A Financial Advisor Shares Financial Advice For Women From Every Decade Of Her Career
- It is important for women to have a financial plan in place to ensure financial security later in life.
- Over time, be prepared to increase your savings rate and make student loan repayment a priority.
- Women should negotiate their first salary as this is the beginning of their career salary story.
As women progress in their careers, start businesses, invest and earn more money, their goals and financial needs are constantly changing.
Insider recently spoke to Ernest Burley, CFP, who has worked in the financial planning industry for over 25 years and his book Money Management: From Elementary School to Higher School has been used to teach people the principles of financial planning and money management. Burley works with female investors, teaching them how to structure their investments so they have financial security later in life.
“Women who make more money invest and save more, but their financial needs change as they go through life and there are steps they can take to prepare for financial security in the future. the future,” Burley told Insider on the topic.
Here are some of the biggest financial moves a woman can make in her lifetime, decade by decade, according to Burley.
Women in their twenties
Typically, when one is just starting out in their career, they need to make sure they negotiate a competitive salary and benefits, including health care, retirement, and parental leave.
Negotiating the salary of his first job is particularly important because it is effectively the beginning of a salary history for the rest of his career.
“Failing to negotiate your salary early on will cost you thousands of dollars throughout your career and that’s money you could have invested,” Burley says.
Not negotiating your salary also contributes to the gender pay gap, and this gap can cost a woman nearly $1 million over her career, according to the Institute for Women’s Policy Research.
Although it may seem early, everyone should start investing for their retirement in their twenties. This means that new hires or women just starting out in their careers should start investing fully in their company’s 401(k) and also open a Roth IRA.
According to Burley, not only should women in their twenties think about retirement, but it’s also an important time to take student loan repayment just as seriously. If you have student loans, establish a repayment plan and be determined to pay them back.
“In your 20s, you might think it’s just okay to have student loans, but that’s when you really should invest as much as possible in paying off student loans,” Burley tells about the theme. “If you don’t have a mortgage or kids, that’s when you can really pay off those loans before life gets in the way.”
Women in their thirties
By the time they reach their 30s, they are probably well advanced in their careers and should be constantly saving and investing. However, one thing people may not think about is long term care insurance.
Long-term care insurance helps cover the costs of care related to a chronic illness or serious accident.
“Get long-term care insurance now because it will be cheaper than trying to get it later,” Burley says.
If you have a serious accident or serious illness, long-term care insurance covers expenses associated with care, such as an in-home nurse, adult day care, and assisted living services.
“Most people start thinking about this blanket when they’re in their 50s, but it’s going to cost a lot more because then you’re more likely to have to use it.”
You may also want to consider starting a business. It’s always a good idea to have multiple sources of income and starting a business or side hustle is a great way to generate more income and also utilize skills that may not be engaged on the job.
“I tell all of my clients to create a side hustle. By the time you’re in your 30s, you know what your skills and assets are and can start a business that will earn you more money to save and invest and also isolate protect you against job loss or market volatility,” says Burley.
Women in their 40s
This is when your retirement savings and investments should kick into overdrive. Professionals are now generally at their highest earning potential as they are well established in their careers and expenses are common.
“All savings and investments should be on autopilot and your retirement plan should be set. Make sure you’re using tax-eligible plans and it would be great to use the 401(k), Roth IRA combo if you can.” Burley says.
In addition to your finances, take stock of your skills, assets and professional achievements. Are you where you want to be in your career? Should you ask for a raise? Should you quit your job and start your own business? Should you increase your skills by taking a course or getting a certification?
“It’s important because you want to make as much money as possible in your career at this point because it affects how much money you have to save and pay for your expenses,” Burley explains. “Take a look at your student loan situation if you have any and be aggressive about paying them back.”
Even though student loan debt may be considered “good debt”, payment is still due monthly and with interest, principal can spiral out of control.
“A lot of women are turned away from paying off their student loans in their 30s and 40s because they get married and have kids, but we’re learning more and more that people in their 60s and 60s are still paying off student loan debt. their student loan, you really want to be aggressive about paying off that debt, you don’t want to deal with it in retirement,” Burley adds.
Women in their fifties
Once you hit 50, that’s when your financial plan should come into fruition. In addition to retirement accounts, you should build a cash reserve.
“Build up a two year cash reserve if you can, I advise that during a period when the market is down like it is now, it is best to withdraw from your cash account instead of investing accounts,” Burley says. “You can replenish cash reserves when the market improves, but if you sell investments when the market is down, you lose money.”
To make sure you’re on track for retirement, talk to your financial advisor, if you have one, about your financial goals, review your investments, and check your time horizon for retirement.
“It’s the deep record where you get a more realistic picture and timeline of the funds you’ll have available for retirement and if there’s a course correction that’s needed, now’s the time to do it” , says Burley.
Women in their 60s
Make sure all your health and life insurance needs are covered and you want to check and make sure you are more careful with your investments.
“At this point, it’s important to have all of your health care, power of attorney and life insurance documents and policies in place, and make sure you have life insurance that is not tied to your work so that that cover is in place whether you work on it or not,” Burley says.
It is also wise to have permanent life insurance. Permanent life insurance means that the premium and benefit stay the same for life and the coverage never expires.
“Permanent life insurance is different from term life insurance and I really recommend that you talk to a licensed insurance professional about your needs because as you get older you don’t want the premiums to go up. during this time,” Burley said.
“As you move forward in your career and in your life, the most important thing to do is to keep reviewing your financial decisions as your goals fluctuate. It is important to stay consistent, to reduce unnecessary expenses and save more. A successful financial plan will not crystallize overnight, but each step will bring you closer to financial security.”