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Wyandotte, Mich. — March 10, 2023 — Women’s History Month puts a focus on numerous aspects of women’s lives, including how they handle money. Carma Peters, president and CEO of Michigan Legacy Credit Union, highlights several tips important for women to get and stay on the right financial track.
Establish a budget
Establishing a budget and sticking to it is the most important tool a woman can have to achieve financial success. It’s a difficult but important habit to form: track every penny you spend against what you have coming in so you can be accountable to yourself and adjust your spending as necessary. This can also help rein in “weakness” purchases – things we may love but don’t actually need – like designer shoes and purses.
Don’t count on a second income
More women are marrying later in life, or not marrying at all. In an article this month in the Washington Post, it’s reported that a record 52% of women in the U.S. are unmarried. Women need to become good stewards of their money to achieve short- and long-term financial goals.
Consider the unique factors impacting women and money
Women live longer than men and statistically earn less than their male counterparts; plus, they may take time off to raise children or care for aging parents. These factors all need to be considered when evaluating job and salary options and short- and long-term savings approaches. Women need to be consistent and intentional in aiming to increase their savings whenever possible. When income rises due to a pay raise, new job opportunity, or even an inheritance, a portion of that increase or inheritance needs to be saved.
Pay yourself first
Whether it’s children, spouse, partner or parents, women are used to putting others first. When it comes to saving money though, women need to pay themselves first to get in the good habit of saving even a little bit of money each pay period. This will help build up a rainy-day fund or achieve longer-term savings goals, such as for a home, advanced education, an entrepreneurial venture and retirement savings. Make a consistent effort to increase savings whenever possible. When you pay off a debt, send at least a portion of the former payment to savings; as your income increases, send some of that raise to your savings or retirement plan.
Have a 6-month rainy day fund
While 3-month’s salary is commonly touted as the ideal rainy day account number, play it safer and aim for a 6-month fund to cover unexpected expenses that may arise, such as a job loss or major home repair, the need to purchase a new car, parental leave – or even a unique travel opportunity. Begin by saving a small amount of each paycheck. If you can’t trust yourself to save, consider sending it via direct payroll deposit or bill pay to a financial institution where you have no ATM/debit card or online banking access. When you put ‘windfalls’ and planned regular savings together, you will be surprised how quickly the rainy-day fund can grow.
Clean out your closet
How many times have you found yourself looking at a dress or purse and saying, “Maybe this year I’ll wear this!” We’ve all been there. Consider selling items you no longer use and put the earnings into a rainy-day account. Rather donate? Determine the value of your clothing donation and it can be counted as a tax write-off.
Establish good credit
A key component of a good credit score is not using more than 50% of your available credit limit. That accounts for 35% of your credit score. Equally important, make all credit card and loan payments on time. Combined, these two factors comprise 65% of your credit score.
When you need a loan, get the right one
There are a variety of loans for a reason – to meet a wide range of consumer needs. It’s important to pick the right loan so as not to ‘pay’ for more money than you need. The goal is finding the right loan at the right rate in keeping with good financial decision-making. But also make sure the loan makes sense. For example, if you need a $20,000 loan for your wedding, are you likely spending more than you can afford for a one- or two-day event?
Don’t use a payday loan service – even if you need money fast
Payday loans charge high interest rates for money that needs to be repaid quickly. Turn to your financial institution first for any lending needs to find the appropriate loan at the most secure and competitive interest rate.
Establish a relationship with your financial institution to optimize good financial decision-making
The number of women making financial decisions – whether single or married – continues to grow. Women should have a relationship with a bank or credit union that is focused on optimal customer services. That makes it easier to find staff who are trained to understand what savings vehicles may be best – or what loan makes the most sense – for your particular needs. Differing interest rates and term lengths for both savings plans and loans have measurable value to savers and borrowers.
“While many money tips are gender neutral, it’s important that women recognize and have a plan to conquer some of the special financial challenges they face,” Peters concluded.
About Michigan Legacy Credit Union
Michigan Legacy Credit Union (MLCU) is a member-owned, not-for-profit financial cooperative serving members who live, work, worship, attend school, or own a business in the state of Michigan. Michigan Legacy Credit Union is committed to providing quality financial services at a competitive price, delivered professionally and efficiently while keeping member/owners and their needs first. For additional information on MLCU, visit: www.michiganlegacycu.org.