{"id":4337,"date":"2020-06-23T06:00:54","date_gmt":"2020-06-23T13:00:54","guid":{"rendered":"http:\/\/springwaterwealth.com\/?p=4337"},"modified":"2020-08-09T22:00:28","modified_gmt":"2020-08-10T05:00:28","slug":"achieving-financial-independence-for-women-5-steps-you-can-take-right-now","status":"publish","type":"post","link":"https:\/\/springwaterwealth.com\/achieving-financial-independence-for-women-5-steps-you-can-take-right-now\/","title":{"rendered":"Achieving Financial Independence for Women: 5 Steps You Can Take Right Now"},"content":{"rendered":"

There is a growing trend in the United States and you may be a part of it.\u00a0 Women are increasingly single.\u00a0 The rate of marriage has declined steadily since the 1960s.\u00a0 The corollary also holds; More women have never married.\u00a0 Also, the number of women who are divorced has grown slightly, particularly among older women.\u00a0\u00a0<\/span><\/p>\n

Our firm works with many \u201cindependent\u201d women.\u00a0 These women are single (i.e. never married), divorced or widowed.\u00a0 They have taught us that financial independence for women is incredibly important.\u00a0 But what is \u201cfinancial independence?\u201d\u00a0 Our clients tell us it means that they are in control of their finances, they have enough money to meet their current needs and they don\u2019t worry about running out of money<\/strong><\/a> late in life.\u00a0\u00a0<\/span><\/p>\n

Unfortunately, far too many women in this country are not financially independent.\u00a0 Let\u2019s explore five steps you can take to move towards your own financial independence.<\/span><\/p>\n

Establish a Budget<\/b><\/h2>\n

Start by determining how much money you need to live comfortably.\u00a0 You should identify your fixed living expenses which are not likely to change all that much from year to year.\u00a0 They will gradually rise over time, because of inflation. \u00a0 Examples include property taxes, groceries, insurance, and utilities.\u00a0 An easy way to identify these expenses is to go through your bank checking and credit card statements.\u00a0\u00a0<\/span><\/p>\n

Now consider your variable expenses which are likely to vary by amount and by how often they occur.\u00a0 These expenses will also be affected by inflation.\u00a0 Examples include replacing your vehicle, remodeling your home, replacing appliances and travel\/vacations.\u00a0 It may be a bit more challenging to quantify these expenses.\u00a0 One way to do it is to think about what they would cost today.\u00a0 Then think about how often you expect to do them over the rest of your life.<\/span><\/p>\n

Now you need to think about your sources of income.\u00a0 If you are working, your salary is probably your primary source of income.\u00a0 If you are retired, you may have a pension, Social Security, rental income and income from investments.\u00a0\u00a0<\/span><\/p>\n

Your income, after paying taxes, needs to be greater than your expenses.\u00a0 If that is not true, you will either be spending down savings or you will be incurring debt.\u00a0 If you are still working, neither of these options is a good long-term strategy.\u00a0 If you are retired, you need to be certain that you will not run out of savings in your later years.<\/span><\/p>\n

Become Debt Free\u00a0<\/b><\/h2>\n

If you are working and you have consumer debt (e.g. credit card or auto loan), your priority should be paying off them as soon as you can.\u00a0 You should pay off the debts with the high interest rates first (usually credit cards).\u00a0 Then move on to the debts with the next highest interest rates until they are all eliminated.\u00a0 The only debt that makes sense for working women is a home mortgage.\u00a0\u00a0<\/span><\/p>\n

If you are getting closer to retirement, you should set a goal to pay off your mortgage before you retire.\u00a0 It was once customary for Americans to enter retirement debt free.\u00a0 However, it is less common today and many people now enter retirement<\/span><\/strong><\/a> saddled with debt.\u00a0\u00a0\u00a0<\/span><\/p>\n

If you are retired, resist doing anything that may cause you to go into debt.\u00a0 Financial independence for women means not having debts.<\/span><\/p>\n

Don\u2019t leave your future to chance. Contact our team at Springwater Wealth today to learn how\u00a0we can help you develop a financial plan for your peace of mind.<\/strong><\/a><\/span><\/h2>\n

