Ep. 154 – INFORM, INSPIRE, IGNITE - EMPOWERING WOMEN IN FINANCE
Hello, and welcome back to the Merging Life and Money Show. I am your host, Marie-Jo Caesar, a financial wellness strategist dedicated to helping clients take control of their finances from both emotional and practical perspectives.
Today marks the beginning of an exciting journey as we kick off the 2024 Financial Literacy Month with the first episode of the Merging Life and Money April series. This year's Financial Literacy Month theme is Inform, Inspire, Ignite, and we are starting strong with a topic that's near and dear to my heart. Empowering women in finance. Financial Literacy Month is a significant annual event that promotes financial education and wellness. This year, we are not just participating. We are leading the charge. Our focus is on informing choices, inspiring actions, and igniting change in women's lives. We are not just providing information; we are sharing inspiring stories and offering practical strategies. Together, we are empowering women to take control of their financial futures and create positive change.
Throughout this episode, we are not just discussing financial literacy for women, investing, and strategies for financial independence, we are embarking on a journey of empowerment, We are diving deep into these topics to equip you with the knowledge and confidence you need to take control of your financial future. So let's dive in and start our journey to achieve a financial empowered future.
Welcome to the Merging Life and Money
In today's episode, we are diving into three key areas that will empower women in finance. Each segment is packed with valuable insights, practical tips, and inspiring stories to guide you on your financial journey. Here is a sneak peek of what is in store. First, I will address financial literacy for women. We will discuss the empowering aspects of financial literacy and explore various resources available to improve your understanding of financial jargon and concepts. This knowledge will not only inform your decisions, but also give you the confidence to take control of your financial future.
Next, I will discuss women and investing. We will delve into the world of investing and its power to build wealth and secure financial futures. We will address common fears and misconceptions that may hold women back from investing and share inspiring success stories of women who have overcome these barriers to achieve remarkable results.
And I will close the episode with an in-depth look at women and financial independence. We will discuss the importance of financial independence for women and provide strategies for breaking free from financial dependence. We will look at practical steps you can take to achieve financial independence and live a life in line with your desires and values.
At the end of this episode, you will have a better understanding of the importance of financial literacy, the power of investing, and the path to financial independence. You will also be inspired by the stories of women who have taken control of their financial lives and created positive change. So, let's get started.
Before we discuss the three main points of today's episode, it is key to understand why financial literacy is so important, particularly for women. Financial literacy is more than understanding numbers and financial jargon. It is the key to unlocking a world of opportunities and securing our financial futures.
Research shows that women often face unique financial challenges, making financial literacy even more important for them. So let's explore the importance of financial literacy and how it can empower women to make informed choices, take inspired actions and ignite change in their lives.
Financial literacy is a foundation upon which we build our money management skills and make informed decisions. It is the ability to understand and apply financial concepts, manage budgets, and make wise investment choices. Financial literacy is essential for everyone, but it is particularly important for women due to the unique challenges they face, as mentioned a few minutes ago.
Now that we've discussed the significance of financial literacy, let's move on to the first point of today's episode: informing choices.
Financial literacy is the cornerstone of making financial decisions. While financial literacy is fundamental for everyone, it holds particular significance for women due to the unique challenges they face daily. Here are some reasons why financial literacy is essential for women.
Longer life expectancy. Women generally live longer than men, which means their retirement savings need to last longer. Financial literacy can help women plan for a longer retirement and make the most of their savings.
The gender pay gap, women still earn less than men on average, despite progress. Financial literacy can empower women to negotiate better salaries, seek higher paying opportunities and make their money work harder for them through smart investment choices.
Career breaks and part time work. Women are more likely to take career breaks or work part time to care for children or aging parents. These breaks can impact their earnings, retirement savings, and overall financial stability. Financial literacy can help women navigate these challenges and plan for a secure financial future.
Financial independence. Financial literacy enables women to achieve financial independence, giving them the freedom to make choices based on their desires and values rather than being constrained by financial obligations.
Once women understand the importance of financial literacy. They can take control of their financial lives, make informed decisions, as I mentioned, and build a more secure and prosperous future.
Now, let's talk about understanding financial jargon and concepts. Having a good grasp of financial terminology is super important to becoming financially literate and making informed decisions. Financial jargon can be intimidating. No question about it, but it is possible to demystify these terms and concepts with a little bit of effort. Here are some key financial terms and concepts that every woman should understand.
