Some affluent women think it can, but they share our fears
Each week, Consolidated Credit searches for unreported financial research that can help you deal with your debt and budget. This week…
The interesting study
Wells Fargo wanted to know what affluent women think about a range of money issues – from investing to retirement. So they asked almost 2,000 women with at least $250, 000 in “household investible assets,” – balances held in your bank accounts, certificate of deposits, mutual funds, stocks and bonds. Turns out these affluent women share the same concerns of women with much lesser means.
The big result
Not surprisingly, 93 percent of affluent women “enjoy making and accumulating money” and 53 percent believe money “helps buy happiness.”
According to the survey, “Women have a strong sense of pride in earning money with 85 percent of them saying they feel proud about their earning power.”
While 75 percent say having a job or career is important to them even if they don’t need the money. They still struggle to balance career and family much like the majority of working Americans.
Of these working women, only two-thirds feel they are “fairly compensated” – a sentiment majority of Americans share.
So how did they make their money? Most of them say the stock market, which is unattainable for the millions of Americans who live paycheck to paycheck.
The fascinating details
Affluent women plan ahead and pass financial lessons such as money management and savings along to their children. Many agree their parents did a good job of talking money with them in their formative years.
Yet one in five say their biggest financial regret is not learning more about money.
Although 68 percent of these women gained their wealth through investments, no one taught them how to invest.
One conclusion that can be drawn from the study is that these women are able to retain their investment returns because they were taught at an early age how to save and manage money.
Americans have been worried about their retirement since the recession – and it’s not just the lower or middle class but also the rich.
Although the financial crisis did not affect these women’s finances, it did impact their savings behavior. More than half (54 percent) say it made them “more aggressive about saving money.” Fifty-five percent believe that a successful retirement is defined by having enough money to live the life they dreamed of in retirement.
While it is not surprising that these women are prepared for retirement, they share the same fears that non-affluent women have: losing their health, losing their mental abilities and running out of money.
For majority of Americans investing is out of reach but there are simple strategies they can learn from the rich.
What you can do
Here are six tips to help you get started:
- Talk to your kids about money. A majority of these affluent women say their parents passed along financial lessons such as money management and savings. A clear indication that the money talk early on in life is paramount in developing a healthy financial outlook. Pass on the knowledge.
- Invest.It doesn’t hurt to take advantage of investment opportunities if you can. If you have money sitting in the bank a good way to increase your earning power is to put some of that money towards investments. Be mindful though that some investments can be risky but not all are. Choose a mix of low-cost mutual funds so all your money isn’t in things like risky stock options. It’s a great way to grow savings over a long period. Choose carefully where you put your money and learn how to improve your investment returns.
- Start saving now. By saving early, your savings will grow and your earnings will compound over time. Financial experts say save at least 10 percent of your income but the more you save the better prepared you will be. And if you can’t afford 10 percent whatever you can is better than nothing. Saving, especially for retirement, should start early and continue throughout your lifetime. Contribute to a 401 (k) or sign up for a Roth IRA ASAP.
- Create a budget and stick to it. A budget is a great way to cut unnecessary spending. It also raises the visibility of where your money is going so you can track your spending and see what’s necessary and what’s not. Don’t forget to allocate saving for retirement.
- Calculate how much you will need to survive in retirement. Experts estimate high income earners will need at least 70 percent of their preretirement income to maintain their standard of living. Low income earners will need at least 90 percent. And because folks are living longer in retirement it is recommended that you save for at least 20 years.
- Get rid of credit card debt and pay off your mortgage especially if you are nearing retirement. The sooner you pay down your debt the better positioned you will be to retire debt free. Doing so will help cultivate the life that you want and eliminate stress in your retirement years.
If you’re concerned about being prepared for your golden years, take advantage of Consolidated Credit’s free educational materials on planning for retirement, financial literacy and women & money. Calm your fears by calling to speak with one of our certified credit counselors at . Or, to find out how much debt you’re in, request a free Debt and Budget Analysis online.