The movement toward gender equality spans generations, but we’ve gained serious momentum in recent years. The push for a more equal society happens to perfectly complement a theme that represents the heart and soul of ModMoney: financial independence for women. Here’s the problem: too many women give up control of their finances to their partner. But relationships don’t always work out. And statistically speaking, women live longer than men. Taking this a step further, the gender pay gap still exists. With that said, the reality is that 90% of women will have to manage their own money at some point in their lives. So, it’s important for us to stay involved. We need to learn how to keep our financial lives healthy and position ourselves to achieve our long-term goals.
The thought of managing your own money may seem daunting, overwhelming, and emotional, to say the least. And that’s totally normal. But there are a few simple things you can start doing today that will get you on track. Consider this post your launchpad toward regaining control over your finances, and never look back!
1. Know your starting point.
Before embarking on your journey toward financial independence, take a moment to reflect on where you are today. My favorite way to do this is by separating a piece of paper into two columns. Write down your personal assets (everything you own) on the left side. List your personal liabilities (everything you owe) on the right.
Your assets should include things like checking, savings, investments, 401(k), real estate, etc. Your liabilities are your student loans, credit card debt, car loan, etc. Now add up both columns and subtract your total liabilities from your total assets. And voila! The resulting number is known as your Net Worth. It’s my favorite financial metric to track because it represents your entire financial position in one number.
Monitor your Net Worth as you continue boosting your finances. And celebrate as you watch it multiply! Pro tip: I use the free Personal Capital calculator to automatically track my Net Worth. It’s almost too easy!
2. Stick to a budget.
To truly grow your wealth to its fullest potential, you have to create a budget. There’s just no getting around it. Still, that doesn’t have to mean giving up on the things that make you happy (spa day, anyone?). I personally use the 50/20/30 budget because it gives me the flexibility to grow my Net Worth without depriving myself.
Here’s how it works:
- 50% of your after-tax income goes toward living expenses (housing, transportation, utilities, groceries, etc.)
- 20% is for financial goals like paying down debt and saving
- 30% is reserved for completely discretionary purchases—Because happy hour should be included in every budget, right?
3. Open up a savings account and start adding to it, NOW.
As a younger woman, it’s easy to shift your mindset toward, “I have my whole life to save. I’ll start later.” Unfortunately, this logic is totally flawed because the more you save now, the more time your money has to build on itself through compound interest.
Let’s put it this way: if one woman starts saving at age 25 and another starts at age 35, the younger woman can have double the retirement savings at age 65. Compound interest literally turns time into money.
4. Make debt paydown a priority.
Whether you want to retire near a beach, send three kids to college, or buy a vacation home in the mountains, there’s one uniting factor preventing us from reaching our goals: consumer debt. If you took on student loans to get through school or swiped your credit card too many times, you’re not alone. And I promise, you can work through it!
The first step is to stop watching your interest snowball as you pay off the bare minimum each month. Instead, focus on accelerating your payments and set your loans to autopay above the minimum. Then, create an actionable plan to pay down your debt, once and for all.
5. Invest any leftover cash.
It’s great to have a savings account you can access for short-term expenses. But that’s not enough if you want to build long-term wealth. A high-yield savings account pays 1.5% in interest, but inflation (general price increases) grows at around 3% per year. In other words, prices are increasing faster than your savings are! On the other hand, you can expect to earn a 10%+ annual return from the stock market over a 10-year period. So if you’re debt-free and have an emergency fund, start investing now (it’s not that complicated, I promise!)
A Final Note
Lastly, don’t measure success by how much wealth you have. Taking control of your finances is about having the confidence to make informed, proactive, and savvy choices with your money. And it should definitely be celebrated along the way! The ModMoney x Camille Styles collaboration is here to inspire you, empower you, and to serve as a resource along the way.