If your best friend was looking for a little advice and asked how you handle your finances, what would you say? You balance your checkbook, signed up for online banking and try your best to stick to a budget.
That’s good enough right?
Unfortunately, that seems to be the approach many women are taking. According to a recent survey by Financial Finesse, women are still way less confident than men when it comes to their finances. And worse yet, they’re failing to do what’s necessary to get their “financial houses” in order. Women tend to overspend and aren’t saving nearly the amount needed for retirement, which is especially troubling as we tend to live longer.
Money is a very personal and private topic for most women. We feel vulnerable and maybe a little embarrassed that we don’t have a better handle on that bottom line. But there are plenty of things we can do to become better informed and take a more thoughtful approach to our finances.
Manage Your Financial Life, a new book from Chicago-based author Nancy Doyle, is a good starting point. As founder of The Doyle Group and with over thirty years of wealth management and investment experience, Nancy is on a mission to help women take control of their financial lives.
If you’re one of the many women who gets a little anxious just thinking about money and investments, you’re not alone. It can be more than a little overwhelming. But in Manage Your Financial Life, Nancy shares a four-step system to bring it all together. And it starts with a little “spring cleaning.”
Organization is the Key
If you do just one thing after reading the book, this has got to be it. Those stacks of documents, receipts, warranties, policies, and statements we’ve all collected over the years can feel like an anchor. And they’re probably scattered throughout rooms, in shoeboxes and on our computers.
It’s time to simplify. Nancy makes sure to remind us that “this process can be tedious and even a little emotional”. Let’s face it, money matters can bring up many past disappointments or mistakes that you’ve made along the way.
You’ll feel different—and more than a little relieved—once you’re in control of your situation. So gather it all up. Take inventory of any and all documents relating to financial, tax, and legal matters, including insurance policies. Nancy offers guidelines on what to keep and what to toss, how to implement a system for keeping things organized, and when it makes sense to go paperless. And especially useful is her strategy for creating an ICE, or “In Case of Emergency” Plan, which I’m guessing most of us don’t have.
What’s Your Financial Profile?
Once you’ve taken the time to get organized and simplify those piles, you should be ready to prepare a personal income statement. Don’t let this part scare you. It’s not as painful as it sounds. You are going to look at the money coming in and the money going out, track your daily expenses and, hopefully, develop a plan to pay down debt.
And you’ll also want to make sure that your insurance needs are being met so that you don’t leave yourself vulnerable to unfortunate events. Plan ahead.
You Need to Be Informed
For many of us, even the most basic investment concepts can be more than a little confusing. Do you have any idea how your money is working for you? How well your 401K is performing? Whether you need to save more for retirement?
Manage Your Financial Life gets into the nitty-gritty on markets, investment types and retirement accounts over the course of several chapters. But be warned: you may get a little lost in some of the more complex terminology. Reversion to the mean, correlation and valuation metrics likely won’t come up over coffee with friends. Fortunately, Nancy does a good job of explaining the terms and showing how those concepts impact your overall strategy.
Take Charge of Your Investments
Maybe you’re fortunate enough to have a really good financial advisor who can explain everything to you. Or you let your husband or partner handle the finances. While it’s good to have a support system, don’t bury your head in the sand too long. Your financial health also depends on you knowing where the money is, how long it needs to last and what you’ll do if there is some unplanned event.
Nancy really helps you determine your savings goals and what you’ll need for the future. Have you thought about setting up an emergency fund or how you’ll pay for college? Maybe you dream of owning a vacation home. How are you going to make that happen? Planning and knowledge are the keys to making these savings goals realities.
Now that you’ve organized, analyzed, educated yourself and invested your money, don’t forget to monitor your investments. Nancy sums it up perfectly when she says that managing your financial life “is an ongoing process. You don’t finish the task and set it aside. Rather, you need to revisit the steps outlined in this book.”
A Final Word
Whether you’re blissfully married and are on the right path or are going through a major life event, it’s important to make sure your financial house is in order. It’s just difficult to know how to begin. Or how—and what—to prioritize.
Manage Your Financial Life is well-written and an excellent resource if you’re not sure where to turn. Nancy Doyle breaks the process down into achievable steps towards developing your own, personalized financial strategy.