and invest more money into them on a regular basis.
By following this strategy you are buying more shares regardless of what the market is doing and as a result, will be able to take full advantage of compounding.
Final Thoughts
At the end of the day, women face financial challenges that can lead to a lot of stress later on in life.
By being proactive and learning about investing and starting as soon as possible, you will lessen the impact of these challenges.
There is one final point about this topic I want to make.
If you are in a relationship and your spouse is handling your finances, make it a point to schedule a monthly financial checkup to be kept in the loop.
Also request a one page summary with important information like account numbers, contacts, etc.
After experiencing the death of a client, I created a file like this for my wife. I want to make sure she doesn’t have the added stress of money on her plate should I pass first.
While it is not easy to talk about these things, they are conversations that need to be had so that your loved ones can continue on with less stress after your passing.
Author Bio: Jon Dulin is a finance professional and writes at moneysmartguides.com. There he helps readers on their journey from paying off debt to starting to invest so they can achieve their financial dreams.
