5 Pieces of Financial Advice You Can’t Afford to Discount

Women have gotten the short stick when it comes to financial literacy, and a lack of official financial education has severe and far-reaching consequences.

Since the patriarchy began, women have been taught that they shouldn’t handle money. In actuality, a study conducted by Rutgers University found that 80 to 90 percent of women will be solely responsible for the finances of their household at some point in their lives, without ever having been given the tools or education to do so.

Further research reveals that women—regardless of race and educational background—are 80 percent more likely to be impoverished at age 65+ than men.

While financial literacy is considered common sense societal knowledge, only 17 states in the US require personal finance courses to be taught in high school, according to Business Insider.

Those are some seriously worrying statistics. As with the gender pay gap, it’s a complicated issue with numerous contributing causes. And that’s not the end of the road for us ladies. All it requires to combat this problem is starting at the beginning and taking ownership of our own finances at a young age.

Here are five essential basics to help us all get inspired to take control of our finances this year:

Plan for the Future

Yes, you should be thinking about a retirement plan this early.

The most basic retirement plans take the form of a 401K, which is facilitated by your employer, or a Roth IRA, a terrific option for freelancers or those employed by a company that does not offer a 401K.

Outside of your retirement plan, and especially at a young age, you can potentially afford to take a little risk with your portfolio. Try out platforms like Ellevest and Stash that can help to automatically build a diverse portfolio based on your timeline and goals. Sounds easy enough, right?

Know what you Owe

Confronting your debt in all its ugly forms can be hard to do, but it is an essential aspect of money management. One way to do this is to write out all of your debts, yes, even the money that you owe to your parents. Include the name of the lender, the outstanding balance, the interest rate, and whether the interest is tax-deductible, kind of like a mortgage.

Then assess the impact. Maybe you want to start with the loan or card with the lowest balance, which has been dubbed the “snowball method.”

Make Saving $$ a Non-Negotiable

Setting aside money for an emergency fund should be a priority in your budget. An emergency fund could be the difference between whether the emergency is just a financial headache, inconvenience, temporary setback, or a severe financial debacle.

The easiest way to do this is to set up an automatic transfer from your checking account to your savings account every month with a set amount. That way, you’re automatically putting money aside, and you’ll be surprised how quickly that can add up!

Stop Using your Credit Cards

Despite all the shiny offers of points, reward benefits, and zero percent financing, there’s one key thing to keep in mind when it comes to credit card companies. Their primary source of business is racking up debt and then charging interest on that debt. Credit cards—while offering a vital lifeline in pressing situations—are not your friend. Repeat it with me. They are not your friend.

Until you reach a point where you can consistently pay off your balance every month—and the keyword there is “consistently”—credit cards should be reserved for emergencies only.

Use the 50/20/30 Budget Rule

Senator Elizabeth Warren popularized the 50/20/30 budget rule in her novel All Your Worth: The Ultimate Lifetime Money Plan.

To break this rule down, you divide up your after-tax income, spend 50 percent on needs, 30 percent on wants, and allocate 20 percent to savings. That’s why it’s really important to sit down and budget your money wisely every month.