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7 strategic financial management tips for women

Below we share some management, budget and investment advice for women entrepreneurs. Virginia Porcella, finance specialist and author of the book “High Heels Economy” and “SOS Economy,” offers her tips.

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Published by ConnectAmericas

HIGHLIGHTS

“When we talk about savings, it is important to consider the idea of investing, since investing makes savings yield better returns”

Due to the multiple roles that women play on a daily basis, as household managers, consumers or as business owners, sound financial management is extremely important. Below we share some tips on how to achieve this:

  • Prepare a monthly budget: Plan your expenses for a given period and monitor if you have spent more than you originally planned. At the end of the month, make the necessary adjustments to optimize it; daily follow-up can help you save up to 15%. 
  • Use different accounts for different purposes: The secret to generating wealth is money management. One of the ways is to divide the money into specific accounts for specific purposes and relate each account to an area of your life – and to use it only for that purpose. Each time you receive money, assign a percentage to each account.
  • Invest instead of saving: Money is too volatile to focus only on saving. Aim to accumulate to invest, generate returns and more income. It is good to be an active investor and, above all, to understand the chosen method.   
  • Prepare for contingencies: Seek to protect yourself through insurance on your business, life and other assets that can be adversely affected and impact your wealth. Create an emergency fund (equivalent to three to six months of your income) in order to face any possible problems relating to work, production or personal situations that may arise.   
  • Increase added value: The more value you generate, the higher the price that your client will be willing to pay for the product or service that you are offering. Investing in yourself to grow and create more capabilities is the best long-term investment where you can accumulate experience, training and continue to be updated.     
  • Think about tomorrow: It is never too early or too late to design a retirement and savings plan. On average, women have a higher life expectancy than men and should think about how they will manage the costs.  
  • Build and consolidate your credit history: You may not have considered this yet, but obtaining credit to open a business, purchase a house or a car, or even to have your own credit card you have to have a good, responsible and timely payment history.  

Virginia Porcella, women’s finance specialist and author of the book “High Heels Economy” and “SOS Economy,” affirms that having a clear focus on business and planning is essential for efficient personal finance management. “This seems simple and even obvious but the truth is that women, due to social and cultural reasons, have less experience and practice with focusing on savings, defining goals and designing strategy,” she adds.  

The author indicates that the first step is to make a diagnosis: how much is spent and on what, how much money comes in, how much is left over, if applicable, or in the worst case scenario, how much is missing. The next step is to establish saving goals that should be used for: first, building an emergency fund, then to meet short and medium-term objectives such as the purchase of a durable or semi-durable good, and finally the long-term objectives such as the purchase of a house. “When we talk about savings, it is important to consider the idea of investing, since investing makes savings yield better returns,” she highlights. 

A study conducted by Lincoln Financial Group determined that half of the women show some type of difficulty in managing their finances, resulting from the years when men were managing the economy.

“Money cuts through all aspects of a person’s life: at a personal, employment, and even at a social level. Focusing on our personal finances means focusing on our lives. There is no overlap but rather integration, managing our accounts is not just another task but a key aspect to all that we do,” affirms Porcella.

As we have seen, it is not necessary to be an expert; you only need to have a clear idea of your current finances and to develop a plan from there. If decisions become a bit more complicated, whether regarding the business or investments, you can consult with a trustworthy financial advisor with whom to build a long-term relationship.

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