Financial Health

Published: May 28, 2014

What Is Financial Health?

Financial Health or “personal finance” refers to how you manage your money and plan for your future. Every financial decision you make effects your financial health now and in the future.

Financial Health is different for Women and Men.

Women all over the world face difficult financial decisions every day while juggling jobs and caregiving responsibilities.  At first glance, it might be difficult to believe women’s financial needs are different from men’s.

While the general principles of financial planning are the same, women face unique challenges that amount to different financial needs.

Facts About Financial Health

  • Financial health (your finances), can impact your physical and mental health.
  • Having a household budget will keep you on track, and aware of where you spend your money.
  • When you are in your 40s, 50s or 60s you need to think about qualified 401(k) or IRA-type money, as well as some of your taxable accounts.
  • Women live longer than men (an average of 7 years) so they need 20% more for retirement.
  • On average, women earn 25% less than men.
  • 53% of women are not covered by a pension compared to only 22% of men.
  • Almost 1 in 4 women are broke within two months of a husband passing away.
  • Since women tend to take time off to raise children or take care of parents (women take off approximately 11 years more from work than men), they save less than men do for retirement.
  • After earning lower salaries over fewer years, women’s social security benefits are about half of men’s, thus making women’s financial needs different then men’s.

What Should we Tell Young Women to Prepare them for Good Financial Health?

The earlier women learn about debt, savings, and credit, the less likely they are to struggle with debt in the future. Every woman should know about finances:

  • How to create a budget
  • Being Independent (relying on your income for what you need), helps build financial confidence

There is often a disconnect between what we’re teaching women about financial literacy and how they actually learn,” Barbara Stewart, a Toronto chartered financial analyst said.
Most of what I see in textbooks and on websites for financial institutions is very dry information.”

Quick Steps to Create a Budget:

The first step toward creating your budget is to keep track of your spending.

  • In a small notebook (take it with you everywhere you go for one month), write down everything that you spend money on.
  • After a couple weeks, start putting this spending and expenses into categories (food, transportation, gas, tolls, clothing, hair care products, cleaning supplies, etc.)
  • Review the categories, and how you spend your money. The results may surprise you, and you may start to see a pattern.
  • Make a list of bills you have to pay on a regular basis (car insurance, rent/mortgage payments, dental checkups, electric/water/phone bills, pet care, medications, internet fees and gifts).
  • At the end of that month, you have a good indication of a month’s spending.

The Next step: compare your monthly expenses to your monthly income to help establish a monthly budget.

Goals of having a Monthly Budget:

  • The first goal is to have what you earn be more than what you spend. (Not going into debt by having higher bills/credit card bills than you can pay each month.)
  • Once you have that, the next goal is to have some left-over to save. It is never too early to start saving for your future needs/plans/goals.
  • Make a plan to start safe investing/saving, even a small amount, so that your money can start to grow.
  • Having financial freedom.

For more details on how to create a budget, refer to pages 4 – 6 of this guide: http://www.wiserwomen.org/pdf_files/stepscaregivers10_05.pdf

Also Related: Suze Orman explains what she means when she says, ‘You are always to live below your means, but within your needs.’ http://www.suzeorman.com/blog/watch-suzes-new-pbs-special

How your Financial Health can Impact your Physical & Emotional Health
Stress and worry associated with trying to maintain your finances can result in:

  • Increased anxiety due to fear of the consequences of getting into debt.
  • Loss of motivation (or the ability to concentrate) to keep control of your finances.
  • Worsened symptoms of depression such as inadequacy, despair and pessimism about the future.
  • Conflict with, or between, family members that makes you feel worse.
  • Worrying about whether you should ask for help in case people judge you or make you do things (you could be more vulnerable to financial exploitation or abuse).

If experiencing depression, it may be difficult to have the energy to manage your finances, or to care about money at all. If your depression is long-lasting, you may find it difficult to earn money through working.

Resources for more Financial Health Information
http://www.suzeorman.com/suze-tools/
www.redhotmamas.org
http://www.wiserwomen.org/pdf_files/stepscaregivers10_05.pdf
http://www.suzeorman.com/books-kits/books/women-and-money-spanish-edition/>
http://barbarastewart.ca/Rich_thinking.pdf

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