By Yusuf Osman, MBA
You may be wondering why women need to take different steps than men when it comes to achieving financial independence. Well, it isn’t because women are any less adept at managing money. It’s that men and women have different considerations and needs when it comes to financial planning for the long term.
The main reason women need to approach financial planning differently has to do with life expectancy. Women’s life expectancy at birth in 2018 was 84.1 years of age, while men’s life expectancy was only 79.9. (1) So you’re likely to live longer than your male counterparts by over 4 years!
For this reason, women are more likely to spend a significant amount of time on their own. If you’re single, the implication is quite clear. If you’re in a committed relationship, the chances are you’re going to outlast your husband or partner, so you want to be well prepared. This makes planning and portfolio management for women very important. Not only do you have more years to plan for, you also have more years on your own to plan for. So, what is a future-focused woman to do?
1. Give Your Money A Purpose
Your first step is to determine what you want. Define the purpose for your money, or what kind of lifestyle you want your money to maintain for you. We start with my Life by Design Plan, which will be your road map to achieving the vision you have for your life.
In my Life by Design Plan, I review your assets and resources, and create a plan to invest your assets in ways that align with your future vision. We also discuss your negotiables and non-negotiables of your vision. This step helps me find flexibility in your plan to optimize what’s most important to you.
2. Take Control Of Your Cash Flow
Next, take control of your cash flow to ensure you follow your plan as you move forward. Essentially, this means you create a budget to track your income and understand what you’re spending money on (and how much). Controlling your cash flow allows you to intentionally adjust non-essential expenses and reallocate those into savings and investments.
Taking control of cash flow early on in your planning also creates opportunities to identify whether you need or want to generate more income. Build assets for yourself or find creative ways to generate more income early in your life to give you peace of mind that you’ll never outlast your money—even if you outlast your husband.
3. Earn, Save, and Invest
As you earn, prioritize your savings and investments. The power of compound interest cannot be understated, and the earlier you start, the more you’ll have in the long run. As a quick example, if you were to invest $500 a month with a monthly compound interest rate of 5% over 30 years, you would have $416,129.32, $236,129.32 of which coming from interest alone! (2)
By contrast, if you invested $500 a month for just 20 years instead of 30, you would only have $205,516.83. The extra 10 years allows compound interest to more than double the total amount at the end of the investment period.
4. Generate Long-Term Income
Generating long-term income is the ultimate goal here. In my experience, I’ve seen that most women tend to be risk-avoidant. But too little risk can be a problem. Too little risk means your investments aren’t growing at the rate you need to live the lifestyle you’ve envisioned, and in the worst-case scenario, inflation could outpace your investment growth.
With longer life expectancy and the desire to be financially independent, a prudent amount of risk might be necessary. My Flex Investment Strategy can help you navigate these tough decisions and make informed choices with your money. With the Flex Investment Strategy, I understand your need for long-term investments and take a proactive approach to identify appropriate options and opportunities that work within your overall risk tolerance.
5. Partner With A Professional
Traditionally, women have been left out of financial planning spaces. I want to change this. I believe it is unacceptable for women to be excluded from financial decisions, so I partner with women to create an environment where you can learn about investing and take an active, engaged role in the financial decisions that affect your life.
If you’d like to partner with a financial planner who understands your unique needs and inspires you to be more confident in your financial decisions, contact me today at (613) 230-5895 or firstname.lastname@example.org.
Yusuf Osman is a Senior Investment Advisor at Argosy Securities Inc., an independent full-service financial advisory firm dedicated to helping clients create financial freedom, security, and peace of mind. With over 30 years of experience in the finance industry, Yusuf is committed to educating, engaging, and inspiring as many people as possible to take control of their finances. He spends his days developing a thorough understanding of his clients’ lives, concerns, and dreams to help them build a financial plan that keeps pace with changes in both the markets and their lives. Yusuf graduated from the University of Ottawa with a bachelor’s degree in Science and earned an MBA in Finance from Queen’s University. To learn more about Yusuf and his Dynamic Wealth Program for Women, go to https://www.argosy-osman.com/women or connect with him on LinkedIn.