Let’s face it, the finance industry was not constructed with women in mind, and it’s time to change that. As a female-owned company, Evergreen & Oak is dedicated to help spread the word on how women can increase their own financial power. This post was developed courtesy of Lindsey Levich, Senior Director at Bounteous, who recently spoke on this topic for the AdTechGod Community Women of Ad Tech (WOAT) Slack, and shared her knowledge on how women can become financially savvy. If you missed it, you can listen to the recording here and view the deck here.
We’ve included a quick summary of what she shared here:
Women and Finance: The Facts
94% of women believe that at some point in their lives, they will be personally responsible for their own finances; however, regardless of this fact, nearly half of women defer to their spouse to make financial decisions, despite 40-50% of marriages ending in divorce.
Although women are often comfortable paying bills and creating a budget, they do not as often feel comfortable building wealth or investing, yet not doing so is a major financial regret for them. One of the problems is women aren’t taught how to invest or build their wealth – in fact, 65% of financial articles targeted toward women tell them to stop spending, while articles targeted toward men encourage investing to increase their power. It’s time to even out the playing field, and help women feel confident making more complex financial decisions.
What is the Mom Tax?
Women value their role as a mother and a caregiver – the top priority for women is “caring for their family,” while men put this value second to last on their priority list. For every dollar fathers are paid, mothers are paid an average of 74 cents, which is what can be referred to as the “Mom Tax.” Men tend to reach their peak earnings around age 55, while women’s pay drops around ages 35-44. These ages coincide with the time period that women are most likely to have children under 18.
Assets vs Debts: What are They?
What is an asset, and what is a debt? An asset is something of value that an individual or company owns or controls, and is expected to provide a future benefit. A debt is money owed to another person or business. Assets can be cash, savings accounts, checking accounts, 401Ks or IRAs, investments, physical goods or home equity. Debts include credit card purchases, bills, mortgage, or any type of loans and taxes owed.
Your goal should be to grow your assets. You can do so through methods of passive growth, such as investing, as well as working, which would be considered active growth. If you have debt, lowering debt should be your focus, and it’s important to decrease debt owed on high interest debts first. You should also try to negotiate debts if you can.
Best Practices for Dealing with Debt
When dealing with debt, there are a few important things you should keep in mind:
When paying down debt, many people tend to pay the “minimum payment due.” This can end up costing you more later. If you only make the minimum payment each time your bill is due, this will result in paying more interest, therefore taking you longer to pay off your debt. Try to pay more than the minimum amount to get your balance cleared earlier.
Investing
You’re never too old to invest, but it is also key to invest as early as possible! Compound growth is the amount you earn on your original investment and simple interest. Compounding growth increases your savings and is especially powerful if your initial investment is invested for a longer period of time.
Types of Investments
Individual Retirement Accounts (IRAs)
Includes 401Ks, Roth, Traditional, Simplified Employee Pension (SEP)
IRAs are low in liquidity, low to medium risk, and have a return of around 8%, but this can vary.
The main differences between these types of IRAs are eligibility, taxation, how much you can contribute and how money can be taken out.
Employer Match
Some employers may match your 401K/403B investments, meaning that this is free money you can get! Some companies may require vesting, but other employers may make it available to you right away. Most employers will contribute around 1-3% for their employees under age 50, though they have the ability to contribute as much as $46k.
Health Savings Accounts
Health Savings Accounts are provided when you have a high deductible plan for health insurance. HSAs are triple tax advantaged, meaning they are tax deductible, there is no tax to take out to pay for medical expenses and no tax on capital gains if the money is invested.
The money from HSAs can be used on current health expenses, or invested to cover future medical costs. With HSAs, there is a limit to the amount that can be put in each year ($4,150 for individuals, $8,300 if married).
529s
A 529 is a tax-advantaged savings account that assists in saving for educational expenses. These plans are not only for 4-year universities, but can also be applied to trade schools, apprenticeships and more. 529 plans are state sponsored, but you don’t have to live in or attend school in the state where your 529 lives. Any money that is used for eligible expenses – such as tuition, room and board and school supplies – is not taxed on the federal or state level.
The Stock Market
Investing in stocks is one of the most effective ways to achieve a strong return on investment. When getting into the stock market, it is important to invest for your age – if you are younger, you have more room for risk. Remember that it’s okay to make mistakes! You will learn from them. Investing doesn’t have to be complicated, there are simple strategies you can utilize to invest.
Types of Stocks
Some different types of stocks you can invest in include:
Ways to Trade
There are numerous ways to get involved in stock trading. Stocks can be managed via a broker, or self-serviced through a broker, website or app.
Some examples of most frequently used trading platforms include E*TRADE, Charles Schwab, SoFi and Fidelity.
Final Tips and Takeaways
It’s always important to stay on top of your finances to ensure things are working as best they can for you! Banks may charge fees you aren’t expecting, so make sure you are watching out for these fees, checking for better rates and being sure you don’t overdraw. Also, make sure to stay on top of your investments. If a current investment is ending, make sure you know what you will do with the money next.
If you’re interested in learning more, Lindsey will be giving a pt. 2 presentation this Thursday at 1:30pm ET and you can join it on Zoom (https://zoom.us/j/95234243471?pwd=SGPOcBhukpK470ERvTMXaHkmTDQadB.1).