How Women Can Prepare to Take on Financial Challenges
If you’re not already well-versed in financial planning, it’s a good idea to get there now so you can proactively meet challenges rather than simply react to them.
Whether it's due to longevity, divorce or other lifestyle choices, nearly 80% of women will become solely responsible for their finances at some point in time.
Many couples don't see it as a problem until it's too late. Oftentimes, one spouse handles the long-term financial planning, and the other handles the day-to-day expenses. With just 23% of women taking the lead, most women will face a harsh reality when they have to take full responsibility of their financial decisions. By thoroughly understanding the principles and nuances of financial planning, women can proactively prepare for challenges, instead of reacting to them.
My financial planning practice is dedicated to empowering women with practical, actionable financial strategies. I help them take charge of their financial futures and feel confident standing on their own two feet.
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The 'why' of financial ownership
Why is it so vital for women to take an active role in managing their long-term finances? The answer lies in necessity, empowerment and clarity.
- Proactivity is key. Gaining exposure to the inner workings of financial strategies early on fosters a deeper understanding, which can dramatically ease the transition during unexpected life events.
- It’s more than just a budget. Taking ownership of your financial situation before you need to means doing more than planning for everyday expenses. You need to understand the long-term impacts of saving, investing, taxes and spending and how they play into your future needs.
- Confidence. Knowing what your long-term roadmap looks like can provide comfort. By having a clear picture of your financial plan, you know where you stand today and what steps are needed to get to your destination.
Keep in mind that long-term financial planning isn't a "one-and-done" activity. Plans can shift, conditions fluctuate, and priorities change at a moment's notice. Once you've started your journey toward understanding, sustain your momentum, but be ready for pitstops and bumps along the way.
Building your financial foundation
When I'm advising women on their financial plans, whether they're single, divorced, widowed or married, I tell them that the journey toward empowerment begins by building a solid foundation. This initial phase — the "build" phase — is all about setting up and growing financial resources effectively.
If you have a solid understanding of finance, you might consider these foundational concepts fairly basic, but they're important to internalize and understand completely. After all, you can't build a house without a strong foundation.
- Start with a vision. This is based upon what’s important to you and what type of lifestyle you want to live. This isn’t always a simple answer, but start by writing down your goals and really take some time to think about what's important to you.
- Have a financial plan. A financial plan is a roadmap that outlines the steps you should consider to realistically achieve that lifestyle vision. There are many facets to a financial plan, such as saving, tax and investment strategies, just to name a few.
- Diversification. A core concept for any investor, diversification takes many forms. The most well-known is your asset allocation. It’s the amount of stocks vs bonds vs cash in your portfolio that determines how it will perform in different market environments. There are other types of diversification, such as asset location and tax-efficient saving strategies. This refers to having the right investment in the right account to minimize taxes. Also, how you save for your goals and retirement should be strategic to minimize taxes in the short and long term.
- Compounded growth. The basic gist of compounded growth is that your earnings have the opportunity to grow much faster over time when they’re reinvested. Time and compounded growth make getting to your goals a lot easier vs having to outright save every dollar. Just like you do your job, let your money work for you.
By focusing on the fundamentals, you can build a strong financial foundation, no matter when you're starting.
Protecting your future
After building a solid financial foundation, the next step is to protect what you've accumulated. The "protect" phase focuses on safeguarding your goals from risks and adjusting your strategy.
- Setting clear goals. Setting goals isn't just about envisioning — it's about understanding how much money you'll need to live the lifestyle you want. This is often easier said than done!
- Aligning investments with future needs. Portfolio rebalancing, risk readjustment and other flexible strategies can help you make sure your money is there for you when you draw nearer to retirement.
- Risk management. Protecting your future also involves managing risks through proper insurance coverage — think life, disability and long-term care insurance. These policies can protect against unforeseeable events that could derail your plans.
