Building Smart Financial Habits Today, Helps Save for Tomorrow

With growing confidence and financial literacy, women today are taking more control over their finances than ever before. But, even with the growth in confidence and financial capabilities, women still face unique financial challenges that require additional planning and a more comprehensive financial foundation. With longer lifespans, caregiving responsibilities, and the gender pay gap, it is critical to develop strong financial foundations today in order to ensure a more financially secure tomorrow. Thankfully, the Iowa Department of Insurance and Financial Services’ SmartHER Money program has a list of tips and advice on how to best navigate these challenges and empower women to take control over their financial future.

The first step in setting up a long-term financial wellness plan is to utilize budgeting. Budgeting isn’t just about tracking how much you’ve spent, but developing an understanding of where your money is going and how best to make intentional decisions about spending it. A budget is the key to gaining control over your finances and ensuring there is a road map for the future. As a rule of thumb for building a strong financial foundation, we recommend implementing the 50/30/20 rule where you allocate 50% of your income to daily needs, 30% to wants, and 20% to your savings and investments. Ideally, in doing this, you can establish a savings account that can support you for three to six months in the event of an emergency.

Your savings will help make sure that you’re prepared for both short-term goals and long-term financial security. When developing your budget, it’s best to get in the habit of regularly contributing to your savings – even if it’s a small amount – so you are always working towards your long-term goal. We recognize each month brings new challenges and unexpected expenses, but by treating savings contributions as a “non-negotiable” expense and contributing as soon as you receive payment, it relinquishes some of the temptation to spend that money elsewhere. By setting up this practice, you are building a financial foundation that will support you well into the future and into retirement.

The long-term goal is building enough financial security to comfortably retire. As you save, it’s important to look into additional benefits and investments to help your savings grow faster. Many employers offer benefits – such as a 401(k) match or retirement account – that would be beneficial in maximizing your savings and investment capabilities. Free money is one of the easiest ways to grow this savings. By understanding your retirement accounts – whether it be a 401(k), IRA, or Roth IRA – you can best take advantage of tax-deferred investments. These options will offer you the ability to capitalize on compound interest, and the earlier you start, the more it will grow. For more information on retirement accounts, or to use a compound interest calculator, visit our website at smarther.iowa.gov.

In the end, it’s best to remain empowered to take the action necessary to secure your future financial stability. Stay educated on the options available to you, know your worth, and don’t be afraid to find support and ask for help when you need it. Financial challenges are bound to pop up over the years, but if you establish the strong financial foundation necessary, you can navigate and overcome challenges while maintaining a prioritization on your future retirement goals. If you ever need help finding resources, the Iowa Department of Insurance and Financial Services is here to help all Iowans on their financial journeys. Iowans can learn more about our services and the resources available to them by visiting our website, iid.iowa.gov.