Financial Confidence: The Secret Weapon That Can Help Women Boost Their Financial Security and Wealth

by | Dec 10, 2021 | Smart Financial Tips, Women & Wealth

Women have led major transformations across every aspect of life and work. But if there is one area where women as a group may have room to further develop, it’s financial confidence. When you understand how financial confidence impacts your ability to grow wealth, you can take steps to improve it—ensuring you can lead the life you foresee in retirement.

A Look at Women’s Views on Money

A recent survey reveals interesting insights on how women view and approach their finances.[i]

  • 41% of women surveyed wished they had invested more of their money.
  • Only 52% described themselves as confident in their ability to manage their investments (compared to 68% of male respondents).
  • 77% see a direct link between their money and what it can enable for their families.

Women also tend to worry more about retirement than men, according to a US Bank study, but they’re less likely to engage a financial advisor to gain the financial security they value.

Given that most women are likely to spend more years in retirement than men, based on a longer average life expectancy, it’s even more important for women to feel confident in their ability to prepare for their financial future.

What Does Financial Confidence Mean?

Though the concept of financial confidence can mean different things to different people, there are some common characteristics among people who feel financially confident. You’re less likely to experience stress and anxiety about money. And when you devote less time and energy to worrying about money, you’re free to focus on other essential areas of your life and less inclined to allow financial concerns to impact your relationships with family and friends.

Financial confidence also helps you stay focused on what you can do in the present to prepare for the future—so you’re less likely to focus your mental energies questioning past decisions or regretting actions you view as mistakes. It keeps you rooted in the here and now, which you can exercise a great degree of control over.

Finally, the more financially confident you feel, the less likely you are to make decisions about money based on emotion. Neuroscience research shows that both men and women often make money decisions based on emotion rather than rational fact, so all of us are vulnerable to this phenomenon. Yet when it comes to investing, it’s critical to avoid letting emotion drive your decision-making. Given the inevitable fluctuations of the financial markets, the ability to stay calm and focused no matter what the latest news headlines are saying can help you stay the course and reach your life goals.

How to Boost Your Financial Confidence and Security

Regardless of your financial circumstances, age, occupation, or current net worth, improving your financial confidence can directly affect your ability to grow your wealth and gain the financial security you need to enjoy a prosperous retirement.

These four steps can get you on your way.

  1. Set financial goals. What is important to you in life? Do you want to purchase a second home, pay for a child’s education, take time out of your career to raise children or care for elderly parents, retire early, spend more time traveling, or contribute to charitable organizations that align with your values? The busy-ness of daily life can get in the way of spending time reflecting on the life goals that will inform your financial goals. But without a firm grasp on what you want to achieve, it can be challenging to feel confident that you’re on the right path. Set aside time to reflect on what you want to achieve in life, personally and financially.
  2. Develop a financial plan. That may sound like an obvious step toward building financial confidence and security, but only 33 percent of Americans have a written plan according to a Schwab 2021 survey. Yet a strategic, comprehensive financial plan that reflects your goals, risk tolerance, and investing time horizon can serve as your roadmap to success. While human nature makes it easy to put off planning for something like retirement, which might be decades away, it’s the only way to gain confidence in your ability to grow your wealth and reach your financial objectives. It’s also the best way to stay strategic, thoughtful, and proactive about money matters. Keep in mind that financial planning isn’t a one-and-done transaction; it’s an ongoing process that involves updating your plan to reflect life’s inevitable changes, such as a marriage or divorce, the birth of a child, a career change, or health or family matters that cause you or your significant other to leave the workforce temporarily.
  3. Build your financial acumen. Increasing your knowledge about financial matters can go a long way toward improving your financial confidence and ultimately your ability to reach your goals. It’s important to gain knowledge about the technical aspects of finances (such as the differences between a Roth 401k and a traditional 401k), but it’s equally critical to stay informed of where your money is going. Your day-to-day decisions about money will compound over time and affect your long-term financial picture, so be sure you know how and where you’re spending what you earn. While you might not think an extra few hundred dollars a month in discretionary spending will impact your retirement, financial models like the kind we use at Team Hewins demonstrate that it could have a large effect over decades.
  4. Partner with a trusted advisor. An experienced fee-only CFP® professional can provide the guidance and direction you need to establish goals, create a plan designed to achieve them, keep the plan current, and stay the course throughout life’s ups and downs.

Contact a Team Hewins financial advisor to schedule a financial planning consultation that can help improve your confidence and your ability to reach your long-term goals.

 

[i] Merrill Lynch. 2021. Charting the unique financial journey of women in America. [online] Available at: <https://www.ml.com/women-financial-wellness-age-wave.html> [Accessed 7 December 2021].

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