How To Get A Handle On Your Finances (Because No, It's Not Too Late!)
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Many women I know, particularly in their 50s and 60s, have expressed to me that they don’t feel totally secure in their finances. Oftentimes our situations change as we age—maybe we lose a job, source of income, or partner. If that’s been the case for you, or you’ve never felt totally in control of your money, there is no time like the present to take back the reins. A lot of people think that once they hit a certain age, it’s too late—but it’s never too late! To give us some financial advice and insight, I asked Victoria Sechrist, a personal finance coach based in New England, to lend us her expertise.
This blog post is the first of a two part series about how to get a grip on your finances!
Let’s get into it.
What do you say to women who think it's too late to work on her finances? Is it ever too late? Or is now a better time than never?
I think a significant part of improving one’s financial health is improving their mindset around money—so to me, having the “it’s too late” attitude is really unproductive. Any time you spend replaying that tape in your mind is time you could be using to actually work on your finances! I also find that limiting beliefs like that inhibit creativity, which is key to helping you find new solutions. It is never too late to get a hold of your financial situation—so to those women, I’d say “the best time is now.”
What are some common financial challenges that you see a lot of women in midlife facing?
Numerous people, including women in midlife, run into multiple financial issues in their lifetime. Some of these issues are unique to women of that age, but some are also universal.
Let’s start with the universal. Spending, or rather spending more than you make, is something people of all classes and ages face. Thanks to things like credit cards, it’s easy to spend outside of your means and drive yourself into debt. Thankfully, there are ways to engineer our environment to make overspending more difficult.
A few tips I tell every client are:
1) Unsubscribe from retail emails — Getting 15% off something you don’t need in the first place isn’t saving money.
2) Disconnect your payment methods from sites that trigger you to buy — You want to make it more difficult to spend, not easier. If you’re someone who loves adding to cart on certain sites, scrub your credit or debit card info from those accounts. Adding that extra step in can be the difference between overspending and not.
3) Delete shopping apps on your phone — Sometimes we don’t want something until we see it, and the more clothing and other items you see, the more you’re going to crave them and spend on them.
Then there are other challenges women in mid life face that are unique. You may be widowed or divorced, and suddenly you’ve gone from two incomes down to one. You may be staring down retirement in a decade or two but unsure whether you have enough money. Your kids may be leaving the nest and you feel a strong pull to support them financially (or not). Your parents may be aging and need your care. There is also your own health and the possibility of increased costs there. All of these are emotional events, and if you’re someone who spends as a way to cope with emotions, this will affect finances.
How can women over 50 start taking control of their money? What are some key steps women can take to improve their financial situation?
First, you need to figure out where you’re starting from. If you had a fitness goal and you wanted to walk more steps everyday, the first thing you’d do is figure out how many steps per day you’re currently walking. Otherwise, how would you know if you’re increasing the number of steps you take? I recommend doing the same thing with your money. Then, set your goal. Do you want to get out of debt and break even? Or start an emergency fund? I would set aside a couple of hours to gather all of the information we’re going to go over. It will pay dividends, literally.
Either on a spreadsheet or on a document on your computer, I suggest listing all of your accounts: checking, savings, retirement, investments, cryptocurrency, etc. Then list the value of each of these accounts.
If you think you may have retirement accounts that you can’t find, try a free service like Capitalize to help you find it. There’s also a great website for the National Registry of Unclaimed Retirement Benefits. Another option is to contact an HR professional at your previous place of employment, and ask them if they have a retirement account on record for you.
Once you have all of the balances of your accounts, it’s time to figure out how much debt you have. This can include student loans, your mortgage, an auto loan, credit card debt, etc. The simplest way to do this is to get a free copy of your credit report at AnnualCreditReport.com. There are three options: TransUnion, Equifax, and Experian. Get a copy of all three and cross reference them—this should list all of your debt. You’ll be able to see all of your debt balances, how many credit cards you have open, whether you’re past due on anything, and whether you have anything in collections. If you see any information on the report that’s inaccurate (like a credit card that’s not yours), you can dispute it online.
Note: Your credit report doesn’t show your credit score. This is easy enough to find through a website like CreditKarma.com or through your credit card issuer’s website.
Next, add all the types of insurance you have to your list. These can include:
Car insurance
Homeowner’s insurance
Life insurance (Term or whole? What’s the death benefit?)
Long-term care insurance
Disability (Short-term or long-term?)
This list isn’t meant to imply that you need all of these types of insurance, but you should know what type of coverage you have. You may have some of these types of insurance through your employer.
Next, round up a couple of recent pay stubs to see what your net pay is. This is how much money you take home after taxes and deductions (like 401k contributions) are taken out.
Finally, I highly recommend tracking your spending. My favorite app is the Rocket Money app. This is especially important if you’re someone who thinks, “I don’t know where all my money goes.” In my experience, most people underestimate how much they’re spending every month in categories like groceries, dining, and retail. A tracking app forces you to be honest with yourself, and it can quickly pinpoint where you may be overspending. Only from this place of awareness can you start to make changes (which we’ll talk about in the next part).
If you’re married, make sure to do all of these steps for you and your spouse!
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Stay tuned for next week, where Victoria will be talking about the types of accounts everyone should have, how to increase your income, and more!
Xo,
Renata