Budgeting. Creating a budget is a process of planning how to allocate your income to expenses, savings, and debt repayment. Understanding budgeting helps you manage your money more effectively and achieve your financial goals.
Compound interest. Compound interest is a double-edged sword. It is the interest earned not only on your initial investment but also on any interest, dividends, and capital gains that accumulate over time.
This powerful concept can help you grow your wealth more rapidly, especially when it comes to long-term investments like retirement savings. Compound interest also refers to the way in which the amount of interest you owe on a debt grows exponentially over time. Unlike simple interest, which is calculated only on the principle, the original amount of money borrowed. Compound interest is calculated on the principle plus any accumulated interest. The power of compound interest means that your debt can grow significantly over time, making it increasingly difficult to pay off.
Assets and liabilities. Assets are things you own that have monetary value, such as cash, investments, or property. Liabilities, on the other hand, are financial obligations or debts you owe to others. Understanding the difference between assets and liability is essential for assessing your net worth and making informed financial decisions.
Diversification. Diversification is the practice of spreading your investment across different asset classes, sectors, or industries. and geographic regions to reduce risks. When you diversify your portfolio, you can potentially achieve more stable returns and protect your investment from market volatility.
Risk tolerance. Risk tolerance is the level of risks you are willing and able to take with your investments; understanding your risk tolerance can help you choose investments that align with your financial goals and comfort level.
It is very important to familiarize yourself with these financial terms and concepts. By doing so, you will be better equipped to make informed decisions and take control of your financial future. I have prepared an investment glossary. that you can download from my website. I will leave the link in the show notes so you can go and grab it.
Now, let's discuss the resources available to improve financial literacy. Numerous resources are available to help women enhance their financial knowledge and skills. And here are some of them.
Online courses and workshops. Websites like Coursera, Udemy, and Khan Academy offer a wide range of courses on personal finance, investing, and money management. Many of these courses are free or very affordable, making them accessible to everyone. Books and blogs. Countless books and blogs are dedicated to personal finance and investing, providing valuable insights and advice. Some popular books for women include Women and Money by Suze Orman, The Financial Diet by Chelsea Fagan, and Smart Women Finish Rich by David Bach.
Financial coaches and advisors. Working with a financial coach or advisor can provide personalized guidance and support as you navigate your financial journey. Look for a fee-only fiduciary advisor who is committed to acting in your best interest. Podcasts and webinars. Podcasts and webinars are excellent resources for learning about personal finance and investing on the go. Some popular personal finance podcasts for women include Her Money, The Fairer Sense, Clever Girls Know, and this podcast, the Merging Life in Money Show, with yours truly.
Nonprofit organizations and community programs. Organizations like the National Foundation for Credit Counseling, or the NFCC, and the Association for Financial Counseling and Planning Education offer free and/ or affordable financial education and counseling services.
By taking advantage of these resources, women can improve their financial literacy, make informed decisions, and take control of their financial lives.
Now let's move to the second topic of today's episode, Inspiring actions. In this section, we will focus on the power of investing for women and how it can help them build wealth and secure their financial future.
Before I get into it, I would like to state that the information provided in this podcast is for educational and informational purposes only and should not be construed as investment advice. And the views and opinions expressed in this podcast are mine and do not necessarily reflect the views of any organization or institution. You should always do your own research and consult with a licensed financial advisor before making any investment decisions. I and any associated parties will not be held liable for any losses, damages or consequences that may result from the use of any information provided. In this podcast.
Now that we've gotten the legal mumbo jumbo out of the way let's get back to the good stuff.
Investing. Investing is a powerful tool for wealth creation, yet many women are hesitant to invest due to fear, lack of knowledge, or misconceptions. The truth is investing can significantly benefit women in several ways. Here are some of them.
Bridging the wealth gap. Women often earn less and live longer than men, which can lead to a wealth gap over time. Investing can help women bridge this gap by growing their assets and creating additional income streams. By investing wisely, women can accumulate wealth more quickly than they would by simply saving, helping to close the wealth gap and secure their financial futures.
