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Women and Personal Finances

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By many measures, women's lives have changed substantially in recent decades. According to a comprehensive government report called Women in America, although certain social and economic situations for women have improved, when it comes to personal finances, many women still face challenging hurdles.

Key report findings include:
  • Women live longer than men but are much more likely to experience critical health problems that hamper their ability to work -- and to pass up needed care due to cost.
  • Although the earnings gap between women and men continues to narrow, it's still significant: Among full-time workers, women's weekly earnings as a percentage of men's have increased from 62 percent in 1979 to 80 percent in 2009. (Those numbers represent overall average earnings in all fields, not what men and women are paid for doing the same job -- although such disparities likely still exist.)
  • More women than men now graduate high school and earn college degrees, but far fewer women earn degrees in engineering, computer sciences and other higher-paying fields, which likely contributes to the wage disparity.
  • Women increasingly are marrying later, having fewer children or remaining childless, yet they still are more likely to live in poverty than men, with single-mother families suffering the worst disparity.
  • Women are less likely than men to work outside the home (61 percent vs. 75 percent in 2009) and are much more likely to work part-time and to take time off to raise children or care for aging relatives.

In a nutshell: Women tend to earn less and live longer than men so at retirement they often have less in accumulated savings, receive smaller retirement and Social Security benefits (which are based on lifetime earnings), and must spread out their money over a longer time period. Clearly, women need to take charge of their financial wellbeing. Here are a few places to start:

Develop a budget. Many tools are available to help track income and expenses. To get started, either download a budget spreadsheet template or use interactive, online budgeting calculators. For example, Practical Money Skills for Life, a free personal financial management program run by my employer, Visa Inc., includes budgeting calculators for everything from back-to-school costs to holiday expenses to retirement.

When you're ready for the next level of managing your finances, investigate software packages and online account management services like Quicken, Mint.com, Yodlee and Mvlopes. Some are free, while others charge a one-time or monthly fee. Some, like Mint and Yodlee, can be accessed online or by smart phone; others, like Quicken, must be accessed from a dedicated computer.

Plan for retirement. Time is your biggest ally when it comes to retirement savings, so get cracking. Start estimating your retirement needs by using online calculators, including:
  • Social Security's Retirement Estimator, which automatically enters your earnings information from its records to estimate your projected Social Security benefits under different scenarios, such as age at retirement, future earnings projections, etc. You can also download a more detailed calculator to make more precise estimates.
  • Check whether your 401(k) plan administrator's website has a calculator to estimate how much you will accumulate under various contribution and investment scenarios. If not, try the retirement calculators at Bankrate.com and AARP to determine your current financial status and what you'll need to save to meet your retirement needs.

Expect the unexpected. An untimely illness, accident or death can devastate your finances. If you depend on someone else's income -- especially if you have children -- make sure you both carry adequate life, health and disability insurance. If you're self-supporting it's particularly important to be covered against accidents or disability, since even a brief period without income could deplete your savings.

Obtain credit in your own name. "Treated responsibly, credit can become a safety net for all women whether they are single, divorced or widowed," says Gail Cunningham, spokesperson for the National Foundation for Credit Counseling (NFCC).

Do your research. Many helpful personal financial education and management tools are available online, including:
  • NFCC's MyMoneyCheckUp, a step-by-step assessment of your overall financial health and behavior in four personal finance areas: budgeting and credit management, saving and investing, planning for retirement and managing home equity.
  • The Department of Labor's Women's Bureau offers many financial education resources for working women, including a program called Wi$eUp that targets younger women.
  • Social Security's Website for Women provides information on retirement, disability and other issues -- in English and Spanish. You can also order or download their informative, free publication, What Every Woman Should Know.
  • The Women's Saving Initiative, a program jointly developed by Heinz Family Philanthropies, the Women's Institute for a Secure Retirement (WISER) and Visa Inc. This free program features an audio- and e-book called What Women Need to Know About Retirement, which you can order on CD or download as a PDF or audio file.

This article is intended to provide general information and should not be considered legal, tax or financial advice. It's always a good idea to consult a legal, tax or financial advisor for specific information on how certain laws apply to you and about your individual financial situation.

To participate in a free, online Financial Literacy and Education Summit on April 23, 2012, go to Practical Money Skills.