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Just Starting Out in Your Financial Life? A Beginner’s Road Map

Part of the Life Stages Series

As a woman, You will go through many life stages. Some of the stages will require you to completely change the financial plan, while others will require just small adjustments to the overall strategy. If you are a woman just starting your carrier or simply just taking control of your finances for the first time, here are some helpful tips as you navigate through this new life stage.

Manage your Money

Take time to understand your income and expenses. Then develop a spending plan and tracking system to help manage your money more effectively.

Set short term and long term financial goals

If you are just starting out, you may not even know what your financial goals are yet. However, you need to start defining what it is you want to achieve with your money– that way you can set targets and deadlines and really use your money more efficiently to reach your goals. Start mapping out your short-term and long-term goals. Your goals could include saving for a vacation in 2 years or paying off your student loan debt within 5 years. The point is to identify what your goals are and then create a game plan to achieve them. Check out my Dream Worksheet for further information on how to create meaningful financial goals.

Establish Credit

Your credit report is like a file on you and your credit history. It basically tells lenders how risky of a borrower you are. So when it comes time to purchasing your new home or new car, you want your credit report and credit score to be in top financial shape to potentially qualify for good interest rates. If you have not established credit yet, a good place to start may be to open up a credit card in your name. Then start charging everyday expenses on your card. For example, you may want to charge your gas every month. Just make sure whatever you charge on your credit card, you can pay off every month. This will help you build credit in your name.

Also, you will want to request your credit report and credit score at least annually to confirm its accuracy, make sure you are aware of the credit lines you have open, and to know what your credit score is.

Build your Cash Cushion

Having a cash cushion is an integral part of your financial foundation. It allows you to use cash to pay for those random expenses or emergencies that arise in your financial life, instead of using debt or tapping into long term investments. Strive to have a cash cushion of about 3-6 months of your committed expenses.

Understand your employee benefits

If you are employed, chances are your employer provides you with employee benefits. Your employer may offer health insurance, dental/vision insurance, group disability, life insurance, and other benefits. Since group plans are typically less costly than individual coverage, make sure you are taking advantage of all the employee benefits that are needed for your particular financial situation and financial goals. Schedule a meeting with your HR representative and have her explain all the benefits you are offered and the benefits you are enrolled in. Ask as many questions as you need until you completely understand them. If you are not offered any benefits at work, or are self-employed, take some time to meet with a financial planner who can help you analyze what benefits you should have. Typically when you are just starting out you will need health insurance, dental/vision insurance, disability insurance (which protects your income) and life insurance (if you have dependents). A Financial Planner can educate you on all your options and help you get the right coverage in place.

Get Educated

Take time to educate yourself on various financial topics. Put time in your schedule (once a week, once a month, whatever you prefer) to read financial books, blogs (like mine), magazines, watch the financial news, etc. Remember to always filter the information you are receiving as not every strategy you learn will be right for you or even apply to you. It is important to learn to filter the information specifically to your current situation and financial goals.

Start Investing

A recent study by Barclays Wealth and Ledbury Research shows women are more likely to make money in the market, mostly because they take a buy and hold strategy with their investments.* The study concluded that women have a greater desire for self-control and therefore once they understand investing and how it fits into their overall financial plan, they trade less and stay the course. Meaning, they typically don’t try to time the market or get interested in the latest hot stock. Instead they invest their money according to their goals and understand that historically the markets tend to reward those investors who stick it out and stay the course. Since women tend to make better investors, develop your financial plan and start investing today for your financial goals.

Take Charge Financially

Remember as a woman, you have a lot of extra challenges to take into consideration. Women still earn less than men, are out of the workforce for 11 years on average taking care of kids and parents, and live longer than men.* This means, as a woman, you need to start taking charge financially to ensure you can overcome these challenges along your journey toward achieving financial success. If you are not planning for your financial future, nobody is. Take ownership of your financial life today!

*Study by Barclays Wealth and Ledbury Research- Deflating news for men: Women Better Investors, Dubai Chronicle, June 2011

*U.S Census Bureau, Facts for features: Women’s History Month, January 2, 2008