Women often face difficulties managing money because of factors like the gender pay gap. Women, on average, earn less than men and must learn to manage their finances better to account for this difference. This demographic also tends to receive less monetary education and thus has lower financial literacy.
As a parent, you can account for this difference by implementing financial empowerment strategies. These strategies allow young women to learn financial skills while they’re young so that they can take this knowledge with them into the future.
1. Monitor Cash Flow
Financial empowerment starts small, with strategies like tracking earnings and spending, and a good place to start learning is when young women earn a steady income for the first time. Cash flow strategies begin with a starting balance, showing your available spending money. Then, you add earnings and subtract expenses to determine your balance at the end of the week.
This strategy allows young women to see what they make, spend and have available to spend. They’ll know at a glance whether certain purchases fit into their budget or whether they need to wait and save up for the things they want.
2. Learn About Budgeting
Once a young woman knows her financial situation and cash flow, show her a sample budget to tell her what goals she should aim toward. With less financial experience, young women may not know how expensive various parts of life are. A sample budget might show rent, food or other expenses they might soon encounter when they move out.
Letting them know the average income they should spend on various areas, from rent to entertainment, and ensuring they have enough left to save for the future is vital. Budgets are a great way to distinguish between needs and wants and set aside money accordingly.
3. Set Up a Digital Tool
Digital tools provide a wide range of benefits for wealth management. The many options give young women assistance with everything from financial news to investments. Young women growing up in this digital age know the value of technology in their everyday lives — make it work toward their future, too.
Look for apps or digital platforms to help them budget, manage their cash flow or review their investments. These tools allow young women to take the initiative in wealth management by making the process more straightforward.
4. Manage Investments
Women tend to invest less than men and see investing as risky, so they’re more likely to save money than place it in the stock market. Many women also feel they lack the education necessary to manage investments properly. As a result, they tend to choose long-term, less risky investments.
Long-term investments have many advantages. When women start young, they can build wealth steadily and prepare for retirement. As a parent, encourage your young women to invest and give them the necessary education so that they feel confident investing and diversifying their portfolio for future growth.
5. Build Credit and Good Borrowing
Until the 1970s, women often couldn’t apply for credit cards or loans without a male co-signer. Through dedicated legal efforts, this situation has changed, but many women still struggle with higher loan debts and lower credit scores than men.
As a parent of a young woman, you can build their financial empowerment through credit and borrowing education. Good credit means better loan interest and higher approval rates, creating more opportunities for them. Women can start building credit young through small credit purchases and on-time repayment. Better loan repayment means freedom from debt and earning more for future savings.
6. Establish an Emergency Fund
An emergency fund saves money for unexpected expenses, like car repairs or medical bills. While young women may have fewer emergency expenses, they’ll still benefit from you teaching them early to set money aside. This process gets easier when they know their weekly and monthly cash flows.
Encourage young women to use other information, like past expenses, to decide how much to set aside. For example, a past $500 car repair may mean a young woman keeps at least that amount in her emergency fund. This money source prevents her from needing to borrow or pay with a credit card to account for a lack of funds in emergencies.
7. Set Financial Goals
As a parent, you should work with your young women to establish goals for their money. These include short-term objectives like saving a certain percentage of their income each week or longer goals like saving for a significant purchase.
The plans these women set in their younger years will guide them toward larger, long-term goals, like saving for retirement. These goals provide an opportunity to build wealth because they set clear objectives young women can strive to achieve.
Help Young Women Build Wealth With Expert Advice
Young women face unique challenges regarding financial management, but you can prepare them early for a successful financial future through education. As you teach young women to adopt healthy financial practices, encourage them to seek your advice or turn to other financial experts to guide their journey.
Despite the challenges young women face, building financial empowerment at an early age gives them wealth management skills they can use for the rest of their lives. Start empowering young women today with these strategies.
About The Author
Ava Roman (she/her) is the Managing Editor of Revivalist, a women’s lifestyle magazine that empowers women to live their most authentic life. When Ava is not writing, you’ll find her in a yoga class, advocating for body positivity, whipping up something delicious in the kitchen, or smashing the patriarchy.