Are You Financially Unprepared?

Do you feel as though you and your family are financially prepared? Who makes most of the financial decisions in your family? Is it you, or is it the man in your life?

UBS recently conducted a survey about the financial habits of over 1,700 married couples. The results found that:

• 56% of married women leave investment and long-term financial decision-making to men
• 85% of the women who deferred financial decisions to their partners believed that their spouses knew more about finances than them.

Unfortunately, millennial-age women are guiltier than any other age group of deferring financial decision-making to their husbands. This is a major problem. You should have enough financial knowledge to handle investments and other decisions, whether you have a partner or not. Let’s discuss the importance of financial knowledge and the top 5 ways you can become financially prepared.

Why Financial Knowledge Matters for Women

Think about it in these terms. Not only do women live slightly longer than men—meaning that your partner is statistically likely to pass away before you— the divorce rate for couples ages 50 and over has nearly doubled since the 90’s. When you put all this information together, the results are terrifying:

Eight out of ten women will end up alone and solely responsible for their financial wellbeing. 

But after spending most of their lives not making any major financial decisions, many women have no idea how to properly take care of their finances.

I’ve Been In This Situation Myself

I’ve been in this situation. Before my husband left, he was making 95% of the financial decisions in our home. When my dad died, he left us with no will, and his wife knew nothing about taking care of their finances. Fortunately, she had me and my siblings to take care of her and ensure that she wouldn’t have to worry about paying back debt.

Don’t let a similar circumstance happen to you, especially when you have the ability to prevent it right now. Be responsible for your future and your family’s by getting your finances in order now before it’s too late. Here are five ways to protect your financial future.

The Top 5 Steps to Becoming Financially Prepared

Here’s a checklist of things you should do to ensure you’re financially prepared for whatever may happen.

1. Create a Will

It doesn’t matter how old you are—it’s never too soon to start creating a will! Not only does it legally protect yourself, your spouse, and your legal assets, but it also spells out how you want things handled when you’re gone. If you don’t make these decisions yourself, your family will end up deciding for you—leading to potential family conflicts.

If you have kids, you need to put a lot of thought into who you would want to take care of them if, God forbid, something happened to you. This is the kind of vital decision that you definitely do not want to leave to chance. Having a will makes sure your children are protected, even if the unthinkable happens.

2. Set Up a Retirement Fund

Everyone needs to prepare for their future with a retirement fund. Setting up a retirement fund is the only way to make sure you’ll have money when you retire from your career. It doesn’t need to be a ton of money right now, because it will steadily grow over time. And what you’re saving right now will help you curb your current tax and grow your tax-deferred income when you decide to use those funds in the future.

3. Diversify Your Investments

If you know about my story, then you know just how important this step is to me. I used to own a business that made millions, and I sold it for millions. But when the market crashed, I crashed with it. Luckily, I had diversified, so I was protected. My money wasn’t just in real estate. It was in savings and stocks.

All small businesses need to diversify. This is one of the most important aspects of investing, especially for entrepreneurs who all too often re-invest every dollar they make back into their businesses. 

It’s always a risk to own a small business. Only 50% of small businesses survive the first five years. This is exactly why you now need to allocate funds to things besides your business. Invest in side businesses, alternative investments, stocks, and savings account. This way, if worse comes to worst and you have to close up shop, you still have income coming in from other sources.

4. Plan for an Off-Season with an Emergency Fund

You’ve probably heard this before: it’s a good idea to have some money saved for a rainy day. As an entrepreneur, you know that business can’t be booming all the time. You’ll most likely deal with downtime. You need to budget for those down months and for an emergency. Ensure that you have enough saved to wither the storm by keeping all your personal finances in mind. Make sure you have enough to cover all your expenses including your housing, food, insurance, and child expenses. 

5. Don’t Co-Mingle Funds

You need to keep your businesses and personal accounts completely separate. I know just how difficult this can be for small business owners. Your business is you. You have a hard time separating you from your work. But you need to remember that you and your business are not the same thing. I understand that you’re enthusiastic, but if you end up spending all your money on your business, there’s nothing left over to take care of your personal expenses.

There are many good reasons why keeping your accounts separate is a good idea:

• It saves you the headache during tax season when deducting your business expenses.
• Your business will have more credibility and more legitimacy.
• It removes your personal liability from something negative happening to your business down the road. 
• It removes the burden for your business expenses from your personal savings.

When you open a business, you should immediately open a business banking account and apply for a business credit card. This is a great start of separating business and personal accounts, and you get to start building your business credit.

Take hold of your financial future! Start putting together a plan for you and your family and take comfort in being financially prepared for anything. Let me know how you plan to get started by leaving me a comment down below.

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Susie Carder is an unstoppable business coach who has firmly established herself as a successful entrepreneur. She is passionate about helping her clients’ businesses exceed their wildest expectations! Learn more by visiting susiecarder.com.