There are some problems that you’ll only have to deal with if you’re born a female, and we’re not just talking about menstrual-related ones. Matters of finance also top the list. Women face unique money challenges in our day-to-day lives though they may not be obvious. Contrary to what pop culture may portray, it’s not because we love shopping for clothes ala Sex And The City’s Carrie Bradshaw or that we’re simply not good at handling money. It’s because there are subtle yet impactful issues that put us at a disadvantage money-wise.
Arguably the biggest financial issue that women have to deal with is the gender pay gap. The good news is it’s becoming narrower, standing at 68.6 percent globally and a remaining 31.4 per cent gap according to the 2020 Global Gender Gap Index. But the bad news is it still exists, and one key factor why, despite increased access to education and healthcare, is because women are still expected to be the primary (sometimes even sole) caretakers of a family and bear the brunt of household work. This leaves them with less time to pursue career opportunities and side hustles. Until there’s a shift in this perspective, closing the gender pay gap will continue to be a challenge.
But even if you don’t have a child, there’s also the pink tax to deal with. It’s when two products of the same quality and purpose have different prices, but the one marketed to females is more expensive.
So what can we do to deal with this reality? Improve our financial literacy so we can take advantage of sensible money opportunities. To help us with this, we interviewed female financial gurus Dawn Cher of The Budget Babe, Izza of SavingsPinay PH, Ameena Rey-Franc of The Thrifty Pinay, and Suraya Zainudin of Ringgit Oh Ringgit to share money tips other women should know.
Tip #1: Know your current financial situation
Taking stock of your current financial situation may not be the most pleasant thing to do especially if you’re experiencing a money crisis but you must do it. You have to know what you’re working with if you want to take charge of your financial well-being. Where to start? By calculating your net worth.
“It all starts with a net worth. This is the starting point if you want to build your own financial plan. Calculate how much your net worth is by subtracting your total assets from your total liabilities,” said Izza of SavingsPinay PH. Just to refresh, assets are the economic resources that we have; this can include cash, accounts receivables (money that’s owed), inventory (goods for sale), equipment and real estate. Liabilities are the opposite of assets; these are the money we owe and it includes everyday expenses, a debt of any kind, taxes and so on.
“Once you have the result, identify what needs to be done in order to grow that number.” And she’s not talking about vague goals like “save more”, instead what Izza advises is to put an exact, concrete amount as your goal. “Put ‘save x amount of money every month’; when your goal includes a number in it, it becomes more specific. This is also important so you can easily track your progress,” she said.
Another thing: never be ashamed to have an honest conversation about money and ask for advice from those you trust. “Like many people, I thought talking about money is 'taboo'. However, I have found out that that is completely a false belief. I have met wonderfully supportive and helpful people who share amazing financial information. We care about making each others' financial life better and that is amazing,” shared Suraya Zainudin of Ringgit Oh Ringgit.
Tip #2: Don’t focus on budgeting and savings alone
Don’t get us wrong, having superb budgeting skills and cultivating a habit of saving are very important. “Automatically pay yourself first before any expenses. Follow the golden rule of ‘income minus savings equals expenses’. Your saving rate or the percentage of your income that goes to your savings will define how long it will take you to be financially free. The rule of thumb is 10-20 per cent of your salary,” Izza said. But at the same time, she also cautions about getting too caught up on this.
Along with growing a savings account, you should also look to increase your income. “The truth is we can only save as much money as we can with our income. We need a bigger paycheck to have bigger savings. This is where earning extra money comes into play. If you’re living on one income, you’re doing it wrong,” she said.
There is also such a thing as too much budgeting which can border on becoming too stingy with yourself. “If you focus on budgeting alone, eventually you will run out of expenses to forego and have to sacrifice things that jeopardise your health and/or safety. No one wants that,” said Suraya.
Tip #3: Seek promotion early in your career
The gender pay gap most likely occurs when a female employee starts having children in her late 20s to early 30s. Ameena Rey-Franc of The Thrifty Pinay knows this from experience. After having children, she experienced a “dry spell” in her career. Her advice? Seek promotion and career growth as much as you can early in your career. “Once you have positioned yourself higher on the corporate ladder, it’s easier to negotiate fair pay when returning to work after a career pause,” she said. On top of that, she also advised continuing to cultivate negotiation skills. “Honing how to negotiate is the key to growing your wage. Work diligently, ask for a salary raise, and be assertive.”