Building long-term wealth. Investing allows women to take advantage of compound interest, which can significantly increase their wealth over time. Women can build a substantial nest egg for retirement and other long-term goals by starting early and investing consistently. For example, if a woman invests 5000 per year, starting at age 25, and earns an average annual return of 6%, she would approximately have about 1. 1 million by age 65. Waiting until age 35 to start investing would result in approximately half of that, about $540,000, showing the power of compound interest and starting early. Okay. Time is your best ally. So start early.
Achieving financial independence. Financial independence is the ultimate goal for many women, and investing can help them achieve it. By growing their wealth through investments, women can gain the freedom to make choices based on their desires and values rather than being constrained by financial obligations. Financial independence allows women to pursue their passions, travel, or even retire early, knowing they have the financial resources to support their lifestyle.
Protecting against inflation. Inflation erodes the purchasing power of money over time, meaning that the value of a dollar today will be worth much less in the future, particularly now. Investing can help women protect their wealth against inflation by generating returns that outpace the rate of inflation. For example, if the inflation rate is 2%, a woman would need her investment to generate at least a 2 % return to maintain the purchasing power of their money. Think about it.
Supporting causes you care about. Women can use their investments to support companies and causes that align with their values. This approach, known as impact investing or socially responsible investing, allows women to generate financial returns while making a positive difference in the world. By investing in companies that prioritize environmental sustainability, social responsibility, or gender equality, women can create change and contribute to a better future for all.
When women embrace the power of investing, they can take control of their financial futures. I keep saying that over and over. They could build wealth and create positive change in their lives and the world around them.
Understanding the power of investing is just the first step. Many women face fears and hesitations when it comes to investing. So, let's look at how women can overcome fear and take action.
Educate yourself. Learning about investing in financial markets can help alleviate fear and build confidence.
Use the resources mentioned earlier, such as online courses, books, and podcasts to expand your knowledge and become more comfortable with investing. Some specific ways to educate yourself include:
Enrolling in a beginner-friendly online course on investing to learn the basics, such as different types of investments like stocks, bonds, mutual funds, et cetera, and how they work.
Read books on investing, written specifically for women, such as The Little Book of Common Sense, Investing for Women by Louise Schroeder, or Invested, How I Learned to Master My Mind, My Fears and My Money to Achieve Financial Freedom and Live a More Authentic Life by Danielle Town and Phil Town.
Follow personal blogs, financial blogs, and podcasts that cater to women, such as Rich and Regular, The Budgetnista, or Ellevest, to stay up to date on investing trends and strategies.
Start small. You do not need a large sum of money to begin investing. Start with a small amount and gradually increase your investments as your knowledge and confidence grow. Some ways to start small include opening a low-cost, beginner-friendly investment account such as RoboAdvisor or a brokerage account with no minimum balance requirements. Invest in low-cost index funds or exchange-traded fund ETFs that provide diversification and require minimal investment. I'm going to add that all these terms could sound confusing, but I have addressed many of them, if not all of them, in previous podcast episodes. So make sure to check my channel and educate yourself accordingly. I tried my best to break it down so that it's easily digestible. Consider using a micro-investing app that allows you to invest spare change from everyday purchases, helping you build your investment portfolio gradually.
Seek professional guidance, okay? Working with a financial advisor or coach can provide personalized advice and support, helping you navigate the investing landscape with confidence. When seeking professional guidance, consider the following.
Look for a fee-only fiduciary advisor who is legally obligated to act in your best interest and does not earn commissions from selling financial products. Schedule a consultation to discuss your financial goals, risk tolerance, and investment preferences, ensuring that the advisor understands your unique needs and circumstances.
You could reach out to me. I'm not going to sell you anything. I retired my Series 7 license, but my aim, my mission, my passion, and my goals are to educate as many women as I can on that very same topic of investment. So feel free. I have a free consult. Get on my website, book some time with me and I will put you on track.
So when you understand all of that, you will be able to go to your investment advisor and make informed investment decisions. When you go and see those professionals, ask about their experience working with women and their investment philosophy to ensure that their approach aligns with your values and your expectations.
Set clear goals. Establishing specific financial goals can help you stay focused and motivated. Whether you are saving for retirement, a down payment on a home, or your child's education, having clear goals can make the investing process feel more tangible and less intimidating.
