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Not only are more and more women contributing the biggest piece of ‘bacon’ to their family financial recipes, many still bear the brunt of responsibility for cooking and serving it to their loved ones as well.
According to the Shriver Report, women are the female breadwinners in nearly half of American families, and are primary or co-breadwinners in â…”.
TD Ameritrade finds that 87% of women, compared with 81% of men, said they were responsible for managing the household budget.
“The demands on female breadwinners are intense: buying homes, paying college expenses, caring for aging parents, investing for retirement–the pressure is on to plan and save to get there,” Carla Dearing, founding CEO of SUM180, an online financial planning service created by women for women.
In this 2 part series, we’re going to share Dearing’s tips for helping female breadwinners ‘get there’ when it comes to creating financial security in their homes.
- Have a comprehensive, up-to-date financial plan. Every woman should have a comprehensive plan based on her particular circumstances and goals. Even gathering the information for the plan pays big dividends in providing clarity of her financial picture. A good plan will make a full assessment of her financial situation, including her income and expenses, and assets and debts. It will play back her financial picture in a helpful way and identify and communicate her next steps in a clear, accessible way.
- Â Deal with those nagging credit card balances. Â Because interest on credit card debt is usually many times more than that of other kinds of debt–and much more than what she can make consistently over time if she invests it–every penny she pays down on her credit card saves her a lot of money in the long run. Once she has the credit cards paid off, she should keep paying them off every month.
- Max out every type of retirement account she is eligible for. When she contributes the maximum allowable amount to all available retirement plans, her money is invested pre-tax, which means a larger chunk of money is earning interest over time. Also, when it is time to start withdrawing money when she retires, her tax rate is likely to be lower, so she will not pay as much in taxes overall.
- Estimate and save for college expenses.Â To prepare for her children’s college education, she needs a good estimate of the typical costs of sending children to college and to adjust her savings rate accordingly. She should plan to have at least 50% of the total cost saved by the time her child enters college.
For more financial tips for female heads of households, come back for part 2 of our series.