Tip #4: Look into passive income
When we think of growing our income, what usually comes to mind is working a side job. But there’s also “passive income” wherein you don’t need to pour too much effort or time into it to make money. But that doesn’t mean you won’t do any work at all. “There's a common misunderstanding when it comes to ‘passive income’. As much as that sounds attractive, most people don't realise that you still need to do prior hard work such as setting up the system or income source, and your fruits only get rewarded later in the form of ‘passive’ payouts,” Dawn Cher of The Budget Babe explained, and added that it’s important to “focus on areas where you're good at, and see how you can build a passive income business out of that skill-set”.
Dawn shares that there’s also dividend investing which she claims to be the easiest and most accessible passive income. “(It’s) where you invest in dividend stocks and get passive income in the form of regular dividends. I teach how to build this here,” she shared. And if you’re going to invest, do it as early as you can. “I started investing at 19 years old. I used the last month's salary I had from my previous job and opened an equity fund,” shared Izza.
Ameena also suggested looking into other traditional assets like mutual funds, bonds, or putting cash in high-yield savings accounts. “If you’d want the unconventional way of earning then try blogging and publishing your own book, like what I do in The Thrifty Pinay. You can also invest in real estate, cryptocurrencies, arts, collectables, and the like,” she said.
Tip #5: Say no to thankless work and tricky money situations
Not everything you do has to make you money, but it should be something that can give back value. For example, volunteering for a charity may not make you money but it can improve your well-being. Otherwise, it’s thankless work and women are compelled or even expected to perform these in the office environment. “I think all of us need to learn and unlearn our internalised misogyny. It is commonplace for women in the workplace to perform thankless tasks that do not lead to promotions, such as planning get-togethers and replenishing supplies,” Suraya said.
Izza adds that the power of no can also extend in other tricky financial situations. “More often than not, we get caught in a difficult situation that involves money — like a friend who would like to borrow, a family member who asks for a gift and so on. Learn to say no to people around you when you really don’t have the money and the confidence that that person will pay you on time. Before you agree to anything, try to assess first if it is in your budget. If it is not then politely say no,” she said.
Tip #6: Shop strategically
“Among all the unique challenges women have to face, ‘pink tax’ has got to be one of the most ridiculous unfair costs we have to pay for womanhood,” said Ameena. We couldn’t agree more. She cited the razor as an example and pointed out that a pink razor marketed to women is generally more expensive than the one for men even though they are basically the same. Her tip is to “shop and swap”. “If you notice a price discrepancy between products geared towards men and those marketed for women, then search for other brands. You might also consider switching to a male-marketed brand especially when its quality and purpose are the same as its ‘female counterparts,’” she said.
Tip #7: Invest a portion of your money you are willing to lose
As a personal finance guru, Suraya has noticed that most women she encounters suffer from a lack of confidence when it comes to investing. But the only way to build confidence is to try. “Our problem is having less money to invest, not the lack of skills or research ability behind making investing decisions. Therefore, stop telling yourself 'I don't know how’ or 'I'm not good at it’; you just don't know (much about) it yet, but you (eventually) will,” she said.
However, one should remember that investment is still a risk and the money you’re gonna put in it must be an amount you can afford to part with. “If you want to learn how to invest, study and do your research, invest a portion of your money you are willing to lose, then learn from your positive and negative experiences,” Ameena advised.
Tip #8: Don’t depend on your partner for money
Whether you’re a housewife or a working woman, having your own savings and finances sorted out is a must. “Take charge of your own finances, and don't simply outsource this responsibility to your spouse,” Dawn said. Ameena added that having your own financial cushion can be freeing. “If you are in an abusive relationship, being financially independent gives you the option to walk away from the situation and ensure your safety. If you’re married, the family can meet the financial goals faster and in case your partner loses a job, you will stand as the backup and security of your family,” she said.
While we strive to raise awareness and fight gender disparity, it’s also important to take steps right now to empower ourselves by learning from each other and continuing to enrich our financial literacy. In the end, money matters.
(Cover photo from: Kristina Paukshtite via Pexels)
Next, learn about the wise money decisions to make during your 20s.
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