Financial Guide For Young Women

Last month I mentioned, that young men are perhaps the most clueless group in America, however, young women give men a good run for their money.  BTW there are many aspects of the article Financial Guide For Young Men that can apply to women as well; however women have some unique financial challenges that men do not have. Regardless of your political opinions between women and men, there are key differences that women need to pay special attention to:

College: Just like for the guys, work and save money.  Attend community college for the first two years and take advantage of tax credits.  Take as many CLEP exams as you can.  These actions alone will save you tens of thousands of dollars.

Run Fund: Always have the ability to leave a relationship. If you are living with a boyfriend/husband, always have an emergency fund in your name that you can access in case you need to leave the situation.  Have at least enough cash saved up to cover 6 months of living expenses if you need to leave.

Cars: Just like with young men, young women also tend to make drastic mistakes when purchasing vehicles. I have many times heard statements to the effect of “Look at how pretty my new car is!” Choosing vehicles based on looks is insane. Women are also more likely to justify spending extra money on a vehicle for “safety”.  If you don’t have a strong understanding of what is important for a car to run well, then have someone who does go with you car shopping, and stick to a very conservative guideline on buying a vehicle. The vehicle you drive should be no more than 1 months income.

Saving for retirement: Women live longer then men, but on average earn less than men and save less then men. Women are substantially more likely than men to leave the workforce to care for children, and to leave the workforce early. Women are also more likely to end up living off of social security in retirement than men. Saving for retirement needs to be one of the top priorities for all young women. I strongly believe that saving is more important for women than it is for men.

Choosing a reproductive partner wisely:  Since the 1960s there has been a strong feminist movement in the US. I’m all for equal rights and equal pay, but one aspect of the more extreme part of the feminist movement is to reduce the importance of men to absolute irrelevance. You often hear women say things to the effect of not needing a man, even when they have kids.  Although being a single mother is possible it is far from easy.

Unless you are extremely wealthy it takes two people to raise a child and have any kind of life.  State help in the form of food stamps, medicaid, daycare assistance and section 8 can be helpful, but what kind of life is it to structurally live off the state and struggle financially the entire time you have children? Although absent fathers are supposed to pay child support, many of them don’t or they have such low incomes that the child support received is a joke.  This is no strategy to have.

Make no mistake, the single most important decision you will ever make is who you have children with and when. The quickest trip to a life of poverty is reproducing young with a worthless man.  I’m not saying only look for rich men as partners, I’m saying look for ambitious, industrious men with a good head on their shoulders; money will follow.

Divorce: If it doesn’t work out, check the clock.  I’m not by any means saying stay in an abusive relationship, run if that is the case, but if you are close to the 10 year mark I highly recommend letting the clock run up to 10 years.  If you are married for 10 years in retirement you can receive social security benefits off of your ex’s work record, provided you are not married to someone else at the time.

Being a stay at home mom: If being a stay at home mom becomes the path for you, ensure that family income is going not just to your husband’s retirement savings, but to yours as well.  Have an IRA and plan to have as much contributed to it as possible throughout the year.

Work part time or from home: Run a small business from home, work in the evenings or better yet find a job you can work while the kids are in school. Minimize the number of years where you aren’t working at all. This keeps yours skills and network up to date, allows for some extra money to come into the household and gives you Social Security earnings.

Skills: Just like with men, women need to know basic skills too.  It isn’t funny or cute that you can’t change a tire, check the oil, or resolve a plumbing emergency.

Networking: Especially if you leave the workforce to have children keeping up a network is important so that you have the most amount of options when you choose to return to the workforce.

Basic repair: Learn how to use basic hand tools and especially if you become a homeowner, learn how to take care of some basic maintenance issues.

fiscal management: Most people, and women seem to be more predispositioned to this as well, find budgets and finances to be boring.  Taking the time to learn the basics of personal finance is extremely important. The basics are relatively simple and once you have a knowledge base getting started on building wealth can be automatic and relatively easy.

Life Insurance: Ensure that your family is protected by getting term life insurance for yourself, and your husband once you have children.  Life insurance is extremely important, and even more so when one of the partners doesn’t work outside the home.  A stay at home mom needs to make sure that her and her kids won’t be in financial ruin if something happens to the primary earner.  It is also vitally important for stay at home mom’s to have life insurance as well. Even with a large sum of money it is extremely difficult to replace the myriad of jobs that a stay at home spouse does.

Princess Mentality: I know MOST young women don’t have this, but many do.  Drop it today. Now. This instant.  The entitled princess mentality will ensure you will never get ahead with money.  Many father’s do their daughters a great disservice by giving their daughter’s whatever they want.  This princess mentality trains young women to be materialistic and creates a giant disconnect between work and lifestyle.

You don’t need to spend thousands of dollars on shoes and clothes. You don’t need an iPhone.  You don’t need a new car. You don’t need a 3 carat engagement ring.  These are all luxuries that come after paying for actual necessities and saving money.  I am horrified by the TV show “Princess” that follows young women who live off their parents and spend 100% or more of their income on lifestyle.  I think all women with even a touch of the princess mentality need to view this show to see the projections of what these attitudes can mean for finances down the road.

 

What did I miss in this Financial Guide?

John C. started Action Economics in 2013 as a way to gain more knowledge on personal financial planning and to share that knowledge with others. Action Economics focuses on paying off the house, reducing taxes, and building wealth. John uses the free tool Personal Capital to track his net worth and posts quarterly updates on his finances. Check out the Action Economics archives section for all past posts.

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