To set clear goals, consider determining short-term, mid-term, and long-term financial goals, such as building an emergency fund, buying a home, or retiring comfortably. Breaking down each goal into smaller actionable steps, such as saving a specific amount each month or increasing your investment contributions by a certain percentage each year.
Tracking your progress regularly and celebrating milestones to maintain motivation in a sense of accomplishment.
Embrace long-term perspective. Investing is a long-term endeavor, and it is essential. To understand that market fluctuations are normal, you can overcome short-term fears and uncertainties by focusing on your long-term goals and maintaining a disciplined investment strategy to embrace a long-term perspective. Consider developing a diversified investment portfolio that aligns with your risk tolerance and financial goals, helping you weather market volatility. Please do not get involved in any type of investment that you do not understand and that keep you awake at night. You surely do not want to have heart palpitations over your investment because, trust me, you won't live long enough to enjoy the fruit of your money working for you. Regularly reviewing and rebalancing your portfolio to ensure that it remains aligned with your investment objective and risk tolerance is a must. Avoiding emotional decision-making during market downturns and staying committed to your long-term investment plan.
By overcoming fears and taking action, women can harness the power of investing and build a more secure and prosperous financial future. Before moving on to the last topic of today's episode, I would like to share a few women investors' success stories. These stories serve as powerful examples of how women harnessed the power of investing to achieve their financial goals and create positive change in their lives.
I will start with Sally Krawcheck’s story. Sally Krawcheck is a prominent figure in the world of finance and investing. She's a co-founder and CEO of Ellvest, a digital investment platform designed specifically for women. After a successful career on Wall Street, Krawcheck recognized the unique financial needs and challenges faced by women and funded Ellevest to help women invest and achieve their financial goals. Through her work, Sally became an advocate for women's financial empowerment, demonstrating the power of investing to create positive change.
Another one is Abby Joseph Cohen. Abby Joseph Cohen is a renowned economist and investment strategist. As a senior investment strategist at Goldman Sachs, Abby became known for her accurate prediction of market trends and economic conditions. In fact, Forbes named her one of the most powerful women in finance, and she has received numerous awards for her for her contribution to the field of investing. Abby's success story inspires women interested in pursuing careers in finance and investing.
Another one is Mellody Hobson. Mellody Hobson is the co-CEO and president of Ariel Investments, a Chicago-based investment firm. As one of the few African American women in senior leadership positions within the finance industry, Hobson has become a powerful advocate for diversity and inclusion. She's also a regular contributor to financial news programs and has been recognized for her efforts to promote financial literacy and empowerment. Mellody success story demonstrates the importance of breaking barriers and creating opportunities for women and minorities in the world of investing.
My last story is that of Adina Friedman. Adena Friedman is the president and CEO of Nasdaq, okay, the world's second largest stock exchange. Adena has been instrumental in driving innovation and growth at Nasdaq, focusing on using technology to improve market efficiency and transparency. She's also a strong advocate for gender diversity in the workplace and has worked tirelessly to promote women's leadership in finance. Friedman's success story highlights the power of women's leadership in shaping the future of investing in finance.
These success stories, folks, illustrate the transformative impact investing can have on women's lives and the world around them. When women embrace investing and overcome the barriers that may hold them back, they can unlock their financial potential and create a brighter future for themselves and future generations.
Now, let us move on to the third and final main point of today's episode, igniting change. Let us focus on the importance of financial independence for women and the strategies they can use to achieve it. Financial independence is the ability to support oneself financially without relying on others, such as a spouse, a partner, or a family member. For women, financial independence is significant for several reasons.
The first one is personal empowerment. Financial independence enables women to make life decisions based on their desires and values rather than being dictated by financial constraints, as I mentioned earlier. This empowerment can lead to greater self-confidence, autonomy, and overall well-being.
The second one is protection against life's uncertainties. Life is unpredictable, and unexpected events such as divorce, illness, or job loss can have significant financial consequences. Financial independence provides women with a safety net, ensuring they can weather life's storms without compromising their financial security. That is true. I've been through two of them and I totally agree.
The third one is breaking free from harmful relationships. Financial dependence can trap women in abusive and unhealthy relationships. But when women achieve financial independence, they can leave these situations and build a safer and happier life for themselves and their children.
The fourth one is closing the gender wealth gap. Women still face significant disparities in income and wealth accumulation compared to men. Financial independence can help women close this gap by enabling them to build wealth, invest, and secure their financial futures.
