National Post - Financial Post Magazine
THE ULTIMATE FINANCE GUIDE FOR WOMEN
Some of the smartest people we know share their financial tips that really work
Women are smashing glass ceilings in all sorts of industries, but handling their own finances isn’t one of them. Four of the smartest people we know shed some light on what’s holding women back and offer their time-tested advice and tips that really work.
Women continue to shine in all facets of business, cracking the proverbial glass ceiling once and for all, but they are unfortunately still the weaker sex when it comes to personal finance. Women have a perhaps-unfounded reputation for being less financially literate than men and for being more risk averse when it comes to investing, but they often leave their financial planning to their male counterparts with detrimental long-term results. A recent analysis of group retirement income balances by asset management giant Mercer LLC showed that women retire with account balances that are 30% lower than men. They also end up working two years longer. Furthermore, a 2021 survey by the Bank of Montreal found that women were 18% less likely than men to know how much money they will need for retirement.
Just what is it about finance that eludes women when they’re so darn good at everything else? We asked a group of experts experienced in helping women find their footing in the personal finance world to weigh in on what’s holding women back, and what they can do better to catch up in terms of accumulating more personal wealth.
BALANCING THE BUDGET
Growing up with a father who started his own brokerage firm 30 years ago, Nicole Simons saw the benefits of good money management firsthand. She wanted a job where she, too, could help guide others, especially black women, towards financial success. Now, she is the N in CPN Financial Services Ltd., a family-run business based in Brampton, Ont., where 90% of her clients are female.
On what’s holding women back: Budgeting itself has this stigma of being negative and restrictive. There’s this fear that if you have a budget, you’re going to have to give up the things you love. But budgeting is really just a spending plan to help you prioritize what you want to spend on and what you don’t. There’s also a lot of negative self-talk among women based on previous spending mistakes. If they try a budget and it doesn’t work, they may automatically think it’s not possible for them. But if you’re still living in the past and not open to change, you will hit a roadblock when it comes to budgeting and keep perpetuating the same habits.
Budget tips that work: Create a budget, whether that’s a simple Excel sheet or something an adviser develops for you. If you don’t know what’s going on with your finances, it doesn’t matter how much money you’re making. A major commonality I see among women is not looking at their statements carefully enough and recognizing where their excess spending is happening. Having a budget and tracking your expenses can help ensure your spending is aligned with the lifestyle that you’re trying to create. Too much access all the time can be a problem, too, so part of my strategy is to set up “out of sight, out of mind” automatic savings accounts as a forced way to make sure money is put aside each month.
It’s a good idea to have an emergency fund to cover immediate expenses (i.e., rent, car payments, utilities, mortgage) for three to six months for those unexpected surprises. If you’re going to invest in a tax-free savings account (TFSA), make sure the money is not sitting in cash, but growing so you’re actually saving tax and using the TFSA for its full purpose. There are also those who say you should pay off all your debt before you invest, but I’m an advocate of doing both. Yes, you should tackle high-interest debt first and foremost, but you can also build a small nest egg in the process.
Life insurance is the foundation of any financial plan, too. I’m trying to educate this next generation about the importance of life insurance to create generational wealth. A lot of times, especially in the black community, life insurance wasn’t something that was spoken about. But by not having life insurance, you will have an impact on the generation after. I’m a big advocate for making sure people have adequate insurance to not only cover their final expenses and burial, but to ensure whoever is left behind is set up for financial success.
Finally, give yourself permission to change your budget as needed to fit different stages. Your life is going to keep changing and your budget should change along with it. It should also be realistic as to what you can afford based on your disposable income, so you don’t get discouraged.
INVESTING WITH CONFIDENCE
Julia Chung, co-founder, CEO and senior financial planner at Spring Planning Inc., based in Surrey, B.C., is inundated with emails and phone calls coming from females in their 20s and 30s eager to learn more about investing and financial planning. So much so, she and a colleague in 2015 published an e-book in collaboration with Modern Advisor called Women & Money.
On what’s holding women back: Women in North America tend to be less aggressive when it comes to how they invest compared to
If you don’t know what’s going on with your finances, it doesn’t matter how much money you’re making