Women can be the CFO of their families. My 4 steps to taking responsibility

Empowering Women to Take Charge of Their Family’s Finances

Until recent decades, women have traditionally taken second place when it comes to managing money for their families. Even now, men are often considered the primary breadwinners and financial decision-makers in many conventional marriages. According to a 2021 study by UBS, half of married women defer to their husbands for financial decisions. It’s time for a change.

As a personal finance coach and a national expert on saving for retirement in the US, I strongly believe that all women, regardless of income or financial background, should see themselves as the financial leaders of their family’s finances if they choose to. Here are the steps to take charge.

1. Track Your Income and Expenses

Women are powerful consumers, accounting for 80% of purchases in all categories, including groceries, new home purchases, and online shopping, according to the American Consumer Council. If you’re already managing most purchases, you already have a grasp on expenses and receipts, which can help you create and manage your budget.

Tracking your income and expenses is crucial. Estimating your monthly expenses is easy, but to ensure your family’s finances are on track, you need to be thorough. List every expense, big or small, to understand your spending habits. This can include gas, childcare, and your cell phone bill.

Remember, no two months will be the same initially. It might take three months or more to get a clear picture of your normal expenses. The longer you track, the more confident you’ll be in understanding your family’s financial picture.

My husband and I have been transparent about money since we got engaged. All our payments, rewards, and income are recorded in our family’s financial ledger using Microsoft Money, which allows us to track all our finances and goals, including income, net worth, and expenses.

When you’re ready to create a budget, remember there’s no right or wrong way. Choose a method that works best for you and your family, and don’t be afraid to switch if the first approach doesn’t work. Here are some methods to consider:

Pen and Paper: Effective for those who prefer visuals or journaling.
Online App or Tool: Consider tools like You Need a Budget or Rocket Money.
Spreadsheet: Design your own or use a template; check out the one sold by @mywealthdiary on Instagram.

2. Take Responsibility for Your Debt and Savings

With a budget in place, you can start looking at where your money is going and where it could go. Begin by understanding how much you’re paying on debt, including credit cards. Americans collectively owe more than a trillion dollars in credit card debt, which often accrues interest at higher rates than other debts like mortgages or car loans.

While paying off debt is crucial, so is having an emergency fund for unexpected expenses, such as a flat tire or a medical crisis. Balancing these priorities is key. Try a twist on the avalanche debt repayment method, where you prioritize paying off the debt with the highest interest rate while making minimum payments on other debts. Once the highest interest debt is paid off, move to the next highest, and so on.

Here are five steps I recommend to get out of debt:

Make minimal debt payments while saving a month of necessary bills (rent, mortgage, car payments).
Once saved, prioritize paying off debts with interest rates of 10% or higher.
Save three to six months of necessary bills after paying off high-interest debts.
Prioritize paying off debts with interest rates of 5% or higher.
Pay off remaining debt while pursuing other financial goals.

3. Start Investing for Retirement

Women, on average, live to age 79, compared to 73 for men, according to the US Census. This means your retirement should last longer than the average man’s. Women also often bear the burden of caring for both children and elderly parents, which can limit time spent contributing to retirement savings.

If you’re married, don’t rely solely on your spouse’s retirement fund. Ensure your financial future is secure by diversifying your retirement savings. If your employer offers a 401(k), start contributing—even a small percentage of your pre-tax income can grow significantly due to compound interest.

If you don’t have a job that offers a 401(k), consider a traditional or Roth IRA, even as a non-earning spouse. You might also explore a taxable brokerage account, which is available regardless of your employment status.

4. Involve Your Spouse in Financial Decisions

Even if you’re taking the lead on finances, it’s important to keep your partner involved. Regularly discuss your financial goals and where the money is going. I recommend a weekly meeting called “Date Sexy Money,” where you and your spouse spend an hour reviewing your budget, planning for the future, and handling money matters. Aim to align on goals and habits, and focus on building a better financial life for your family.

Conclusion

By taking these steps, women can empower themselves to become the financial leaders of their families. Tracking income and expenses, managing debt and savings, investing for retirement, and involving spouses in financial decisions are key strategies to achieve financial success. Embrace your role as the CFO of your family’s finances and create a secure and prosperous future for your loved ones.