 <\/p>\n

Save First, Then Spend<\/b><\/h2>\n

Let\u2019s assume that you are debt-free.\u00a0 If you are working, you should save first and then spend whatever is left over.\u00a0 So, let\u2019s say that you earn $100,000 a year and you have determined that you need to save $20,000 a year to achieve financial independence. \u00a0 You should save as much as you can in your employer-sponsored retirement account.\u00a0 You can save nearly that much ($19,500 in 2020) in a 401(k) or 403(b) plan.\u00a0 You could save additionally in a savings or investment account.<\/span><\/p>\n

You would have approximately $80,000 left over.\u00a0 Let\u2019s assume your adjusted (for taxes) gross income is $65,000 and you pay combined (federal and state) taxes of 30%.\u00a0 Your taxes would be $19,500.\u00a0 You would have $60,500 for your fixed and variable expenses.\u00a0 So, you need to make sure you spend no more than $5,000 a month.\u00a0\u00a0<\/span><\/p>\n

Most Americans spend money on their living expenses, pay their taxes and save whatever is left over. \u00a0 This is not a good strategy, because too often there is little left over to save.\u00a0 Financial independence for women requires saving first and then living on the rest.\u00a0\u00a0<\/span><\/p>\n

Set Goals<\/b><\/h2>\n

Financially independent women set goals and they develop a plan<\/span><\/strong><\/a> to achieve them.\u00a0 You should set goals for all of your large variable expenses.\u00a0 Here is an example.<\/span><\/p>\n

Let\u2019s imagine that you wish to buy a new car in 3 years.\u00a0 We\u2019ll assume that you own your car outright now and in 3 years the trade in value of that car will be $20,000.\u00a0 The new electric car you plan to purchase will cost $40,000.\u00a0 That means that you will need to save $20,000 in the next three years.\u00a0 We will assume you save in a simple saving account and that the interest on your savings is 1.3%.\u00a0\u00a0<\/span><\/p>\n

If you save $545 a month for the next thirty-six months, you will be able to pay cash for the new vehicle.<\/span><\/p>\n

If we assume (from above) that you can spend $5,000 a month, you will have $4,455 after your auto savings for day-to-day living expenses.<\/span><\/p>\n

Get Help<\/b><\/h2>\n

If these actions seem a little overwhelming, because you do not know where to start, you find the math confusing or you just need a cheerleader, get help!\u00a0\u00a0<\/span><\/p>\n

There are many resources on the internet and mobile applications where you can track your expenses (e.g. <\/span>Mint<\/a><\/span><\/strong>, <\/span>Wally<\/a><\/span><\/strong>, <\/span>YNAB<\/a><\/span><\/strong>) and manage your investments (e.g. <\/span>Vanguard<\/a><\/span><\/strong>, <\/span>Betterment<\/a><\/span><\/strong>, <\/span>Wealthfront<\/a><\/span><\/strong>).\u00a0 If you need personal guidance, consider hiring a Certified Financial Planner\u2122.\u00a0 You can find qualified, fiduciary financial planners at the <\/span>CFP Board<\/a><\/span><\/strong>, <\/span>NAPFA<\/a><\/span><\/strong> and <\/span>Garret Planning Network<\/a><\/span><\/strong>.\u00a0\u00a0<\/span>We help women gain financial independence and you can reach us <\/span>here<\/span><\/strong>.\u00a0<\/span><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

There is a growing trend in the United States and you may be a part of it.\u00a0 Women are increasingly single.\u00a0 The rate of marriage has declined steadily since the 1960s.\u00a0 The corollary also holds; More women have never married.\u00a0 Also, the number of women who are divorced has grown slightly, particularly among older women.\u00a0\u00a0 […]<\/p>\n","protected":false},"author":2,"featured_media":4338,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","_mi_skip_tracking":false,"footnotes":""},"categories":[3,5,6],"tags":[66,87,107,140],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/springwaterwealth.com\/wp-json\/wp\/v2\/posts\/4337"}],"collection":[{"href":"https:\/\/springwaterwealth.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/springwaterwealth.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/springwaterwealth.com\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/springwaterwealth.com\/wp-json\/wp\/v2\/comments?post=4337"}],"version-history":[{"count":0,"href":"https:\/\/springwaterwealth.com\/wp-json\/wp\/v2\/posts\/4337\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/springwaterwealth.com\/wp-json\/wp\/v2\/media\/4338"}],"wp:attachment":[{"href":"https:\/\/springwaterwealth.com\/wp-json\/wp\/v2\/media?parent=4337"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/springwaterwealth.com\/wp-json\/wp\/v2\/categories?post=4337"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/springwaterwealth.com\/wp-json\/wp\/v2\/tags?post=4337"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}