Women and Money: 5 Common Financial Fears
Tips to Overcome Your Worries and Embrace Your Financial PotentialKathy Longo, CFP®, CAP®, CDFA Thursday, 25 May 2023
In some ways, women are more financially empowered than ever before. They control 33% of household wealth – or $10 trillion – and that number is expected to rise to $30 trillion in the next three to five years. However, I still see many women caught up in common financial fears that can hold them back from fully embracing their financial potential. Money worries are not insurmountable, however, and in this article, I’ll discuss how to face them head-on so you can break free from the limitations that may be holding you back from building more wealth and creating greater financial well-being.
#1. Fear of Financial Instability
One of the most common financial fears among women is the fear of financial instability. Concerns about job security, income fluctuations, and unexpected expenses can be overwhelming. To overcome this fear, there are a few moves you can make to give yourself more peace of mind. Prioritize establishing an emergency fund, creating a budget, and exploring additional income streams or investment opportunities. When you have a rock-solid financial foundation, you have the tools you need to navigate uncertain times without fear.
If you want to arm yourself with even more financial stability, you might also consider developing skills that are in high demand or exploring entrepreneurial endeavors that provide a level of financial independence. By diversifying income sources and staying adaptable, women can mitigate the fear of financial instability and create a more resilient financial position.
#2. Fear of Making Financial Mistakes
Many women put off making important financial decisions for fear of making a mistake. Sometimes, inaction can seem safer, right? Whether it's investing in the stock market or making major financial commitments, the fear of getting it wrong can be paralyzing. And, that paralysis can keep you from missing out on important opportunities. To alleviate this fear, it is crucial to educate yourself about personal finance through books, courses, or seeking advice from financial professionals.
Finance can feel overwhelming, especially investing. Like most common financial fears, you’re best served by learning the basics first and gradually increasing your knowledge and confidence. Begin with less complicated investment options such as index mutual funds or Exchange Traded Funds (ETFs). As understanding and comfort levels grow, you can explore more complex investment strategies. Additionally, seeking guidance from financial advisors can provide valuable insights tailored to individual circumstances, reducing the fear of making costly mistakes.
#3. Fear of Retirement Insecurity
When it comes to common financial fears, this is the one I hear most often. I understand because the idea of running out of money in retirement or having to ask for help can seem terrifying to many women. Factors such as longer life expectancy, wage gaps, and interrupted career paths can contribute to this fear. To address retirement insecurity, it is important to be strategic and intentional. So, start planning and saving early if you can. If you feel behind, remember that it’s never too late to make progress and strengthen your financial standing.
Begin by assessing your current retirement savings and setting realistic goals. Maximizing contributions to retirement accounts, such as employer-sponsored 401(k) plans or individual retirement accounts (IRAs) can significantly boost your long-term savings. It is also essential to diversify investments and consider a mix of stocks, bonds, and other assets to balance risk and potential returns. Since this can become complex, consider working with a financial advisor who can help you develop a tailored retirement strategy that factors in your unique circumstances and goals.
#4. Fear of Negotiating Salaries and Promotions
As far as common financial fears go, this is a particularly consequential one. Women often hesitate to negotiate for higher salaries or promotions throughout their entire careers, fearing negative consequences or being perceived as pushy. However, it is vital to overcome this fear and advocate for fair compensation. Otherwise, you may find yourself underpaid for all of your working years, and this will have a considerable impact on the future financial security you’re able to create for yourself. Researching salary benchmarks, highlighting achievements, and practicing negotiation skills can help you feel empowered to ask for what you deserve.
Start by researching industry standards and salary ranges for your current or desired position. Prepare a compelling case by showcasing accomplishments, skills, and contributions to your organization. Practice negotiation scenarios with a trusted friend or mentor to build confidence and refine communication strategies. Remember, negotiating is a crucial step in bridging the gender pay gap, ensuring equitable compensation, and achieving long-term financial stability and growth.
#5. Fear of Financial Dependence
Many women fear having to rely on others for their financial well-being, be it a spouse, adult child, or family member. Having a plan to build financial independence – and sticking to it – is key to overcoming this fear. Educate yourself about personal finance and actively participate in financial decision-making.
Develop a comprehensive understanding of personal finance by reading books, attending workshops, or taking online courses. Take control of personal accounts and finances by monitoring income, expenses, and investments. Actively participate in financial discussions and decision-making processes within relationships or family dynamics to ensure equal involvement and influence. By taking these steps, you can break free from the fear of financial dependence and establish a sense of empowerment and autonomy.
Overcoming Common Financial Fears
I believe that every woman deserves financial security and independence. If you’re struggling with any of the common financial fears mentioned here, the first step is acknowledging the obstacle and committing to overcoming it. It’s possible to transform your mindset and take control of your financial life, no matter where you’re starting from. Through education, planning, and smart decision-making, you can overcome your financial fears and pave the way for a future where you can flourish.
Have you considered partnering with a trusted financial advisor to tackle your financial fears and develop a comprehensive financial plan? At Flourish, our team of dedicated professionals specializes in guiding women on their financial journeys. We can help you create strategies to build wealth and achieve your financial goals. Contact us today to learn more. We look forward to hearing from you!
About the Author
Kathy Longo brings over 25 years of expertise and experience to Flourish Wealth Management. Kathy is wholly dedicated to improving the life of each client and finds joy in making complex matters simple and easy to understand. She excels at asking the right questions, uncovering new possibilities and implementing the most advantageous strategies for success. Playing such a pivotal role in her clients’ lives remains an honor and a privilege. After earning a degree in Financial Planning and Counseling from Purdue University, she began her career at a small firm in Palatine, Illinois where she worked directly with clients while learning to build a viable, client-centric business. Over the years, she gained extensive knowledge and wisdom working as a wealth manager, financial planner, firm manager and business owner at notable, various sized companies in both Chicago and Minneapolis.