Enjoying the fruits of your labor
Transitioning from the "protect" phase into the "retire" phase is about enjoying the lifestyle you've worked hard to achieve. This step marks a significant psychological shift, from accumulating wealth to comfortably spending it and enjoying the rest of your life.
- From scarcity to abundance. In retirement, it's time to switch from planning and saving to planning and spending. Even though your income may have stopped, the planning doesn't. This mindset shift can be difficult for any individual, no matter how much they’ve saved or how well-versed they are financially.
- Strategic withdrawals. This is about how to make your money last. With the right planning, you can maximize income while minimizing taxes, but it all depends on the details.
- Maintaining flexibility. Retirement isn't static anymore, so your financial plan must follow suit. It's critical to continue making adjustments to your plan.
Retirement should be an exciting time and not filled with the worry of “Do I have enough?” or “Am I going to run out of money?” And for that, communication is key.
Boiling it down: Communication
For women who want to have greater financial control and understanding, communication is truly the most important piece of the puzzle. If you're in a relationship, have open and honest conversations with your partner and your financial adviser about what you want to achieve in the long term. If you're single, talk to your friends, your adviser or anyone else who can help you gain and share an elevated level of financial literacy.
Women deserve a seat at the long-term financial planning table. It's not just about equity or fairness — it's a smart move that can help you and your family build toward a brighter financial future.
There is no guarantee that asset allocation or diversification will enhance overall returns, outperform a non-diversified portfolio, nor ensure a profit or protect against a loss. Investing involves risk, including possible loss of principal.
Related Content
- Six Ways Women Can Overcome Any Financial Obstacles Holding Them Back
- What Every Woman Needs to Know Before Retiring
- Three Steps for Women to Take Control of Their Finances
- For a Good Time Managing Your Money, Call on These Apps
- How to Build Your Financial House From the Foundation Up
-
Is Home Insurance Tax Deductible?With home insurance rates on the rise, you might be hoping to at least claim the cost as a tax deduction. Here's what you need to know ahead of tax season.
-
The December Jobs Report Is Out. Here's What It Means for the Next Fed MeetingThe December jobs report signaled a sluggish labor market, but it's not weak enough for the Fed to cut rates later this month.
-
Trump Signals Plan to Ban Institutional Investors From Buying Single-Family HomesThe president says the move could improve housing affordability. Here’s what the data shows about investor ownership, recent buying trends and what it could mean for homebuyers.
-
4 Simple Money Targets to Aim for in 2026 (And How to Hit Them), From a Financial PlannerWhile January is the perfect time to strengthen your financial well-being, you're more likely to succeed if you set realistic goals and work with a partner.
-
I'm a Wealth Adviser: Everyone Needs an Estate Plan (Seriously, Even You)If you've acquired assets over time, even just a home and some savings, you have an estate. That means you need a plan for that estate for your beneficiaries.
-
How to Be a Smart Insurance Shopper: The Price Might Be Right, But the Coverage Might Not BeChoosing the cheapest policy could cost you when you have a loss. You'll get the best results if you focus on the right coverage with the help of a good agent.
-
7 Reasons Why Your Portfolio Needs Short-Term Bond ETFsMoney market funds are a safe option for your cash, but ultra-short and short-term bond ETFs also deserve consideration. Here are seven reasons why.
-
I'm a Wealth Planner: Forget 2026 Market Forecasts and Focus on These 3 Goals for Financial SuccessWe know the economy is unpredictable and markets will do what they do, no matter who predicts what. Here's how to focus on what you can control.
-
I'm a Financial Adviser: Why In-Person Financial Guidance Remains the Gold StandardFace-to-face conversations between advisers and clients provide the human touch that encourages accountability and a real connection.
-
This Is How You Can Turn Your Home Equity Into a Retirement BufferIf you're one of the many homeowners who has the bulk of your net worth tied up in your home equity, you might consider using that equity as a planning tool.
-
Feeling Too Guilty to Spend in Retirement? You Really Need to Get Over ThatAre you living below your means in retirement because you fear not having enough to leave to your kids? Here's how to get over that.
