The New Demographics

Can We Correlate Equality With Financial Freedom?

National Women’s Equity Day asks some important questions

by Kristine Principe, Ph.D.

Dr. Principe is an associate professor of economics at Niagara University and serves as faculty advisor to the university’s Federal Reserve Challenge team.

While women are making terrific advances regarding their finances, there is evidence there is room for improvement. National Women’s Equality Day, August 26th, may be a good time for women to look at their saving and budgeting practices to help them on their way to financial freedom.

According to the 2020 Profile of Home Buyers and Sellers, single, female buyers accounted for 19% of homes purchased in 2020. 19% of first-time home buyers and 17% of repeat home buyers were single women, while 11% of first-time home buyers and 9% of repeat buyers were single men. For those women who may not yet have achieved the financial status they seek, and especially for young women just starting out, there are several simple practices they can employ to set them on their way.

First, I recommend that women have their own checking and savings accounts and that they make sure to put some funds away (even a small amount) from each paycheck. This can start as early as the teenage years for young people who have part time jobs while still going to school.

Setting goals is also important. If you determine that you can save $1,000 by the end of the year, based on your income and spending, you should be able to do it. You’ll be surprised at how that first $1,000 and more added each year will rise in value over a period of 10 or more years. You’ll be surprised at how well you can build wealth, even if you start small.

Money Awareness

Be aware of your money and how you spend it. Monitor your financial statements and keep track of your progress. This will work as an incentive to keep saving and to rein in spending.

Educate yourself. Find out which financial vehicles will help you plan for long term financial stability and invest in them...

Live within your means. Buy only what you need (except for a few splurges) and don’t run up consumer debt. Credit card interest and interest on personal loans can seriously derail a financial portfolio. Try to pay your credit card bills in full every month.

Monitor your credit score. When you’re ready to apply for a mortgage, your status with the credit bureaus will be important.

Educate yourself. Find out which financial vehicles will help you plan for long term financial stability and invest in them. Know the difference between CD’s and IRA’s and mutual funds and annuities. Find a trusted broker who can get you started in conservative investments and begin to grow your personal portfolio.

I also recommend watching financially oriented television programs whenever you can. It’s a great way to educate yourself on financial and economic matters. I especially like Squawk Box on CNBC, which is broadcast from 6 a.m. to 9 a.m. Eastern.

Emergency Funds

Perhaps most important during these difficult times is to make certain you have a fund for emergencies. Most financial professionals recommend having six months of required expenditures at the ready, just in case.

Finally, women should have what I call a macroeconomic perspective, which means understanding the overall financial system, having a basic knowledge of how the economy works, including both monetary and fiscal policies. Women should understand the role of the Federal Reserve and why it is important to a well-functioning economy.

They should also have a basic understanding of fiscal policy. What are the long run implications, for example, of the current level of government spending and debt?

Until the past year, Millennials and anyone born after 1990 have never known a period when inflation is a concern. Now that prices are rising, it’s important to know what drives high prices and what policies may reverse the trend. The Federal Reserve Bank of St. Louis has some wonderful educational resources, including their Women in Economics podcast series. Another is the organization’s Page One Economic series.