Financial Freedom for Women: Personal Finance 101

Happy Women’s Day to you! I have been writing on this blog about books, travel and more. But this women’s history month,  I really want to highlight what I consider as the most important topic for women today – achieving Financial Freedom and Growth! Imagine yourself retiring on a beach with financial security someday soon… That’s right, I’m here to talk money (but not to preach). 

Everyone has a different life with a different foundation, different priorities, needs, expenses, and desires. All of these things affect how our bank accounts wax and wane. So, rather than taking a shame route, I want to try and shed a bright spotlight on the importance of having financial goals, especially for women. And if you are a woman, or know and love the women around you, please share this with them as a special Women’s Day gift! 

In his TED talk, financial expert Sanjay Jesrani explored the question – “Is the financial literacy and leadership bridge too far for women? It certainly is not!” 

Finance is not rocket science, it’s a life skill, it’s empowering and liberating. 

Women often shy away from learning and applying finance. But they pay a heavy price for it. Starting from home to leading some of the biggest organizations in the country, so many everyday smart monetary decisions are made by women. Then, why do women shy away from managing finances, and how can we turn things around? 

I think this goes back to the way different success metrics and in turn societal pressures are applied to different genders from the very beginning of our lives. While men are being pressured into working hard, building their finances, getting a good salary, being a homeowner; for women it is quite the opposite. It’s 2022, and we still place importance on the traditional success metrics for women like – beauty, obedience, finding a suitable partner, etc. are the standards women are judged upon for most of their lives. Whether anyone around you holds you accountable for being a financial success or not doesn’t matter. It begins with you holding yourself accountable, leveling up by mapping goals for your own success, and educating yourself by both unlearning old ways and learning new ways of achieving financial freedom. 

There are many myths that stop women from taking personal finance seriously. Women often think finance is:

• Complex
• Boring
• Unnecessary 
• Only for the math wizards!

By being under this illusion, women in all different economic levels of society end up being at the mercy of other breadwinners in their life, or end up having a wide net worth gap compared to their male counterparts. Women are told they are risk-averse (we’re the opposite), not good at investing (we are natural investors), need more financial education (so does everyone)! There are several points that bring us to the same conclusion – that we hold immense capability to do well when it comes to personal finance and building generational wealth too. Financial awareness and money management skills can lend you a deeper sense of security that makes it easier to save and invest for the future.

“I was desperate to understand money. Not to make it, to understand it. I wanted to know how it worked, and I wanted to know so that I would have enough and would be able to make good financial decisions.”

– Mellody Hobson, Chairwoman of Starbucks Corporation & JPMorgan Chase

Steps To Begin Your Journey Towards Financial Freedom

When it comes to personal finance, I feel that everyone, whether you are a male or a female, should have a firm grip on your finances, like understanding how credit works, or how to manage debt. In numerous studies, financial experts asked what motivated people when applying for jobs, reducing stress, or gaining better health, and the answer was money. If you feel that your money isn’t where it needs to be or if you need to make some improvements in certain areas, I’m going to break down some things that you can start doing today. (Skip to the resources section if you are not a beginner)

1. Know how to care for yourself – The number one thing that I feel is important for every woman is to know how to take care of herself financially by being financially independent. This means that even if you are a stay-at-home mom or working only part-time, it is still important to at least prepare for the possibility of having to lead your life on your own. You do not want to face a situation where you would almost be starting from scratch. So it’s better to be in a position where you have some updated skills or knowledge that can help you build life on your own merit. Placing importance on being financially independent is key to building a safe future for yourself and your loved ones too. Basic steps like starting your own high-yield savings account or investing a fixed sum of money every month in a low risk mutual / index fund can give you some cushioning. This is applicable to you even if you work full-time as it can work as an emergency fund for you to help support situations like medical emergencies, pay cuts, or loss of a job. 

The FREEDOM of knowing I’m financially independent is priceless. Money isn’t everything, and it’ll never take over the importance I place on community, friends and family, but it will *always* be a gateway to independence.  

Sim & Sonya (@GirlsThatInvest)

2. Eliminate your debt – Eliminating your debt is highly important because as long as you have debt, the money that you make doesn’t actually get to stay with you. If you avoid paying your debt completely, that destroys your credit. And credit is really important in places that have a credit system (it helps you secure loans, rent places, or even some jobs). There are two major ways you can eliminate debt: 

a) The debt avalanche method – a way to pay off debt by getting rid of the balances with the highest interest rates first. With this payoff strategy you make minimum monthly payments for your debts regardless of balance, but you put extra towards your debt with the highest interest rates until it’s paid in full. Once this happens, then you can shift your focus into paying the debt with the next highest interest rate, continuing this method to clear all your debts. 

b) The debt snowball method – This method is a debt reduction-strategy, where you pay off debt in order of smallest to largest balance which will help you gain momentum and motivation as you knock off each balance. When the smallest debt is paid in full, you roll the money you were paying on that debt into the next smallest balance, and so on until you are debt free! (Roadmap to saving six figures)

3. Negotiate a Good Salary that Acknowledges Your Worth – While women are making better salaries than ever before, they continue to be underpaid for equal amounts of work compared to their male counterparts. Making your worth known starts with negotiating a salary that properly represents your capabilities. Women should also ask for periodic raises. Those who ask for raises are twice as likely to get one than women who don’t. To get started, research salaries within your industry, have confidence in your abilities, negotiate without fear, and work out a salary goal with your company. 

