Written By: Allison B. LaGasse, CLTC, Financial Advisor

Women seem to do be doing it all these days. From managing the home while building successful careers, to raising children while caring for elderly parents, the roles many women play in today’s society have become increasingly multi-faceted. So it should come as no surprise that in-between running business meetings and carpooling to soccer practices, women are also projected to control over half of all private wealth in the United States by the year 2010 (Business Week/Gallup, 2005).

Aside from simply controlling the money, women have plenty of convincing reasons to become financial savvy…not all of which are pretty. For one thing, according to the Bureau of Labor Statistics, women tend to make $.77 to every $1.00 made by our male counterparts. Combine this with the fact that women tend work fewer years and are likely to live longer than men, and you can see why women should be getting on the path to financial success as quickly as possible.

These facts seem to paint a grim picture for the aspiring female millionaires out there, but luckily there are quite a few characteristics, inherent to women, working in our favor. For one thing, women tend to be better at COMMITMENT than men, which make us more successful investors! While men tend to invest on instinct and act on the “hot stock tip” of the moment, women tend to develop and stick to a long-term investment strategy. In fact, according to a study by the University of California-Davis on average, women investors outperformed male investors by 9% a year! Furthermore, women aren’t afraid to speak up when dealing with a topic with which we are unfamiliar. We eagerly read articles, conduct research on the internet and reach out to friends and family to seek information that will help us make better decisions and become better educated along the way.

So, what are the initial steps to becoming financially successful? Many would argue the first step is to make more money, but this is simply not true. Below I’ve outlined 5 steps to get anyone, on any budget, started on the path to financial freedom. 

1. Get Started Early. When it comes to building true wealth, nothing plays a more powerful role than TIME. The longer your money is invested, the faster it can grow upon itself (known as compounding interest) and the less you have to save per month to reach your goal!

2. Have a Game Plan. Knowing where you stand currently is a key component to developing a plan to get you where you want to be down the road. Take some time to consider the following questions: How much is your salary? How much do you save per month? How much do you spend per month? What are you spending your money on? Next, take some time to ponder where you would like to be in 1 year, 5 years, 10 years, and at retirement. Visualize your future as you hope to see it, put your goals in writing and determine what you need to start doing today to put you on track for the life you envision.

3. Lay the Foundation. Now that you’ve set some goals, it’s important to put the proper protection in place so that should any unexpected bumps in the road occur along the way, your dreams can still be accomplished because you planned accordingly. Every woman should have adequate life, disability, and long-term care insurance to protect her and her family. These insurance plans will protect you financially during an emotional time and no financial strategy is complete without them. Life insurance products contain fees, such as mortality and expense charges, and may contain restrictions, such as surrender charges, so make sure you understand what you are purchasing.

4. Invest Regularly. These days it is extremely easy to put your savings on auto-pilot. Your employer, bank and brokerage house all have the capacity to set up automatic, monthly contributions to any retirement plans, savings accounts and brokerage accounts you open. Furthermore, by putting your savings on autopilot, your investments will perform better in the long-run because you have essentially taken your emotions out of the equation. For example, if you’re investing $100 per month, every month, regardless of what’s going on in the economy, that $100 will buy fewer shares of stock when the market is high and more shares when the market is low. However, if you were investing the same $100 at random, you would probably be hesitant to invest your money in a down economy because your emotions would come into play. Investing the same dollar amount every month is known as dollar-cost averaging and it is great technique to ensure you are buying low and selling high. Dollar Cost Averaging does not assure a profit and does not protect against loss in declining markets. Also, since such a program involves regular investment purchases regardless of fluctuating price levels of the investment, consider your financial ability to continue purchases through periods of low price levels.

5. Don’t Put All Your Eggs in One Basket. Diversification is probably the most commonly given piece of investment advice and, I could argue, it is also one of the most misunderstood. Holding ten different stocks in your retirement account does not mean you’re diversified; diversification considers what those investments represent. For example, are you invested in all large growth companies or are you invested in all small international companies? Are you holding all corporate bonds or are you invested in all technology companies? A well-diversified portfolio can help minimize risk while producing competitive returns. Diversification does not guarantee against loss, but is a method used to manage risk.

Now that you’ve read some reasons why women need to plan more than men, some arguments as to why we’re destined to make better investors than men and five steps to get started on the path to financial success and security, it’s time you take some action. Read articles, talk to friends and family, and seek out a financial advisor you can trust to build a long-term relationship. Continually find ways to increase your “Investment IQ” and surround yourself with people who support your efforts. There’s no time to procrastinate. This is your life, plan for it.

Allison is a Registered Representative of Securian Financial Services, Inc., Securities Dealer, Member FINRA/SIPC, and a Registered Investment Advisor.  Financial Advantage Associates is independently owned and operated.

1175-2009-46820, D.O.F.U. 2-2009