5 Practical Steps Women Can Take to Strengthen Their Finances

In recent years, women have become more comfortable having discussions with their friends and families about their financial situations—how much they earn, how much they have in their retirement accounts and other ways they're working to increase their wealth.

However, there's still a long way to go before these conversations truly become normal. There's good reason to keep talking with each other about finances because doing so can help solve financial issues that are unique to women. These include women's longer life expectancy, more common stints out of the workforce and caregiving needs for aging parents. Here’s an overview of the unique financial headwinds women face—and some ways to overcome them.

Women's unique financial needs

When it comes to financial security, it's important for women to fully understand their potential financial hurdles.

Women tend to live longer

On average, women live approximately 5 years longer than men. With a longer life expectancy, women should consider a few extra things in their financial plan, including:

• Making their retirement dollars stretch further
• Planning for some type of long-term care event, as well as the increased cost of healthcare in general
• Preparing to dispose the marital estate because many married women will outlive their male partners and bear this responsibility

Women have less savings due to less earnings

Because women tend to earn less over their working lives, they tend to have less in their retirement and savings accounts when they reach retirement age. Data from the US Census Bureau shows that American women earn about 17% less than their male counterparts, and this gap increases with age.

There can also be a tendency among women-owned businesses to charge less than the market value for their products and services. Similar to employer wages, this leads to fewer retirement funds overall.

Because women need to make their retirement savings last longer due to longer lifespans, the dilemma is clear. With a smaller financial cushion, women can be more vulnerable to unexpected economic life events like a job loss or divorce.

Caregiving typically falls to women

According to 2023 data from the Bureau of Labor Statistics, more than 37 million Americans provide unpaid elder care—and 59% of these caregivers are women. Another study suggests that women do approximately one-and-a-half times more caregiving than men.

In many cases, providing care for a family member means only being able to work part time or leave the workforce entirely. Because caregiving tends to fall to women, this reduction or cessation of work can have significant financial impacts, including:

• Reduction or loss of income, employer-sponsored healthcare, retirement benefits and other employee benefits
• Less savings
• Potentially lower Social Security benefits in retirement
• Challenges in career advancement—and therefore earning potential—or challenges reentering the workforce
• Reduced ability to weather a financial hardship in the event of a divorce or death of a spouse

Women tend to live alone

Whether single by choice, divorce or death of a spouse, a growing number of women are living alone. This is especially true toward the end of a woman's life, when her spouse is more likely to have predeceased her. Overall, this means single women will have sole responsibility for protecting their assets and making financial choices on their own.

5 steps to build financial resilience

Despite the encouraging numbers of those taking control of their financial well-being in recent years, there's still more work to be done when it comes to financial planning for women to help counter the unique challenges they face.

Here are five steps you can take to position yourself for financial success.

1Understand your cash flows

Creating a cash flow plan or a budget is an essential step to staying in control of your finances. You should have a strong understanding of how much you have on the assets side of your balance sheet—such as monthly expenses and taxes—as well as how much credit you have available to help bridge the gap between the two. A great place to start is having a good grip on your household budget in collaboration with your spouse or partner if you have one.

2Build your confidence in investing

Whether you only contribute to a 401(k) with your employer or dip your toes into trading through a brokerage account, having a solid understanding of investing concepts like risk tolerance, diversification, inflation and asset classes can help you feel more comfortable when deciding which types of investment accounts are right for you. Sit down with your financial partner to get a full view of where—and in what—your money is invested so you have a good starting spot from which to learn more.

3Estimate your retirement income needs

There's a greater need for retirement planning for women due to their longer life expectancy, but challenges like less time in the workforce apply downward pressure to their retirement savings accounts.

To get an understanding of how much you'll need in retirement, a retirement savings calculator can be useful. For a deeper dive into your retirement income needs, weigh when you should start taking Social Security benefits and planning for higher healthcare costs. Remember, the earlier you start to save for retirement, the better off you'll be in the long term.

4Build an asset protection plan

Whether you run your own business or work for an employer, you have assets that need protecting. These may include your retirement and other investment accounts, physical property, your family and yourself.

To build an asset protection plan, you'll need to identify your potential risk exposure and determine how it can be reduced. For example, disability insurance can help cover the cost of care if you're unable to work due to disability.

5Advocate for yourself at home and work

While everyone's situation is different, there are a few ways to help you advocate for yourself whether you're at home or work.

• If both you and your partner work, make sure your partner is equally invested in responsibilities at home, including home upkeep and childcare.
• If you're out of the workforce temporarily to raise children or care for aging relatives, try to keep your skills up to date to remain competitive when reentering the workforce.
• If you're caring for disabled or aging family members, be sure to ask for help from adult siblings or others. If these options aren't available, check for external providers and support groups.
• Whether you've been in the same position for years or are looking for a new opportunity, always do market research to determine a fair salary for your experience.
• If you're a business owner, try networking for new business opportunities or learnings to take back to your company.

Bring the full picture together with a financial professional

Women are their own best advocates in everything they do, and this includes having a better understanding of their financial situation. But when it comes to financial advice for women, planning isn't always easy or convenient to do on one's own.

In many cases, women—as well as their partners—can benefit from working with a professional who can help them make their money work for them. Connect with a First Citizens Wealth consultant today to navigate your personal financial challenges.