The fifth one is ensuring a comfortable retirement. As I mentioned, women generally live longer than men, which means their retirement savings need to last longer. This means that they could end up in poverty if they don't. So, financial independence allows women to save and invest for retirement, ensuring they can enjoy a comfortable and secure retirement without relying on others for financial support.
And the sixth one is setting a positive example for future generations. Whenever women achieve financial independence, they inspire and empower their daughters, nieces, and other young women in their lives. They can teach them the importance of financial literacy and investing in self-sufficiency, thus creating a ripple effect that benefits future generations.
Now, let's discuss strategies for women to break free from financial dependence and achieve financial independence. These strategies empower women to live life on their terms and create positive changes in their lives and the lives of those around them. Achieving financial independence is a journey that often begins with taking steps to break free from financial dependence on others.
Let me share a few strategies that can help women achieve financial autonomy.
Assess your financial situation. Start by taking a close look at your income, expenses, debt, and assets. Understanding your current financial situation will help you identify areas for improvement and set realistic goals for achieving financial independence.
Create a budget and stick to it. Developing a budget is key to managing your money effectively and achieving financial independence. Allocate funds for essential expenses, savings, and debt repayment, and track your spending to stay on track.
Build an emergency fund. An emergency fund is a necessary safety net that can help you weather unexpected financial challenges without relying on others. I could vouch for that—I've been there, done that. Save at least three to six months' worth of expenses in an easily accessible account.
Increase your income. Boosting your income can significantly speed up your journey to financial independence. Consider asking for a raise if you feel that you are not paid enough and you're working for it. Pursuing a higher-paying job or starting a side hustle to generate additional income.
Pay off debt. Higher-interest debt can be a significant barrier to financial independence. Prioritize paying off your debts, starting with those that have the highest interest rates. As you pay off your debt, you will free up more money to save and invest.
Save and invest for the future. Building wealth is essential for achieving financial independence. Save a portion of your income regularly and invest in a diversified portfolio of stocks, bonds, and other assets to grow your wealth over time.
Educate yourself about personal finance. Continuously learning about personal finance, investing, and money management will empower you to make informed decisions and take control of your financial future. By implementing these strategies, Women can break free from financial dependence and take significant steps to achieve financial independence. This newfound autonomy will empower them to live life on their terms and create positive changes, as I said, in their lives and the lives of others of those around them.
Building upon our discussion on breaking free from financial dependence, let us now explore Strategies for achieving financial independence. These strategies will help women not only gain financial autonomy but also maintain and grow their wealth over time. I identified eight of them, and here they are:
Set clear financial goals. Establishing specific, measurable, achievable, relevant, and time-bound SMART financial goals will provide you with a clear roadmap to financial independence. Whether you are saving for a down payment on a home, starting a business, or planning for retirement, having clear goals will keep you motivated and focused on your journey to financial independence.
Two- develop multiple income streams. Relying on a single source of income can be risky. By creating multiple income streams, such as rental income, dividends, or income from a side business, you can diversify your financial resources and build a more stable financial foundation.
Three, live below your means. Living below your means is a fundamental principle of achieving financial independence. By spending less than you earn and consistently saving and investing the difference, you can accumulate wealth and secure your financial future.
Four, prioritize retirement savings. Retirement may seem far away, but it is essential to start saving for it as early as possible. Take advantage of your employer-sponsored retirement plans, such as 401k plans, and consider opening an individual retirement account, an IRA, to maximize your retirement savings.
Five, invest wisely. Investing is a powerful tool for building wealth and achieving financial independence. Educate yourself about various investment options such as stocks, bonds, mutual funds, and real estate. It's not that many and create a diversified investment portfolio that aligns with your risk tolerance and your financial goals.
Six, minimize taxes. Understanding tax laws and taking advantage of available tax deductions and credits can help you minimize your tax liability and keep more of your hard-earned money. Consult with a tax professional to ensure you are making the most of your tax-saving opportunities.
Seven is protect your wealth. Insurance is an important component of financial planning. Yes. but folks You've got to make your friends before you need them. Make sure you have adequate insurance coverage, including health, life, disability, and liability insurance, to protect your financial well-being in the event of an unexpected life event,
Eight, monitor and adjust your financial plans. Review your financial plan regularly and make adjustments as needed to stay on track with your financial goals. Life changes such as marriage, children, or career transitions may require you to revise your plan to ensure it remains aligned with your objectives.
