April is a time of renewal, when the days begin to lengthen and plants and flowers bloom. It also happens to be Financial Literacy Month, and this season of growth is the perfect time to nourish your financial education.
Understanding finances is important for everyone, but for women, financial literacy is critical. Did you know that women are twice as likely as men to associate negative emotions with finances? Inequalities such as the wage gap, unpaid parental leave and career gaps that are often influenced by skyrocketing child care costs can influence this unfavorable perception.
The negativity is understandable, but here’s the truth: the power to take charge of your financial future is in your hands, and it begins with enhancing your financial literacy. With a solid foundation in a few key areas, you can live a financially savvy life.
Here are five steps you can take to change your money mindset.
Explore your relationship with money
Our attitudes toward money are often shaped during our upbringing. Even if you were never directly taught finances, seeing how your family interacts with money can have an enormous influence. If you grew up without a lot of money, you may have carried frugality into your adult life. On the other hand, some people who had little as children end up overcompensating — thus overspending — as adults.
During this exploration into your own mindset, there is no right or wrong; you simply need to be honest with yourself so you can learn and grow. Does thinking about money make you anxious or fearful? Do you worry about milestones in the future such as college or retirement — or, worse, do you avoid thinking about them at all? Confronting truths, even if they feel uncomfortable, is the first step toward change. Recentering these beliefs and understanding that you can choose something different is the next.
Cultivate a positive mindset with money
Now, the fun part begins! Once you acknowledge your fears and uncertainties, you can take active steps to shift your mindset. No matter what you’ve done in the past, today is a new day that offers a chance to start fresh. You get to decide what your relationship with money will be. A great place to start is to think about your goals as well as your values. Money can be a source of both security and fun; you just need to establish smart habits (which we’ll cover below).
Set savings goals — and create a consistent habit
Whether setting aside money for a home, a vacation, retirement or a rainy day, establishing smart saving habits is key for financial success and wellness. A little goes a long way over time, so even if your budget is tight, remember that the savings will add up. As you watch your savings grow, your motivation will strengthen. If you get a raise at work, consider increasing your savings amount.
If you don’t have an emergency fund already, make it a point to establish that first. Setting aside money to pay for unexpected car expenses or medical bills can alleviate the stress and anxiety that contributed to any negative emotions about money you may have had in the past.
Access your debt and create a payoff plan
Carrying debt can often lead to anxiety about finances. It can be hard to plan for the future if you’re still paying for things from the past. Women tend to carry less debt than men overall, but having a plan for payoff can ease your financial woes. Paying off debt is a lot like savings plans — once you establish your goal, the trick is to stick with it. Instead of trying to pay down all of it at once, focus on one loan or credit card at a time. Watching balances decrease and debts disappear is intensely rewarding, and this will give you the motivation you need to continue.
As you’re paying off debt, keep an eye on your credit score to see how even small changes can make a huge difference.
Invest for the future
A study by Fidelity showed that the number of women investing outside of their retirement accounts has soared in recent years. In addition, the study unveiled that women invest with purpose and are more likely to invest in opportunities that make a positive impact on society.
Women have been making great strides, but there is still work to do. Did you know that there is an investing gap between men and women, potentially costing a woman nearly $1 million over her lifetime? That’s a lot of money to leave on the table. It’s never too late to start investing, and the sooner you can start, the better. If your job offers a 401k matching program, make sure you’re contributing and maximizing your future financial security. Roll over any 401k funds you may have left behind at previous companies.
Education is key, so take time to explore possibilities in investing, whether you work with a financial planner, research on your own or take courses to improve your investing know-how.
Remember that you have the power to take charge of your financial future. More than anything else, go forth with the knowledge and confidence that you can (and will!) be financially successful.