There has been a lot of research on the gender pay gap, proving that oftentimes women are paid less than men. However, that doesn’t mean that we can’t improve our own personal wealth. How much money do you set aside for your future? How much do know about investing? Do you know how to buy and sell stock? What do you know about mutual funds? I was fortunate to see Barbara Stanny, author of Secrets of Six Figure Women, speak at a conference several years ago. She interviewed several women that made a large salary, but found that many felt that they were still living pay check to pay check. The ones that were wealth builders followed three simple rules, spend less, save more, and make smart investments. This same strategy works at any income level. If you follow the money rules you will increase your personal wealth and the sooner you start, the more you will have when you choose to retire. Here are some of the things that I have learned over the years:
- Always pay off your credit cards at the end of the month. Carrying a balance will require you to pay interest and fees. This is money you are giving away.
- Set targets for spending less, for example, if you buy Starbucks every day, reduce it to 3 times a week.
Pay Yourself First
- Setup your paycheck to automatically deposit a portion to your savings account or money market account. I have put $200 a month in a savings account since I was 20 years old and it really adds up!
- Put at least 4% of your pay in 401K and many companies will match it! If you aren’t doing this, you are leaving money on the table!
- If you can’t afford to put the full 4% in now, increase with each pay increase you receive. Overtime, max your 401K to the federal allowable amount.
Put your money to work
- Educate yourself on investing. Fidelity has a great site: https://www.fidelity.com/learning-center/?ccsource=em_crmemCRM.CORE.LearningCenter
- Don’t be afraid of the stock market.
- Look for value dividend stocks that pay out each quarter and have a long history of dividends. OMI has historically been a great dividend stock, but there are many out there.
- Look for growth stocks, companies that seem to be on the rise. Imagine if you had bought Amazon two years ago.
- Don’t have time to watch the stock market? Mutual funds may be a great option for you.
- Diversify! Don’t put all of your investments in one company or industry. There will be times when some are up and some are down, but overall it will even out. Rebalance your 401K from time to time to keep it diversified.
- You don’t have to have a lot of money to invest? You don’t need a lot – Just Start!
Give to Charity – although it isn’t listed as one of Barbara’s money rules, it is my personal belief that giving back is important.
While our salary is critical, managing the money we get is what will make the difference in our ability to increase our personal wealth gap!