By Gabrielle Olya
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Why do women tend to have less in their bank accounts than men?
On average, women earn less than men. So, for them to save an equal amount, they need to save a greater percentage of their paycheck than men. Their living expenses are generally no different than their male counterparts, so they don’t have as much available to save after paying the bills. On top of that, women often leave the workplace or work part-time due to child-rearing or elder care. Full-time daycare can be very expensive, and it can seem like it’s not “worth it” to go to work and pay for childcare. You can’t save money if you don’t make money!
Although things are changing, traditionally women were less likely to involve themselves proactively in finance and investments. Finance has always been a male-dominated arena, so it can feel intimidating to have money conversations. Moreover, men still tend to be the financial money managers in the household.
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How much should women aim to have in their savings and checking accounts?
Ideally, everyone should aim to have an emergency fund to keep in a high-yield savings account separate from their day-to-day checking account that would allow them to pay three to six months of living expenses. You never know what might be down the road, as we all know too well having lived through the last two years! Knowing you have enough to pay your bills if your income is reduced or gone can be a huge stress reliever in uncertain times.
Your checking account should have enough to cover your monthly bills with enough buffer so you don’t accidentally incur any overdraft fees.
What steps can women take to ensure they have enough money in their bank accounts?
Track your spending and look for ways to cut back. The first thing to do is to look at your spending and make a list of the bills you absolutely have to pay every month: rent, mortgage, utilities, car, insurance, phone, etc. Then make a list of everything else you have been spending money on. Look to see where you can cut down or eliminate spending.
Make a budget and stick to it. Prioritize personal savings as part of your budget.
Automate your savings. Open a bank account away from your checking and debit card. Have a portion of your paycheck direct deposited into that account.
For some people, it works better to use cash rather than debit or credit cards. Take a certain amount of cash each week to spend. Think of it as your allowance. If you’ve already spent half your allowance, you might think twice about running into Starbucks for an expensive latte!
Do not rack up credit card debt. If you charge something, make sure you can pay it off in full when the bill comes in. Not only will you not be racking up debt, but you also won’t be paying interest on it. Think of a credit card more like a debit card, and it won’t become a problem for you down the road.
Increase your savings whenever you can. If you get a raise, increase the amount you direct deposit into your savings account. If you come into extra cash, throw it in your savings rather than splurging on something you don’t really need. Watching your bundle of savings grow can be an incentive in and of itself to save even more and achieve bigger financial goals.
