5 Financial Tips Every Young Woman Should Know

The earlier in life you can start to develop your good money habits the richer your financial future will be to become a financially stable woman, here are 5 financial tips you need to know. 

#1 Develop your long-term vision. One of the best financial tips for women in their 20s – or at any age for that matter – is to clearly understand what you are working toward. The clearer your vision, the easier it will be to stay on track. By moving towards something that is deeply meaningful to you, staying focused on your goals becomes a lot easier. 

Ask yourself:

• What matters most to you and why? How do you want it to play a part in your future?
• What gives your life meaning?
• What are three things you want to do in the future that are non-negotiable?
• What kind of career and work life do you want?
• What does retirement look like to you? If you don’t want to retire, what do you envision yourself doing?

Be as detailed as possible with your answers. Once you know what you want out of your life, you can then start to build a plan for financial self-reliance and making your vision a reality.

#2 Create a spending plan and live within your means. The debt in the country has risen to massive levels. This is because so many people live beyond their means. To ensure you are not one of them, set up a spending plan to keep yourself on track with your financial goals. This will help you avoid financial stress from overspending. 

If you struggle with impulse buying, click here to learn how you can overcome it.

To design your personal spending plan, start by determining your monthly income. This is easy for people who have a job and a pay stub but a bit harder for someone who is self-employed or has multiple streams of income. Be as accurate as possible.  

Then, track your monthly spending. There are many apps out there that can help you track your expenses, or you can set up a simple spreadsheet. Make sure you add in all bills and expenditures including:

• Utilities
• Rent or mortgage payments
• Car payments
• Insurance costs
• Personal care expenses
• Groceries and food expenses
• Entertainment
• Internet and phone bills
• Streaming services
• Convenience services 

Tally your totals and compare what you’re spending to the amount you are bringing in each month. You will quickly see if you are overspending or underspending, and you can adjust accordingly. When you have excess cash at the end of each month, use it to either start investing or build your emergency fund if you don’t have one yet. 

#3 Set up an emergency fund.

For all my clients, I suggest setting up an emergency fund because you want to be able to focus on what matters most when an unexpected event happens, not your financial circumstances. 

The earlier you set up your emergency fund, the easier it is to maintain as your life changes through various stages. When your income and/or your expenses increase, you simply need to add a little more to your emergency fund to match the change.

I recommend a minimum of three months of living expenses to be kept in an emergency fund, but during uncertain economic times like the ones we are currently experiencing, I suggest increasing that fund to at least six months of living expenses for greater preparedness.

#4 Develop a smart savings and investing strategy for long-term goals. 

It is great to save money but keeping your money in a bank at a very low interest rate is unlikely to deliver the life that you want or create financial security. This is why it’s important to consider the various options that can give you higher returns and/or look at other ways to develop streams of income to help you achieve financial freedom. 

Financial freedom comes when you are making more money than you are spending each month.

If you’re falling behind on your savings goals, CLICK HERE for 3 Simple Strategies to catch up!

The best way a woman can protect herself financially is to invest wisely and create portfolio diversity. The broader the investment range you have, the easier it will be to weather market shifts and changes in the economic environment. 

Real estate is one of my personal favorite investments because people always need a place to live regardless of the financial climate. There are also many other investments that offer steady returns, including:

• Stocks and equities
• Bonds
• Real estate investment trusts (REITs)
• Rental and vacation properties
• Angel investing
• Small businesses
• Franchises

The thing to remember when you’re investing is to do your research before you invest and to make sure that you are aware of the risks. Every kind of investment has them. If you do not feel good about the investment do not invest, no matter what anyone else says!

As a young woman, you can also build your own assets which can create extra streams of income. There are many things that you can do that other people don’t know how to do. Those natural gifts, talents and acquired skills can be turned into assets like:

• Books
• Courses
• Videos (with ad income)
• Inventions
• Unique processes
• Royalties

The more streams of income you can create, the faster you will be able to attain financial freedom.

#5 Leverage good debt and avoid bad debt. 

Good debt helps to accelerate your wealth. It is debt that can be paid back responsibly and is used to purchase an asset or make an investment that will increase in value, bringing in more money than the interest you will have to pay on the debt. 

Examples of good debt are: 

• Mortgages on investment properties 
• Small business loans 
• Low-interest lines of credit (with the money being used to buy, build or purchase an asset)

CLICK HERE TO LEARN HOW TO MAKE GOOD DEBT WORK FOR YOU!

Bad debts come from money borrowed to pay for things like luxury items or other purchases that do not provide an income stream.

Examples of bad debt are:

• Credit cards 
• Payday loans
• Auto loans (most cars are depreciating assets)

Unfortunately, many of these debts come with high interest rates and also have high minimum payments required each month. This directly affects the amount of money available at the end of the month to pay down your debt or build wealth. 

Getting rid of bad debt is a must, so you can free more of your money for smart investing and growing wealth.  

The above is just a brief overview to help you start to build your financial freedom. It’s important to know that how money works for women is very different than it is for men. If you want to be a financially stable woman, it is important to learn how money works for you. 

I co-authored a book, How Money Works for Women: Take Control or Lose It, and it will help you conquer the money milestones you may face at each stage of life, so you can design your financial future. Click here to get your copy now.

About How Money Works for Women: Take Control or Lose It

How Money Works for Women: Take Control or Lose It is a powerful new book from award-winning author Sharon Lechter and financial literacy advocate Kim Scouller. This book provides practical solutions for the unique financial challenges and opportunities that women encounter throughout their lives from paying for college, to starting a business, to raising children, to taking care of elderly parents, to planning for retirement and long-term care needs. 

“This powerhouse author team has put together a simple, direct, actionable book. It is a reference, coach, game plan and inspiration all rolled into one short, easy to read, and understandable package. The background of these two dynamic women leaves no doubt in the readers mined that the reader is in good hands on this topic. I recommend this book to everyone. Male or female. Young and old. You may be just fine but you KNOW someone who needs this book. Read and share.” – Gretchen Ricker (Verified purchase from Amazon.com)