By Angela Dorsey
If the pandemic has taught us anything, it’s to stop and evaluate our lives, get clarity on what’s essential, and turn our focus to what matters. Your financial security matters. And your mistakes have far-reaching consequences for your family, yourself, and your future. It’s crucial to get your mental game together and stop making these mistakes.
Having A Budget
Between working and helping your children learn virtually, your days are even busier than they were pre-pandemic. Still, the first step in securing your financial future is to evaluate where you stand and set up a budget.
How much debt do you have? Are you afraid to open up your Visa statement? Then you probably have too much debt, and budgeting can help. Plan out your monthly payments, pay off your highest-interest debt first, and then tackle the next.
Do you have an emergency fund? An emergency fund should typically be between 6-12 months of your salary for unforeseen healthcare bills, car repairs, or a broken pipe…if you don’t have one, start now! With so much uncertainty, an emergency fund should be at the top of your budgeting to-do list.
Are you investing enough? According to an S&P 500 Global survey, only 26% of American women invest in the stock market. (1) Only 26%. Let’s think about that number for a moment because it is so astounding. You can’t time the market, no matter what any guru or financial shaman tells you. But it does help if you have time on your side. Yes, the ups and downs of the market can make you queasy, so it’s necessary to gauge your risk tolerance first and then decide which types of investments are the right ones for you. But an allocation of stocks can be a part of a healthy investment plan, which takes inflation into account. Start now, set aside dollars in your budget for investing, and make it a priority; otherwise, you are missing out on stock appreciation and compounding. If you want to boost your financial literacy, here is a list of great financial books to read.
If retirement is not on your radar, then it should be. We are all going to retire, and as women, the odds and actuary tables tell us that we will outlive our spouse and have the entire financial burden of retirement on our shoulders. Max out your IRA and 401(k) contributions every year if you can, and if you can’t, incrementally increase your contribution every year. The 2020 maximum annual contribution to an IRA is $6,000 and $7,000 for those over age 50. For a company plan, the maximum yearly contribution is $19,500 and $26,000 for those over 50. (2)
Find A Trusted Advisor
You need someone in your corner. Someone who can help you change your financial life trajectory, help you create financial goals and aspirations, and keep you accountable. As professional women with or without families, we have a lot on our plates, but financial soundness should be a priority because having a plan is empowering. Being burdened with debt or lack of a retirement fund can cause undue stress and anxiety. But you can do something about it now. I would love to work with you on designing a financial plan that can help you work towards paying off your debt, start saving and start yourself on the path to financial independence. Call me at (310) 370-7776 or schedule a free introductory 30-minute phone call today!
Angela Dorsey is the founder and fiduciary financial advisor at Dorsey Wealth Management, a fee-only financial planning firm helping successful women and couples prepare for retirement. Angela earned a BS in computer science from Loyola Marymount University, an MBA from UCLA Anderson School of Management, and spent 20 years as a Senior Compensation Specialist in large corporations before becoming a Certified Financial Planner™ (CFP®) and a Registered Investment Advisor (RIA). That background gave her the tools to couple with her passion for empowering women to make the best financial decisions possible. Angela lives in Torrance, California, with her husband and two children. She enjoys spending time at the beach or surrounded by nature. To learn more about Angela, connect with her on LinkedIn.