5 Steps to Building Wealth for Women

It’s not savvy for any woman – rich, poor or anywhere in between – to not actively participate in managing her own money. Far too often I’ve seen powerful smart women put financial blinders on and defer to their partners or financial advisors to call the shots. Sadly, this is exactly how women end up getting burned – bad investments, financial abuse, over leveraged and under-prepared for retirement. Look, I get that financial planning might seem overwhelming and isn’t every woman’s idea of a good time, but it’s well worth the effort to become familiar with money – how to make it, save it, grow it, and spend it. Financial knowledge is empowering and will allow a woman to create better quality opportunities for her future…and build wealth that lasts!

There are 5 key steps a woman can take to get rich and stay that way:

1. Use a budget and reconcile spending. Budgets are a compass to guide monthly spending but, as with most things in life, plans don’t become real without accountability – comparing actual spending to what was planned. If a woman finds her spending off-track, she can quickly course correct. Budgets also have a bad rap for being restrictive and boring. But, fun purchases like clothes and take-out should be included in a budget.

2. Keep it. Financial geeks, myself included, know that the only way to build wealth is to keep as much of what’s been earned as possible. So, don’t overspend. Pay cash for purchases and pay credit card balances in full and on time each month. If need be, a woman can slash spending in certain budget categories that don’t help build her net worth (assets minus liabilities) like shoe purchases or trading in high-end gym memberships when the regular pass will do the trick.

3. Make more money. Remarkably women have a knack for making more money. The low hanging fruit in this strategy is simply leveraging free money through employer matching retirement savings programs or utilizing available tax credits. Step this up with some “side-hustle” where a woman leverages her skills to make more money. A great example of this is teaching fitness classes as well as holding down a regular job. Most importantly, women need to stand up for their salary and advocate for themselves to receive promotions; similar to their male counterparts.

4. Save 15 – 20 percent. Women live longer than men and sadly, still earn less than men for performing the same jobs (yes this is a legit fact and it irritates the heck out of me). As a result, women need to save more than the standard 10 percent. We must prepare for a long-life and one in which we don’t rely fully on government retirement programs. Starting to save from scratch? Contribute in regular monthly contributions a percentage of income…even if it’s only 1 percent to start. Try to increase this amount every three months (the length of time it often takes us humans to adjust and form new budgeting habits).

5. Build a Money Master Plan. It’s difficult for a woman to achieve her financial goals without a clear plan for her future. In my experience thinking much past five years is too far to map out. So, start planning by identifying personal, financial and professional goals for the next five years plus price tags for each of these goals. Then build strategies to support these goals.

The formula for women staying poor is simple:

Step 1: ruminate over financial mistakes from the past;

Step 2: compare herself to others;

Step 3: blame her circumstance on other people (including er partner) and situations that she couldn’t control. If women don’t learn to get real with their financial situation, things like maxed-out credit cards and a mortgage she can’t afford will forever haunt and prevent her from moving her life forward.

The biggest financial obstacles for women aren’t their actual finances; they are their mindsets. A fascination with the past prevents even the smartest women from achieving their full potential — financial, personal, and professional. She might blame that stingy boss who would never give anyone a raise, or that ex-spouse who wouldn’t pay their fair share of child support. Sure there will have been challenges along the way, but she needs to own up to her financial reality.

Compounding this focus on the past, is a torturous pattern of trying to keep up with the Joneses because “we deserve it.” We all know these people. I was one once. In late 2015, a 45-year-old woman came into my office seething with anger because her ex-husband was a deadbeat and left her with a mountain of credit card debt … eight years prior! Rather than owning up to her financial reality, she’d kept up “appearances” and buried herself further in debt. The past trapped her. She needed to stop obsessing about her ex, examine her own behaviour, and deal with the reality she was living in now. As women we spend a lot of time looking in the rear-view mirror hoping that it will teach us something about the financial road ahead. But sadly, we miss simply being present in today — taking in what’s happening right here and right now. Extraordinary things come out of many “todays” layered together when they are pointed in the direction a woman wants her life and finances to head.

If a woman wants to be rich — and when I say that I mean she would like to be truly satisfied with her financial, personal, and professional life — then she needs to take stock of where her life and money are today. This can be as simple as calculating her net worth, setting a realistic goal to grow it, and working to change one bad financial habit at a time. Make a resolution to focus on smart solutions for your financial future, including building enough savings for retirement. Some of the most amazing financial progress I’ve seen is with women starting from ground zero — they don’t even have two nickels to rub together. But their commitment to a better financial future is centered on making the best financial choices possible with what they have every day … and they’re quick to halt bad financial habits.

The formula for women to get rich is quite simple:

Step 1: put past financial mistakes in the past;

Step 2: get real with her financial reality;

Step 3: point every decision towards achieving her financial, personal, and professional potential.

Originally shared June 2016 on Advancing Women.