4. Have a peace out fund – This is simply an emergency fund. It is six months of your living expenses saved up & readily available for you to use in case of an emergency. It eliminates the stress or anxiety surrounding money, because if anything bad is to happen to you or your financial situation, you have at least six months of money saved for a rainy day allowing you to keep living the same lifestyle as before while you figure out what to do next. It can also help you plan for that break or sabbatical from work that you always dreamed of but never actually took. Sound financial planning means considering major life events. Although it’s absolutely true that some things happen unexpectedly, we can reasonably anticipate other events in order to prepare. Here’s how you can do it!

5. Have multiple streams of income – I am going to be screaming this from the rooftops, because this has been my biggest personal finance life lesson to date! If you are that person who is dependent on one income stream, and no matter how lucrative that income stream is, it is too close to none. Gone are the days when our previous generations could build a simple and safe financial future through a traditional company or a government job. In today’s world, simplicity costs a lot. I consider having multiple streams of income as a form of self-care. And you don’t necessarily have to hustle 100 hours a week to achieve that! Let’s erase that myth. Whether you are a hustler or a non hustler, you deserve to grow your money. It is far too stressful to rely on one job or business model or one revenue stream period. So to move ahead from that, you can start a side hustle like monetize your hobby, or build a small business based on your skills, or explore investment opportunities to earn dividends, etc. Do not get overwhelmed or prejudiced until you learn to take small steps. Narrow down ideas that work best for you considering the effort and time you put in.  

6. Make your money work – Investing your money is the natural next step to make your money grow. Simply saving your money in your bank account or a fixed deposit isn’t going to help you achieve financial freedom. When you invest your money, you are able to take advantage of things like compound interest, and building passive wealth – which is basically growing your wealth even when you are sleeping.

“We are many years away from closing the gender-pay gap, but what I can work on is closing the gender investing gap, because ignoring this costs women thousands & millions of dollars over the course of their lives and that is life changing.”

– Sallie Krawcheck, CEO & Co-Founder of Ellevest

When you start building passive income through your investments or assets like homeownership, then actively working becomes more optional day by day. I don’t know about you, but I love having more options in life!

WHY IT MATTERS:

1. Investing is a powerful tool used to help generate wealth, yet has remained inaccessible to everyone since its inception.

2. Only 16-24% of women invest globally, and even less so for women of color.

3. 95% of money media articles direct women to save, while 70% direct men to invest.

So start learning and exploring investment options to steadily build passive income opportunities for yourself. Confidence is key when pursuing opportunities towards improving your personal finance.

7. Find like-minded people – Be among people who are on similar journeys as you are because the path to financial freedom then becomes easier. It takes time and patience, so have like-minded people around you who can keep you motivated and inspired, as well as share with you resources that are working for them, and put you on your game. You are an average of the people you spend the most time with. So if you are trying to up level your personal finances, if you do not want to repeat some of your past mistakes, if you want to do bigger and better things in life in general, it’s important to be mindful of this step. Explore platforms like Reddit or Discord to get started. And also be generous by sharing your life lessons with others.

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Personal Finance Resources

I am happy to share some great resources on all things personal finance. These have helped me and millions of other women who are trying to build a secure and thriving financial future! 

Special Mentions

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Books on Personal Finance

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Platforms For Personal Finance

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Learning

• Blockchain/Web3 Workshop 
• Dow.Janes Investing Masterclass
• Financial Goal Accelerator
• Elevate – Real Estate Investing
• DIY Investment Portfolio Building Workshop
• Financial Independence 101

Podcasts

• Girls That Invest
• DIY Money
• Financial Feminist
• Financially Free Journey
• Optimal Finance Daily
• Value Investor

Personal Finance Tools

• Mint – Budget tracking + planning app
• TFD template – Basic Budgeting Template
• Smart Pig – Online line piggy bank (high yield savings account)
• TFD Habit Tracker – Track habits and improve spending
• Ready-to-use Worksheets – Worksheet library of personal finance and business worksheets
• Better Saver – Beginner investing in funds
• Taxing playbook – Use tax advantages to grow your money
• Nav.it – Money management and coaching app

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So get started and spread the word with other girls and women out there! Please share your thoughts and experiences below, and let me know if you found this post useful in the comments. Thank you for reading!