Continue to invest in yourself
With pensions quickly becoming a thing of the past, it’s important to pay yourself before paying anyone else. A quick rule of thumb is to contribute 12% to 15% of your salary to a retirement fund, but if that seems out of reach, contribute as much as your budget will allow, then plan to bump it up a percentage point or two each year. Easy ways include a 401(k), IRA, or Roth IRA, and automatic contributions make it simple and convenient.
Make a budget
Ok, this may not appear to be the most exciting activity, but it’s an extremely important one. If you don’t know where your money is going, you can’t start making it go where it should. Here’s how:
- Gather three months of bank statements, utility bills, credit card bills, mortgage and auto statements, general receipts, etc.
- Total up all sources of income.
- Create a list of monthly expenses using the paperwork you’ve gathered.
- Separate fixed expenses from variable expenses.
Fixed expenses are the same or nearly the same each time, like mortgage, rent, and car payments. Variable expenses change from month to month, like groceries, gas, dining, and entertainment.
- Subtract expenses from income
If you have more income than expenses, you can put money toward retirement savings or debt repayment. If your expenses are more than your income, the next step becomes even more important.
- Make adjustments
Figure out where you can lower your variable spending, like eating out less or canceling that pricey cable subscription. If that’s not enough, take a hard look at your fixed expenses or ways to increase your income, including asking for a raise.
Create a financial path to fulfill your goals
The first step to fulfilling your goals is to figure out what they are. Think about how you want to be living and what you’d like to be able to afford five, ten, even twenty-five years into the future. Then consult a financial advisor you trust to figure out the best ways to get there.
Get comfortable with risk and return
Women tend to be more risk-aware, but all investments carry some degree of risk. Successful investing is not about eliminating risk, but about finding the right balance by holding a diversified portfolio of stocks, bonds, and other assets. Your portfolio composition should be tailored to your financial objectives.
Educate yourself on investing in the market for long-term
Learning the basics of long-term investing can be overwhelming, like learning a new language. But if you can master a few of them, you’ll be well on your way. The most important keys are to start early, practice patience, and stick to the strategy. At Cobblestone, we break investment management into four steps: Plan, Research, Implement, Evolve. Investing is a long game, so your first moves can make all the difference.
Know your social security benefits
As retirement looms, you’ll need to understand when will be the best time to start claiming your benefits. The age at which you’ll receive full benefits depends on the year you were born. If you take benefits before you reach full retirement age, they’ll be lower than if you wait.
Choose a financial advisor who can tailor a unique strategy
Finding a trusted partner to help with money management isn’t always easy, but one way to make sure they have your best interests in mind is to work with a firm that is a fiduciary. Another way is to check out this six-step guide to choosing your perfect financial advisor. If the previous six money moves seem like a lot (and they usually do) the good news is the right advisor can help you with each and every one of them. The key is to start making the right moves today.
DISCLOSURE Investments in securities are not insured, protected, or guaranteed and may result in loss of income and/or principal. Diversification does not eliminate the risk of market loss. A long-term investment approach cannot guarantee a profit.
National Partnership for Women and Families. 2021. “America’s Women and the Wage Gap.” Accessed March 25, 2021. https://tinyurl.com/032021wagegap.
Olson, Elizabeth. 2016. “For Many Women, Adequate Pensions Are Still a Far Reach.” New York Times, June 3, 2016. https://archive.is/jVjM2.
Statista Research Department. 2021. “Average Life Expectancy in North America for Those Born in 2020, by Gender and Region (in Years).” Accessed March 25, 2021. https://tinyurl.com/2020lifeexpectancynorthamerica.