Six Essential Steps for Women’s Financial Empowerment
Financial empowerment is the ability to make informed and confident decisions about your money. It means having the skills, knowledge and resources to manage your finances effectively and achieve your financial goals. Financial empowerment is especially important for women, who often face unique challenges and barriers in the economic sphere. You see, women, being by nature the ‘nurturers’ of their families, are in a rather disadvantaged position in comparison to men when it comes to earning their own living and creating wealth, due to the many extra responsibilities that they have as mothers, wives, carers and housekeepers. Furthermore, the pay gap between men and women is still rather wide, which adds to the problem.
Today I read a great article by Professor in Finance at the University of Piraeus Nikolaos D. Filippas and PhD candidate Aphrodite Stathopoulou on the website of the Hellenic Financial Literacy Institute about how us women can empower ourselves financially. Because, let’s face it, there’s nothing classier than standing solidly on our own feet. After all, a woman’s financial empowerment benefits not only her, but also her family and the community she lives in.
Build knowledge on finance. Getting ourselves educated on finance is a key in our economic empowerment. It is imperative to know a few basic terms in the field of personal financing, such as financial planning, opportunities and risks of borrowing, debt management, and investing. There is plenty of free reliable informative material on the internet.
Consult with a finance expert or a mentor. Getting one’s finance together is extremely challenging even for the most experienced financial minds. Find a reliable financial advisor who will be able to guide you through managing your wealth based on your age, goals and risk tolerance. If you live with a partner, being open about and holding discussions on personal finance is strongly advised, as it can improve your relationship.
Protect your financial health. The term “financial health” refers to the general financial well-being of an individual or an organization. It includes various aspects of financial stability and security, as well as the ability to manage and settle outstanding financial obligations, both in the short and long term horizon. As a general rule of thumb, Philippas and Stathopoulou suggest that one’s debt should not exceed 37% of their personal income. In order to be financial healthy, make sure that you can cover your current payments, pay up any debts, have savings, and make smart and wise investments.
Limit your debts. Philippas and Stathopoulou stress that financial empowerment means that we rule money, not the other way round, hence it is crucial to bring our debt to zero. Here’s how you do it: start with the credit cards that have the highest charges. If you have unpaid balances on multiple credit cards, it is recommended that you pay off the outstanding amount of the card with the highest interest rate every month, as much as you can, while keep depositing small amounts on a regular basis for the gradual repayment of the remaining credit cards. When the first card is paid off, continue with the next one with the immediately higher interest rate until you are completely free of debt. It is worth noting that not all debts are the same! For example, housing and student loans can increase your total wealth, while debts arising from the inability to pay credit cards are generally best to be avoided.
Prepare for retirement. In order to retire on time and at the same time have secured enough money to continue enjoying the lifestyle you are accustomed to, you need to start saving immediately. The first step is to calculate how much money you will need for the retirement period, and secondly, to start saving a portion of your income in a private pension plan or in unit-linked investments. Keep in mind that the earlier you start saving, the faster you will reach your financial goals.
Create an emergency fund: An emergency fund is a monetary amount that is exclusively intended to cover possible unexpected expenses or emergencies. It is a safety net that we can rely on in case that unexpected expenses arise, such as car repairs, unexpected medical expenses, or unemployment. It is generally recommended that we have an amount that will be sufficient to cover our living expenses for a period of at least six months. The emergency fund strengthens our personal confidence, enhances our independence, and reduces our financial anxiety!
Financial empowerment is a challenging but rewarding process for a woman, since it helps her be free, confident and independent!
