“Wisdom for Wealth. For Life.” Episode 26: Financial Planning Tips for Women: Budgeting, Benefits, and Retirement

Start by Budgeting

Sometimes the word ‘budget’ intimidates people; however, it simply provides a framework and starting point for decision making. To establish your goals, ask yourself, “Where am I right now in terms of my money?” and apply balance sheet concepts:

• Consider, “What do I have (checking account, savings account, etc.) and what do I owe (student loans, car loan, etc.)?”
• Track your income and spending. Measure what’s coming in and going out.
• Be honest and thorough about your spending habits; when you track everything you spend, you may be surprised about where your money really goes.

There are plenty of tracking tools you can take advantage of, like those offered by some banks or apps like Mint. When creating a budget, make sure it’s realistic and sustainable. A budget may look nice on paper, but it may not match up with real life.

Maximize Employee Benefits

Insurance products like short-term disability, long-term disability, and life insurance offered through an employer can be beneficial, even if you’re young. You never know if something catastrophic will happen, and it’s reassuring to have insurance if you become disabled or are out of work for a while. Take advantage of insurance provided through an employer while you can. In the future, you may not meet insurability standards for certain products on your own, or they may become too expensive.

Health Savings Accounts (HSA) are another great tool to leverage. They’re noted for having “triple tax advantages.” Money is contributed to an HSA pre-tax, it grows tax-free, and money can be withdrawn tax-free when used for medical expenses. When you put money in an HSA, it’s yours to keep, and you never lose it. For this reason, HSAs can be a valuable asset as you get older and possibly have higher healthcare expenditures.

Prioritize Retirement Savings

If you’re in the workforce, saving for retirement and participating in employer-sponsored retirement plans should be a top priority. Employer matches can be very generous; some even match dollar-for-dollar or 50%.

Here are some tips to keep in mind about 401(k)’s and other employer retirement plans:

• While you shouldn’t put all your savings in a retirement account, most advisors encourage clients to at least contribute enough to max out the employer match. A dollar-for-dollar match essentially doubles your money almost immediately.
• Contributing to a 401(k) reduces your taxable income today and offers tax benefits for the future. When you withdraw the funds in retirement, you’ll presumably be in a lower tax bracket than you are during your working years.
• 401(k)s can provide loan provisions in the event of an emergency.
• Having contributions automatically deducted from your paycheck simplifies things and ingrains the habit of saving. Even if you stick with the same contribution rate (i.e., 5%), your contributions will increase as your salary grows.

Mastering these basics is a great place to start when you’re not sure what your first step should be. Blue Trust advisors are here to walk alongside women on their financial journeys. We meet women where they are and can provide everything from financial literacy resources to more complex financial planning. Click here to check out our page featuring more resources for women. For more information or to speak with a Blue Trust advisor, don’t hesitate to call 800.987.2987 or email blog@bluetrust.com.

“I think the first step for any woman is to see where are you right now. You can’t decide where you want to go until you know where you are.”

– Sherri White, Sr. Private Wealth Advisor