4 Reasons Why Women Should Cut Their Credit Cards Today
Financial Advisor Calls For Wiser Perspective On Spending - by Erica L. McCain
While women continue to make impressive strides in academics, in the business world and with buying power in general, a significant percentage are vulnerable to retail therapy and other modes of frivolous spending.
According to a recent study from Prudential the eighth biennial of its kind women report they are no more prepared to make sound financial decisions today than women in the study were two years ago and 10 years ago.
“Women love buying nice things not only for themselves, but also for their children and other loved ones,” McCain says. “As I’ve experienced in my years of assisting clients, and in my own life, you’re likely to kick yourself down the road when you realize $200 would’ve been better spent for retirement, rather than at the salon.”
• You’ll want financial independence for your golden years. As the Prudential study indicated, 75 percent of women say that maintaining their current lifestyle is very important, yet only 14 percent reported they were confident they could make that happen.
Most of us seem to be living in parallel realities, which is a dangerous long-term plan. A good rule of thumb is that you need seven times your annual salary to fund your retirement. If you make $50,000 a year, your retirement savings should be a minimum of $350,000,000.
• Rare opportunities for your children come with a price tag. Being short of necessary funds for a child’s rare opportunity may come as a surprise to some women. A woman in her 30s may be accustomed to a lifestyle supported by two strong incomes, but in the event of a divorce, most women should prepare themselves for a financial reality check.
Err on the safe side of your finances, if you’re enjoying a lifestyle of liberal spending because of a great income, realize much of that stream can drastically slow due to an unforeseen life event.
• Emergencies quickly follow with the need for funding. One of the defining characteristics of life is its unpredictability. A careless driver could total your car; medical emergencies are often expensive, even with insurance; you may need to hire an attorney for a number of reasons; and the list goes on. Life is scary, but less so when you have adequate funds to deal with an emergency.
• Time can be on a woman’s side. Women are uniquely pressured to maintain an image of beauty throughout their lives. With age comes added pressure to look good, so more money may be spent on hair coloring, haircuts, Mani-Pedi treatments and Botox injections. It all adds up.
When it comes to saving money, time absolutely can work for us. The more you save and longer you save it, the more asset building you can do. Instead of fighting time, why not use it to your advantage?
Erica L. McCain is a financial professional with a Life Underwriter Training Council Fellow (LUTCF) designation and more than 16 years of experience. She founded her own firm, McCain & Associates (www.mccainins.com), in 2007, intent upon providing the detailed, personalized services retirees and pre-retirees need to pursue their retirement goals. She specializes in the financials for women in all stages of their lives and careers. McCain is a member of the Million Dollar Round Table (MDRT), the premier association of financial professionals.