“Wisdom for Wealth. For Life.” Episode 32: Financial Planning Tips for Women Part II
Last year, Blue Trust hosted Part I of financial planning tips for women. We are excited to share with you Part II as we discuss some of the priorities that women should consider for their finances. This episode features a panel of Blue Trust advisors, including senior private wealth advisors Sherri White and Suzanne Miller, and family office advisor Anehita Chie.
They discuss the benefits of living on one income for married couples, how to follow sequential investing, and how to begin estate planning.
Living on One Income
Many women often find themselves reentering the workforce after a period of handling childcare duties or taking care of family members. When a married couple begins receiving a second income, it’s a good idea to consider continuing to live on one income. If household expenses haven’t increased significantly, having a second income is a great opportunity to save more for retirement rather than increasing spending on lifestyle. A second income shouldn’t mean that the established household budget expands; rather, it can be used to have more margin and flexibility for the future.
Sequential Investing
Women have frequently expressed to financial advisors that they want to become savvier about investing but aren’t sure where to begin. Blue Trust clients are advised to start with building up their reserves and a basic emergency fund that would include 1) three to six months of normal expenses, and 2) a cushion of six to nine months in reserves for unexpected events, such as a job layoff.
Once that is in place, the next step is taking advantage of an employer’s 401(k) plan and any matching contributions the employer offers. If a client is unsure what to choose within a 401(k)’s investment options, a target date fund is a solid place to start. With target date funds, a fund manager makes the decisions about how to allocate the money invested and adjusts the risk level in the portfolio according to the anticipated retirement date.
The next priorities may be to put money in the bank to save for a car or education expenses, pay down debt, and set aside funds for the long term. Sequential investing – or using an investing approach based on when money will be needed – helps ensure that financial needs are covered but still growing for the future. The last (and optional) point in sequential investing may be to devote a small amount of money to individual stocks or more speculative investments; however, this type of investing should be approached with great caution.
In any case, the principles of sequential investing work well, regardless of age, and particularly for women who may find themselves adjusting to divorce or widowhood. After a divorce settlement, women must ensure that they have proper medical coverage and health care planning, as well as good advice for what to do with the assets they kept from the marriage. While women tend to value and prioritize safety when investing, it’s important to consider some risk to give their investments an opportunity for growth. The concept of diversifying your investments is important as well. When considering diversification, please speak to a financial advisor who understands how to do this and can help you implement into your portfolios.
Estate Planning
There’s a misconception that estate planning is only for the elderly or retired. Blue Trust advisors recommend that, regardless of age, it is wise to have three key documents in place:
- Power of Attorney. This document identifies a trusted person ahead of time to help you handle future financial affairs.
- Advance Directive for Healthcare or Healthcare Power of Attorney. This document names someone to make decisions if you become sick or disabled and can’t make decisions for yourself any longer.
- A will or other estate planning tool. It’s essential to have documents like a will in place that detail assets owned and who should get them when you die.
No one likes talking about disability and death, but creating an estate plan can provide great peace of mind. It’s a best practice to revisit these three documents every few years or as life circumstances change, such as marriage, divorce, widowhood, having children, moving, or receiving a significant financial windfall. In addition, Blue Trust advisors work with clients to identify the values and legacy they want to instill in their families via their estate plan, including managing multigenerational wealth and planning details of how beneficiaries will receive future inheritances.
Blue Trust advisors are skilled at making women feel more at peace and at ease with their finances. The Blue Trust library contains a wealth of information and is a good place for any woman to start when taking the next step on her financial journey. We encourage you to tune into our True Riches: A Series of Webinars on Wisdom and Finances. For Women. By Women. webinars taking place each Wednesday at 2:00 PM EST during the month of March. To register and attend, please click here.
“To the extent you can start off living on one income, then as life happens, you’ve already established the savings practice and it’s much easier to spend more if you have excess.”
– Anehita Chie
In our “Wisdom for Wealth. For Life.” podcast series, we share financial advice and wisdom from our network of wealth advisors, thought leaders in the industry, and our community of over 10,000 financially blessed families who apply biblical wisdom to their financial planning and giving.
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