Today the world is living and seeing the biggest wealth transfer on record, and that money is moving into the hands of entrepreneurial women. When women become more financially independent, the world becomes a better place. However, it is also a fact that statistically, women are more financially vulnerable than men. This being from the salaries that they earn to the savings that they have. With a current pay gap in place it is important to ultimately support the outwork of women as well as to educate ourselves and secure our financial futures. Whether you’re an investor, a small business owner, or just looking to take the reins of your future as a financially independent and savvy individual – it is important to have a financial checklist for how well you or your small business are positioned. Here are seven tips to how to keep on track:
Make sure you have the right legal structure
If you are a business owner, it is a possibility that when you launched your business you may have operated under sole proprietorship. According to Matt Johnston, senior director of Advanced Planning at Northwestern Mutual, “a more formal business structure such as a corporation, LLC, or even certain partnerships can help protect your assets from creditors as your business continues to grow.” The benefits of this are that as your business adapts to a more formal model and structure, it may lead to more potential partnerships, and even become more attractive to potential lenders.
Take financial inventory of your spending and savings
It is important this is not passed up on the list. One of the most important steps to financial health and self-care plans is to make sure you are taking stock of your monetary situation; which begins with budgeting. Reviewing your spending habits for the past three months is a good place to start. Review where your money is going, fixed expenses and areas where you are able to cut costs. How much of your budget is going towards debt repayment? Is saving a line item in this budget? Tracking your budget can help you become aware of what you are doing and where you might be missing opportunities. A personal financial inventory is a tactical must for you and your business.
Review your business insurance
As a small business owner, it is important to review your business insurance annually. A financial advisor may help you review what are some of the gaps in your current policy. You may need additional coverage limits to your existing policy, or to add additional insurance for specific types of risk. Its important to identify what these gaps are, and that your current policies efficiently protect your business, your employees and you.
Pay down debt
One of the biggest roadblocks to financial wealth is debt, so it is important to develop a plan and stick with a strategy to pay it off as your budget allows. Make sure to review your bank activity to avoid costly overdraft fees or late payment penalties. Consider how you can clear high interest debt if you have extra money left. A certified credit counselor may be useful in some situations and can discuss a few tacticall strategies that are tailored to your needs and savings.
Have an emergency fund
One way to save for emergencies is to make sure to treat it as a recurring expense on your budget. Sometimes unprecedented things can happen that often can lead to an expense(s) you did not see coming. It is important to have an emergency fund that can assist you and potentially bail you in whatever accident or situation you may run into. Building that emergency fund can look like having enough savings to cover up to three to six months of expenses. The pace of accumulating this can look different for everybody, however it is important to remember to start small and make it a goal to slowly add to it what you can over time.
Check on your credit score
It is important to take note of what is helping your credit score and what is causing it to drop. Keeping credit card balances high, paying late, and running up large balances in conjunction to your credit limit can have a negative impact on your credit. Having a good credit score is an important financial goal that can make prospective financial wellness specific and measurable. Keeping track of it month or weekly is a good place to start.
Plan for retirement
Having an investor mindset and being the CEO of your financial wellbeing can also look like planning for the long haul. Though retirement may look far for some, or close for others, the sooner you start saving the better and the more in tune you will be in your financial self-care checklist. Knowing how much you’re saving toward retirement can help determine if you are likely to reach your goal. A good way to do this is investing through a 401(k) or 403(b). While some employers do offer and make it easy to save by automatically enrolling you upon hire, you can individually apply for an individual retirement account yourself if not offered. You can check your monthly and yearly contributions, your investments, and what you’re paying in fees in order to determine how much you’ll need to save monthly or yearly to set yourself up for the future.