Women’s financial needs and priorities evolve through different life stages. Whether you’re in the prime of your career, a new graduate, starting a family or caring for aging parents, it’s essential to have a plan that guides your financial life.
Reviewing and updating your strategy can help you achieve goals aligned with your values and dreams, such as having a comfortable retirement, spending time with loved ones, and leaving a legacy. The tips below can help you get started no matter your age. You can also contact Edward Jones to help make these financial tips a reality.
Financial considerations in your 20s
Why not start early? Your 20s are a fantastic decade for building positive financial behaviors that may set you up for a lifetime of success.
•Consider creating a budget to understand your income, track where your money goes, and allocate funds for short- and long-term goals like travel, more education, or buying a car. Focus on improving your career skill set and consider saving raises and bonuses instead of spending them.
•Having a healthy emergency fund is essential for successfully navigating potential hardships, like losing your job or an unexpected medical event. Make a goal to accumulate several months’ worth of your total expenses so you have a cash cushion to fall back on.
•Regularly investing small amounts now makes amassing wealth or even retiring early possible because time is on your side. An excellent guideline is investing at least 10% to 15% of your gross income in a retirement account, such as a Roth IRA; a workplace plan like a 401(k) or 403(b); or a solo 401(k) for the self-employed.1 Sometimes, your employer may pay additional matching funds, which you should prioritize maximizing yearly.
•The goal behind diversifying is to build a solid foundation that helps prevent your risk of suffering a large loss, but note that past performance is not a guarantee of future results.2
•Also, with a Roth IRA or Roth 401(k), you won’t receive a tax deduction when you contribute but can generally take withdrawals in retirement without paying taxes, according to Edward Jones. You may benefit from a Roth IRA if you are currently in a lower tax bracket expect to be in one of the top four federal tax brackets in retirement, or have most of your investments in traditional IRAs or retirement plans and are looking to increase tax diversification and flexibility in retirement.
•If you’re like many others, you’ll also have auto and student loans to fit into your budget. Make a habit of paying off any monthly credit card balances to avoid high-interest debt. Additionally, ask a financial advisor about how to best consolidate debt or your employer what your stock options may be. Maintaining a reasonable level of debt also helps improve your credit, which is crucial for future financial needs, such as buying a home.
Getting off to a good start in your 20s by focusing on your income and expenses, saving for emergencies, and investing early, you can set yourself up for a secure financial future.
Financial considerations in your 30s
Your 30s can be full of significant life events like getting a new job, relocating, entering a serious relationship or starting a family. It’s a critical decade to make wise financial decisions, advance your career, and build wealth.
•Women control or influence almost $20 trillion of U.S. household assets.3 So, as your household expenses increase, reconsider your savings, such as keeping up to six months’ worth of total expenses on hand.3 That’s especially important if you have dependents, rely on one income source or plan on buying or upsizing a home.
•Aim to increase your annual retirement contributions and max out your contributions when possible. And if you have kids, you may also want to start saving for future education expenses by exploring options like a 529 college savings plan.
•Your 30s are an excellent time to purchase or update your insurance policies, such as disability and life insurance. Also, make sure you update beneficiaries on financial accounts after major life events like getting married, or having children and create emergency documents like a will, healthcare directive, and power of attorney — so your wishes are known and heirs are protected.
•As your household costs increase, it can be tempting to accumulate too much debt. Continue monitoring your income and expenses and focus on paying down high-interest debts, such as credit card balances. Your 30s are a balancing act of growing your wealth, managing debt and planning for your family’s future.
•If you’re in a relationship, maintaining open communication about money is essential. Nearly 90% of married or partnered women make spending and investing decisions for their household.3 Creating goals and making critical decisions together can help prevent financial frustrations in your relationship.
Financial considerations in your 40s
Your 40s can be a hectic decade in your personal and professional life. In recent years, women have increased their presence in higher-paying jobs traditionally dominated by men, such as professional and managerial positions.4 That’s why your 40s are a pivotal time for financial planning, as you may be moving up a career ladder and earning more than ever. Plus, you’re getting closer to long-term goals like retiring or taking up a hobby you’ve always wanted to try but never had time for.
•In addition to potentially caring for a family, you may also have family members or loved ones who need your help, which can have a significant impact on your financial future if they’re dependent on you. Do your best to keep your retirement savings a priority. Since women outlive men, try to avoid tapping savings when caregiving, and when possible, keep up your retirement contributions.
•Remember that saving for a child’s education is terrific but not at the expense of jeopardizing your retirement. It’s essential to balance saving for college and retirement to increase your chances of achieving both. It’s equally crucial to regularly re-evaluate your risk tolerance as you navigate this decade, based on when you might need to access your investments.
If you’re in your 40s and don’t have a financial plan or are unsure how much money you need to retire, consult a financial advisor. They can help you make essential financial decisions and help you create a strategy for long-term success and happiness.
Start your journey with Edward Jones today to find the right financial advisor to accomplish your goals.
Sources
1 CNBC, “This is how much of your income should go toward investing, according to experts,” 2023.
2 Financial Industry Regulatory Authority (FINRA), “Investor Knowledge Quiz,” 2007.
3Hearts & Wallets, “Portrait of U.S. Household Wealth,” 2020.
4 Pew Research Center, Gender pay gap in U.S. held steady in 2020, 2021
Investors should understand the risks involved of owning investments, including interest rate risk, credit risk and market risk. The value of investments fluctuates and investors can lose some or all of their principal.
Edward Jones, its employees and financial advisors cannot provide tax or legal advice. You should consult your attorney or qualified tax advisor regarding your situation.
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