Most women enjoy makeovers. A new look -- whether
it's changing your hairstyle or updating your wardrobe -- often
leads to a fresh outlook and renewed confidence. Imagine how fabulous
you could feel if you had your finances in tiptop shape.
With an eye toward starting 2005 on the right track,
Bankrate.com asked several experts for money tips geared specifically
to the financial issues women frequently face.
Like any makeover,
not every tip will work for every woman, but you should be able to find one or
two ideas to freshen up your financial style.
Check out these
five savvy tips for breathing new life into your finances.
Buff up your investing prowess
If Carrie Schwab Pomerantz could get
women to change one thing in 2005, it would be to educate themselves about finances
and get more involved in the investment process.
women than men lack confidence in their investment abilities," says Pomerantz,
president of the Charles Schwab Foundation and vice president of consumer education
for the investment giant. "They're likely to avoid it, abdicate it to someone
else, or dislike the process. It has to do with a lack of culture for women. They
don't have role models or experience and don't have anyone to validate their worth."
unfortunate, she says. Today, more women than ever are the primary decision-makers
in their families.
"Women are finding themselves having to
handle the family money and finances and there's resentment because they're not
necessarily prepared to do it. They're put in a situation they don't want to be
She offers several solutions for becoming a more confident
and educated investor. First, take advantage of the wealth of educational materials
available, both online and in print. If you have an investment account or a retirement
fund, check the broker's Web site for self-paced tutorials. Then, do what women
have always done when they're stumped about a situation -- talk to other women.
friends can be a great support system," she says. "Women feel they're doing it
alone. They feel like there's an old boys' network they aren't allowed to participate
in. In fact, there are enough women out there."
of women to share tasks and information was behind the creation of Money Clubs,
a program of the nonprofit Women's Institute for Financial Education (WIFE), co-founded
by financial professionals Ginita Wall and Candace Bahr. Money Clubs are similar
to book groups or other small group studies, meetings where women discuss various
financial topics in a non-threatening environment.
the great strengths women have is in chatting," Wall says. "We talk about child
rearing and how to get bargains, but money is taboo. If we create a forum where
women can support each other, how powerful is that?"
Massage your retirement accounts
Women in particular should take advantage
of the federal government's "catch up" benefits for putting extra money into a
retirement plan after age 50, Pomerantz says. Under the Tax Relief Act, the maximum
allowable contribution to
a 401(k) is $13,000 in 2004, $14,000 in 2005 and $15,000 in 2006. Workers
50 and older can tuck away another $3,000 on top of that in 2004, as long as the
contribution is made by April 15, 2005. In 2006, it will increase to an extra
$5,000. Those who also have an IRA
can add extra funds there as well.
Those tax rules were
designed with women in mind because they tend to go in and out of the workforce
during their lifetimes to raise children and take care of aging family members.
The need to play catch-up is why Pomerantz also recommends that women have both
a 401(k) and an individual retirement account, if possible.
Fatten your savings
When it comes to saving, Americans are bad at it,
and women are worse at it than men, says Gail Perry-Mason, co-author of "Girl,
Make Your Money Grow" and first vice president of Michigan investment firm
Oppenheimer and Co. And, women still earn less money than men.
compares the savings strategy to a New Year's diet regimen, starting small and
gradually working up to a serious savings routine. To help get in the habit, she
recommends getting a jar and putting aside a dollar a day in January. "When you
wake up in the morning, pay yourself first," she says. In February, save $2 a
day; in March, tuck away $3 a day; in April, $4; and so on. By the end of the
year, it's nearly $2,400 to put into a retirement account.
need to go on a money diet," she says, "but we can't deprive ourselves. This way,
you start out in baby steps. The more you save, the less you spend. Wouldn't it
be great to lose weight and gain assets? It's a woman's dream."
Trim credit usage
Credit expert Gerri Detweiler, education director
for Consolidated Credit Counseling Services Inc., and author of "The
Ultimate Credit Handbook," says that most credit issues impact men and women
equally, but two issues pop up fairly regularly for women. One is shopping to
relieve stress or to make them feel better, which can lead to serious impulse
spending and excess debt.
The makeover strategy here is identical
to the one weight-loss experts recommend for emotional eaters. Make a list of
alternative activities to shopping when you're stressed out. That could include
exercise, taking a long walk or a bubble bath, reading a book or doing some volunteer
The other bad habit women have is co-signing loans for
"Women help people out -- a husband, boyfriend,
child or other relative -- by co-signing and they end up getting burned," she
says. "It does go along with that mentality of taking care of people."
advice? Don't do it. Once you're a co-signer on a debt, it's tough to convince
a creditor to take you off the loan.
Exercise your budgeting and tone up your spending
Along with Money
Clubs, WIFE offers its own 21-day money makeover, offering three weeks of small
steps that can be taken one day at a time to start taking financial control. One
step might be writing down your expenses for a day.
say, 'I take $200 out of the ATM and I don't know where it goes,'" Bahr says.
"Write it down. Cut out the things that don't give you any pleasure and don't
get you ahead. If you stop at Starbucks every morning, is that a highlight of
your day or is it a way to stall going to work? If it's stalling, then cut it
out and do something that doesn't cost anything."
knows how tough the idea of budgeting can be. It's so tough, in fact, that she
doesn't have one. What she does have is an automated system to save for retirement,
her children's education, and charitable contributions.
is left after that is fair game," she says. "We know we have the future taken
Bahr might call it automated saving, but Wall says
it's actually the best kind of a budget, and one tailor-made for the money management
strategies of most women, who tend to take care of their family's day-to-day needs
first and tuck away whatever, if anything, is left over.
budgeting from the top down," Wall says of automated savings plans. "Women try
to do it from the bottom up."
Pat Curry is
a Georgia-based freelance writer who specializes in personal finance topics.