Women must implement these strategies to achieve financial independence and secure a prosperous future for themselves and their families. At the end of the day, embracing financial independence empowers women to live life on their terms, pursue their passions, and create positive change in their lives and the world around them.
As we wrap up our discussion on empowering women in finance. Let us recap the key takeaways from our conversation and how women can take control of their financial future and create positive change in their lives and in the world around them.
Financial literacy is essential. Understanding financial concepts and jargon is necessary for women to make informed decisions about their money. By improving their financial literacy. Women can better navigate the financial landscape and take control of their financial futures.
Two. Investing is a powerful tool. Investing enables women to build wealth and achieve financial independence. Overcoming fears and taking action. Help women harness the power of investing to create positive change in their lives and support causes they care about.
Three, financial independence is key. Achieving financial independence is essential for women's personal empowerment, protection against life's uncertainties, and the ability to break free from harmful relationships. Women can secure a prosperous future for themselves and their families by prioritizing financial independence.
Four strategies for financial independence. We discussed breaking free from financial dependence, setting clear financial goals, developing multiple income streams, living below your means, prioritizing retirement savings, investing wisely, minimizing taxes, protecting your wealth, and monitoring and adjusting your financial plans, all key strategies for achieving financial independence.
When women embrace these key takeaways, they can empower themselves to take control of their financial futures, create positive change, and inspire future generations of financially savvy women.
Folks, the hour is getting late. I know. And I want to let you know that this episode is running a little longer than usual, but it's an important one. That's because financial literacy as it relates to women is such an essential topic that I want to make sure that we cover as much ground as possible. After all, it's financial literacy months, and knowledge is power. And when it comes to our finances, the more we know, the better equipped we will be to make informed decisions and achieve our goals.
Financial literacy for women is more than just understanding financial concepts, as I mentioned. It's about empowering women to make informed decisions that can positively impact their lives. By equipping themselves with financial knowledge, women can confidently navigate the world of personal finance, break free from financial dependence, and achieve their financial goals. I will continue to say that. Investing is a powerful tool, people, that can help women build wealth and create lasting change in their lives. When women overcome fears and take action, they can unlock their potential and invest to grow their wealth, secure their financial future, and even support causes they are passionate about.
The stories of successful women investors. serve as an inspiration and I'm so thankful for having them, demonstrating that women can excel in the world of investing and make a significant impact. The path to financial independence requires dedication, planning, and perseverance. By implementing strategies such as breaking free from financial dependence, setting clear financial goals, and living below their means, women can pave the way to a prosperous and secure future. Financial independence benefits women individually and contributes to the broader goal of closing the gender wealth gap and creating a more equitable society.
Financial literacy, investing, and financial independence are interconnected and are the main components of women's empowerment.
As we come to the end of this insightful discussion and passionate, I'm passionate about this. Let us reflect on the words of the renowned financial expert, my dear friend Suze Orman, who once said, "The goal is not to get rich. The goal is to live richly". This quote serves as a powerful reminder that financial empowerment is not solely about accumulating wealth but rather about living a fulfilling and meaningful life. So let us carry forward the insights and strategies shared on this conversation and commit to living richly, not just financially, in all aspects of our lives.
Together, we can empower women to create positive change and inspire future generations to embrace financial literacy, investing in the journey to financial independence.
Make sure to share this episode. It's an important one. Help me, help us spread the message of financial empowerment by sharing this episode with your friends, your family, and your colleagues. You never know who might benefit from the information and inspiration provided in this conversation.
Before signing off, let me share a sneak peek into our next episode, which celebrates 2024 Financial Literacy Month. Join us next week for an insightful and informative conversation titled 'Empower Your finances—Tools and tips for surviving divorce.'
In this episode, we will be welcoming our esteemed guest, Leah Hadley, a renowned financial expert and divorce coach. Leah will share her wealth of knowledge and experience to help our listeners navigate the complex financial landscape of divorce with confidence and resilience. So thank you for being a part of this transformative journey.
I will see you next week. Until then, stay financially empowered and inspired and continue merging life and money. Bye for now.