Start Building Wealth Today: 5 Tips Every Woman Should Know

There are a lot of negative mindsets, emotions, and uncertainty centered around money. We get it; we’ve been there too. 

These are the Common Barriers we see Women Face in Building Wealth:

• They don’t make it a priority.

• Shame – they worry about being judged.

• They’re not sure where to go for help.

• Their spouse takes care of the investing.

• They feel like they need to know more before getting started.

Here are five steps every woman should take to get started building her wealth:

1. Spend with Purpose

Understand Purposeful Spending

It’s not what you make but what you keep! Spending with purpose is about aligning your financial decisions with your values and goals. Are there things that could be more intentional or targeted towards what matters? By being intentional with your spending, you can ensure your spending habits reflect what matters and align with your plans to build wealth.

Align Spending with Values

Spending with purpose is a mindful approach to money that goes beyond just budgeting and saving. In my personal experience and with my clients, when you are crystal clear about your values and goals, spending with intention makes your purchasing decisions much easier. I have found that trying to approach budgeting and saving any other way feels restrictive, but once you align your values with your purchases, your savings rate increases.

Shifting from Impulsive to Thoughtful Spending

This purposeful approach requires a shift from impulsive purchases to thoughtful consideration. Before making a purchase, it's helpful to ask yourself whether it aligns with your long-term objectives or if it's simply a fleeting desire. By doing so, you can avoid unnecessary expenses that don't add real value to your life. Instead, focus on spending on things that bring joy, foster personal growth, or support loved ones.

2. Have an Emergency Fund (Roughly 6 Months of Your Expenses)

Life happens! When it does, you want to be prepared. Establishing an emergency fund is one of the most important steps in managing your finances and can help you avoid going into debt when an unexpected financial expense arises.

Why You Need an Emergency Fund?

Having adequate savings if you get hurt, sick, lose your job, or have an unexpected home repair is huge. If you have debt, you need to save at the same time you’re paying it off!

How Much Should You Save?

How much do you need to save? It depends on various factors such as your income level, existing debt, housing and food costs, and transportation. Your emergency fund needs to be roughly 3-6 months of your expenses.

Where to Keep Your Emergency Fund

Your emergency fund should be kept in a high-yield savings account. This type of account is the best way for your money to grow. A high-yield savings account works just like a regular savings account, but you can earn around 3% or more in interest (aka free money). Two of my favorite resources are Bankrate and Nerdwallet

3. Investing

The Basics of Investing

Investing is your money-making money! Money that is not being used to fund your emergency account or pay your bills should be invested. Investing extra cash is one of the best ways to build wealth. This should be money you won’t need in the next couple of years.

Retirement Accounts vs. Non-Retirement Accounts

You’re already investing if you’re contributing to a retirement account (401k, ROTH IRA, IRA), but most likely, you will need to grow wealth beyond your retirement account. You can open a non-retirement investment account. Unlike retirement accounts, a non-retirement account will allow you to access your money before age 59.5.

Talk to a financial advisor to see what is best for your specific situation, as each of these accounts has different rules.

HOT TIP:  Automating your investing is the best way to build wealth over time! Make the decision once to set it up, and you don’t have to think about it every month or every paycheck.

4. Insurance for When Crap Happens

Ever feel like life is just waiting to throw you a curveball? Whether it’s an unexpected illness or an unfortunate accident. Crap happens, and it often happens when you least expect it. No one likes spending money on insurance or talking about it, but it’s a crucial part of building wealth.

Why Life Insurance is Essential?

During a tragic situation, do you really want to be worrying about money? If someone is relying on your income, having life insurance is essential! Life insurance ensures your loved ones are taken care of and have the financial security they need if something happens to you. It can cover expenses like mortgage payments, college tuition, medical bills, daily living costs, and funeral expenses. Think of life insurance as a way to keep your family's financial future secure, even when you can't be there.

The Importance of Disability Income Insurance 

Disability income insurance is equally important. If an illness or injury prevents you from working, this insurance provides you with a portion of your income, helping you maintain your lifestyle and cover essential expenses. It's a financial safety net that minimizes stress during tough times.

Review and Update Your Insurance Policies

Review your current insurance policies and see if they meet your needs. If you don’t have life or disability income insurance, consider reaching out. We’re here to help. Prepare for life’s curveballs now!

 5. Estate Planning is for Everyone! Wills and POAs

Why Estate Planning is Crucial

Real quick, let’s demystify estate plans—you don’t have to be old or wealthy to have one! They really are for everyone. Estate plans are another crucial part of building wealth. For women, taking control of your estate plan ensures that your wishes are honored and your loved ones are taken care of. But what are the most important steps you should take?

Creating a Will

First, create a will. A will is the cornerstone of any estate plan. It allows you to specify how you want your assets distributed, how your debts are handled, and who will take care of any minor children. Without a will, the state decides these matters, which might not align with your wishes and can cost your loved ones thousands of dollars.

Setting Up a Power of Attorney and Health Care Proxy

Second, consider setting up a power of attorney and a healthcare proxy. These documents allow you to designate someone to make financial and medical decisions on your behalf if you become unable to do so. This not only protects your interests but also provides clear guidance to your loved ones during difficult times.

Healthcare Proxy

A healthcare proxy lets you choose someone you trust to make medical decisions for you if you’re unable to do so. This person will ensure that your healthcare wishes are followed, whether it’s about treatments, surgeries, or end-of-life care.

Power of Attorney

A power of attorney allows you to appoint someone to handle your financial matters if you’re not able to. This could include paying bills, managing bank accounts, or handling investments. This person, known as your attorney-in-fact or agent, steps in to make sure your financial affairs are taken care of according to your instructions.

Don’t leave a hot mess for your loved ones. These documents make it easy!

Need Help Building Wealth?

We’d love to help! Book a complimentary call and learn more about how we can help you shift your money mindset.