Women have always gotten the short shrift when it comes to financial literacy, and it has serious and far-reaching consequences. Here are four essential basics to get your game plan off the ground.
Since time immemorial, women have been inundated with the idea that they’re inherently bad with money. From the first day we start school, girls are told they have a more natural aptitude for verbal skills, and boys are told they’re better at math.
This, of course, is some patriarchal nonsense. Numerous studies have shown that disparity in performance is cultural rather than cognitive—a domino effect of girls being told they’re not good at math from an early age, and thus not being provided with incentive or opportunity to pursue it.
The toll this takes is dire and long-lasting, putting women at disadvantages that compound over time; a study conducted by Rutgers University found that 80 to 90 percent of women will be solely responsible for the finances of their household at some point in their lives in the wake of a divorce or death of a spouse, without ever having been given the tools and education to do so.
Head even further in that direction and studies have shown that women—regardless of race and educational background—are 80 percent more likely to be impoverished at age 65 and older than men.
Those are some seriously harrowing statistics. And as with the gender pay gap, it’s a nuanced issue with numerous contributing causes. But as with any societal ill, it requires starting at the beginning and taking ownership of our own set of circumstances before we can band together and move forward.
It’s an issue that Toneisha Friday, founder of Coin Financial, a financial education platform aimed at making financial literacy more inclusive of marginalized populations, has actively sought out to remedy. “Mainly, [clients] come to us about their retirement savings, high credit card debt and basic savings information,” she says.
And while these topics are considered to be starting-line knowledge, she points out that only 17 states in the US require personal finance courses to be taught in high school.
Friday shared some of the most common issues she sees in clients that come to them in hopes of building a financial foundation for themselves:
Plan for the future
Specifically, retirement. The most common retirement plans take the form of a 401K facilitated by your employer or a Roth IRA, which is a terrific option for freelancers or individuals employed by a company that does not offer 401K.
“Don’t worry as much about any lulls in your 401K investing,” she says. “It’s natural for the market to experience ups and downs, but when you invest for retirement, you are making a long-term investment that is less susceptible to market fluctuations.”
Outside of your retirement plan, however, Friday acknowledges that when you’re young, you can afford to take a little more risk with your portfolio. And platforms like Ellevest and Stash will automatically build a diversified portfolio for you based on your timeline and goals. Easy peasy.
Know what you owe
Confronting your debt in all its ugly truth is essential to righting the course on your finances. “List all of your debts—yes, even the money you own Aunt Sally—and include the name of the lender, the outstanding balance, the interest rate, and whether the interest is tax deductible (like a mortgage),” Friday says.
Then assess the impact: “How big a chunk of your income goes to debt payments? Too much? It’s best to start with the loan or card with the lowest balance,” she says, referring to what is commonly called the “snowball method.”
Make saving $$ a non-negotiable
Setting aside money for an emergency fund should be a priority in your budget. “Just like getting your hair done,” says Friday. “An emergency fund could be the difference between whether the emergency is a just a financial headache, inconvenience, temporary set-back, or a major financial crisis.”
The easiest way to do this is to set up an automatic transfer from your checking account to your savings account.
Stop using your credit cards
Despite all the shiny offers of points, reward miles and zero percent financing, there’s one key thing to keep in mind when it comes to credit card companies: Their primary source of business is you racking up debt and paying interest on said debt. Credit cards—while offering a necessary lifeline in pressing situations—are not your friend.
Until you reach a point where you can consistently pay off your balance every month—and the key word there is “consistently”—credit cards should be reserved for emergency situations (and ideally, you’ll eventually have an emergency fund for those purposes).
But as founder of financial planning service Brunch & Budget and Girlbossfinance columnist Pamela Capalad points out in an article about paying down your credit card debt, it’s a habit that can be really tough to break: “Chances are, you’ve gotten to used to paying for things on the card and spending the cash you have in your checking account, so you may have to spend a month playing catch up.”
And as a bonus, some words of wisdom from budgeting queen Cardi B:
For Financial Literacy Month this April, we’re rounding up our favorite articles and resources on saving money, earning more, and spending wisely, so you can take control of your financial situation. Follow along all month for the features that’ll help you navigate money matters on your own terms—like this one.
This story was originally published on January 8, 2018. It has been updated (and will continue to be updated) to include new tips, advice, and guidance, to ensure we are always giving you the best, most valuable resources.