April became National Financial Literacy month in the United States in 2003, when Congress passed the Financial Literacy and Education Improvement Act after determining that too many Americans lacked an understanding of, and basic education about, financial literacy. It’s an education effort that continues nearly 20 years later in the U.S., and recent statistics are proof that there is still a long way to go in the effort.
A 2020 survey reported that more than one-fifth of American households have no money set aside for emergencies — and the financial gap between genders paints an even more dire picture for women. 22% of American women surveyed say they’d be unable to afford their lifestyle if they encountered financial difficulties, compared to 13% of men. Nearly one-third of this gender financial literacy gap is attributed to women’s lower confidence levels rather than an actual knowledge gap. The historical causes for this are likely due to generations of women who weren’t allowed access to financial instruments like bank accounts or mortgages until relatively recent years. But, with education, this can change.
Financial Literacy Empowers Women
Financial literacy skills can be learned. As part of Argent’s focus on serving women called Women | Wealth | Wellness, I’d like to emphasize three important areas that can help women build these skills: saving, investing and protecting.
This is where it starts — and the best way to begin saving more efficiently is to set a budget and keep careful track of where your money is going. Prioritize paying yourself first by setting aside money from income earned to put into a savings account. Deciding where to cut money from your budget is accomplished by carefully analyzing your current spending patterns. This will show where you’re overspending and in what areas you can best allocate money for optimal savings.
As the saying goes, a penny saved is a penny earned — and the pennies that aren’t unnecessarily spent can be turned into dollars that are saved. Knowing exactly where you’re spending money, and having a purpose for that spending can help you reach your overall financial goals.
After setting a budget and using the results from it to save more money, the next step is a sound investment plan. This is where a wealth management expert can really help — by assisting in strategies to grow money.
Plans for investing will be for both short and long-term goals. A short-term goal might be to purchase a house or car, while a common long-term goal could be investing for retirement. Investing as much as you can into a company 401(k), IRA or equivalent retirement plan should be a top long-term investment priority. Deciding how to best approach different savings objectives requires a thoughtful strategy and must take into consideration near-term and future market outlooks. Keeping up with trends and changes in the market is time consuming and is best done with the help of a fiduciary who has your individual best interests and goals in mind.
Protecting the money that has been saved and invested over a lifetime is crucial, with wealth preservation being a powerful tool to assist in passing assets to future generations. Estate planning is also a vital area to plan for the optimum transfer of wealth from one generation to the next, but the most advantageous execution of these processes can be very complex.
This is where the services of Argent Trust Company are beneficial since trust laws vary by state and federal tax laws can change frequently. We stay abreast of these changes and work in your best interest. Therefore, this is yet another key area in which it is essential to have a fiduciary relationship with a wealth manager who can provide unbiased service tailored to an individual’s unique financial circumstances.
Finally, as mentioned from the study earlier, in the majority of countries surveyed, women tended to disproportionately answer that they did not know the answers to basic financial literacy questions. At Argent Trust Company, we offer a wealth of resources for beginning and experienced investors, including women just like you. In addition to personal service, we have frequent articles on topics such as how to take proactive steps in your financial journey and the benefits of working with a fiduciary.
If you would like more information on fiduciary-based wealth management strategies for women, please contact me or any one of our professionals at 800.375.4646. We would like to be a part of your financial wellness journey.