Melissa A. Seamon, CFP®
Senior Financial Advisor
They say the best financial advice is simple and that the things people do to accumulate and preserve wealth aren’t rocket science. But, if it were so easy, then why isn’t everyone a multi-millionaire? One reason is because so much about wealth building is rooted in behavior and psychology.
How we feel about money, the narratives we run in our heads surrounding money, and the way we were brought up all influence our behavior when it comes to our finances. For some, this is a blessing. For others, it can be a curse.
But just because we were raised a certain way or have always done things a particular way, doesn’t mean we aren’t capable of changing. Even the most capable investors surely have room for improvement.
Money is Different for Women
While we certainly have nothing against men, it is no secret that women and men do not come to the financial playing field on even terms. Women still earn less than men, they live longer than men (meaning they need more money to fund their longer life), and they often take years away from the workforce to care for children or aging parents (diminishing their earning power and potential social security benefits). Which is all to say that there are significant hurdles women must overcome that men traditionally do not have to overcome.
So, when we see a woman who has taken control of her finances and manages to sustain a great deal of wealthi, we ought to wonder: how does she do it?
Following is a list of the Top 5 Habits of Wealthy Women for you to peruse, ponder, and possibly even use in enhancing your own financial situation.
1. They Spend Less Than They Make
This one may sound obvious, but many people cannot manage to do it. If you always carry debt, are spending more than you make, and aren’t investing for your future, you’ll live on a perpetual hamster wheel of spending, debt, and repayment and never be able to make financial progress. And this is true of all income levels.
Wealthy women understand that the best place for their money is at work—that is, invested. If you aren’t saving, you’ll never reach the point of financial freedom.
2. They Pay Themselves First…Automatically
Remember when your parents would sit at the kitchen table with their pile of bills, an adding machine, and their checkbook to pay the bills? Now, most of us aren’t even aware when many of our bills are paid because we set them up to automatically debit from our accounts on the due date. How much easier is bill paying now that it is automated?
The same idea goes for investing. Employ these helpful tips to start building your wealth today.
- Set up automatic contributions and investments to your retirement account with your employer. You’ll want to at least contribute up to your employer match.
- Direct deposit the balance of your paycheck into your checking account.
- If you are self-employed, you can set up automatic monthly withdrawals from your checking account to your IRA. (You can still do this even if you have an employer sponsored retirement plan, but you won’t likely qualify for a tax deduction.)
- Set up automatic, monthly deposits into a taxable brokerage account.
Every time you earn income, you should pull out your savings first. You can’t miss what you don’t see.
Anytime you can automate healthy habits, the more likely you’ll be to stick to them. This is because you are reducing the friction in the decision-making process. You aren’t having to force yourself to make the decision of spending or investing each month. Set it and forget it until you have an increase in income and need to reevaluate your contribution amount.
3. They Don’t Wait to Start Investing
Time in the market will always win. That’s because of the amazing power of compounding ii. The longer your money is invested, the more income it can earn NOT ONLY on your principal investment, but on the returns generated from that principal investment, as well. That means you see growth upon growth upon growth as your portfolio value exponentially increases, essentially reducing the amount you will have to contribute later in life. In other words, this is how to build your nest egg the easy way.
4. They Weigh the Cost of Their Decisions with a Neutral Mind
Did we mention that so much of our financial habits are rooted in our emotions? Wealthy women think neutrally about their money, putting their emotions on the backburner. Rather than attach emotional weight to a decision, they think about the realistic outcome of it.
For example, a wealthy woman won’t forego investing in her own future (retirement account contributions) for immediate pleasure (buying the latest handbag that is hot and trending). Instead, perhaps she will invest in one high-quality handbag each year and continue increasing her retirement contributions to escalate her progress toward financial independence.
5. They Use Expert Financial Help
Wealthy women understand that they don’t have to be experts in financial planning and investment management in order to get expert guidance. They enlist the help of fiduciary investment advisors who do the heavy lifting for them.
With an expert in your corner, you can plan, save, and invest in the most tax-efficient and risk-sensitive ways possible without having to worry about it all on your own. Your advisor will help you determine which financial goals should be prioritized over others, set up your investment portfolio to meet near and long-term needs, and provide the support you need as you embark on the journey to building and preserving wealth.
At Gardey Financial Advisors, we have over 150 years of combined experience helping individuals, families, and business owners navigate life’s financial complexities for the best possible outcomes. If you or someone close to you could benefit from this type if relationship, we encourage you to reach out. Simply schedule a call with one of our trusted advisors when you are ready. We best serve clients looking for exceptional client service, who value a long-term partnership, and have a minimum of $500,000 in investable assets.
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