By Caroline Wright
Fear #1: Establishing a budget would mean facing where you're really at.
Taking an honest look at your finances can be downright scary, which is why it sometimes seems easier-and less painful-to continue spending blindly rather than sit down and evaluate your situation.
Solution: Take a deep breath, pour a glass of wine, and pull out a pen and paper. Congratulations, you're already on your way to creating a budget! Now write down a number and breakdown for each of these three things: your monthly post-tax income, your monthly expenses, and those areas in which you tend to regularly blow through money.
Do you notice any patterns? Do you see areas where you can cut back a bit? The key to financial planning is creating a budget that you can live by-otherwise it'll end up in the shredder. If you know that you like to eat out every so often, look for other places where you can cut back to allow for that. Maybe you can't afford the family ski vacation this year, but if you skip it, you realize you'll be more easily able to pay for more important things, like child care. A successful budget not only helps you find the money to indulge, but it also helps you sleep better at night.
Related: 25 Lazy Ways to Save Money
Fear #2: Talking to your husband about your finances will just cause more fights.
Discussing money, especially with a spouse, can be uncomfortable because it forces you to consider big-picture things, like lifestyle goals, professional plans, and priorities. At the same time, you may be afraid that your husband won't want to hear what you have to say, or be reluctant to face the reality of your situation.
Solution: "Use the New Year as a starting point," says Linda Descano, president and CEO of Citi's Women & Co. "Kick off regular financial 'date nights' with your spouse-have dinner at your favorite spot, and begin by reflecting on the things you've achieved in the past year. Use those accomplishments as a jumping-off point for talking through your goals for the next year and how you're going to manage your finances in order to achieve them." Like in any other emotionally-fraught conversation, try to use "I" or "we" instead of "you" statements, so your partner doesn't feel like he's being blamed or ambushed. After all, you're in this together, and in order to be successful, you both need to be on board with plans for managing household finances.
Fear #3: If you ask for a raise, your boss will think you're greedy.
If your palms start to sweat at the mere thought of it, you're not alone. The Women Don't Ask study found that men are four times more likely to initiate salary negotiations than women, and that 20 percent of adult women will never try to negotiate despite feeling they deserve more money.
Solution: Arm yourself with the facts. Women who consistently negotiate their salary stand to earn a whopping $1 million more than those who don't. If it's been more than a year since your last raise, you've taken on new responsibilities, or you've been doing a particularly awesome job, schedule a time to speak with your boss. Remember, most managers won't just give you a raise-you have to ask for it.
Once you've set up your meeting, prepare by practicing your talking points and gathering evidence that supports your case. Make a list of your recent accomplishments, using hard numbers if possible, and do some research to see what others in similar positions make. Above all else, project confidence. If you don't at least act like you deserve a raise, chances are your boss won't believe you do either.
Related: The Secret to Financial Freedom
Fear #4: Making sense of investing just sounds exhausting.
A study by Wells Fargo & Co. found that a staggering 41 percent of affluent women say they are "not at all confident" in their investing ability. That's a shame, because regardless of your income, there's money to be made.
Solution: Take it slow. Try investing in bonds or certificates of deposits, which allow you to keep the principle balance and function like IOUs-with interest. You "loan" a predetermined amount of money to a bank, private company, or even the government for a specific amount of time, and once that period is up, you get all of your money back, plus interest. Since interest rates hover around 1 percent, bonds provide lower returns than you might get playing the stock market, but they're also a low-risk way of testing the waters.
Fear #5: You'll never get out of debt.
Nearly one in four Americans have more in credit card debt than they do in emergency savings, according to Bankrate.com, meaning you're definitely not alone in the predicament. And there are ways out.
Solution: Before panicking, know that you have many options besides filing for Chapter 11. First, determine your level of debt and which of your cards has the highest interest rate. Although another card may have a higher balance, it's ultimately most beneficial to pay off debt from the card with the highest interest rate first. Simultaneously, make sure you pay at least the minimum balance on your remaining cards every month to avoid getting dinged with late fees or other penalties. And be brutally honest with yourself in determining the items you can live without, like new clothes or a big vacation. If the situation calls for it, you may have to sell major investments, like cars or property, to help you regain your financial footing and start anew.
If you're already doing these things but don't feel as if you're making enough progress, consider transferring your balance to a credit card with a zero-percent introductory period APR (annual percentage rate), which can help you save on interest long-term. Or think about debt consolidation. By taking out a private loan to pay off your credit card balances, you won't necessarily get out of debt more quickly, but you could boost your credit score. Basically, it comes down to increasing your credit limit, yet keeping your balance the same, and thus lowering the percent of your credit limit that you actually use.
Fear #6: You're not saving enough for retirement, and you'll be left strapped later.
Between putting aside money for your kids' educations, doing home repairs, and paying for other living expenses, it's no wonder many women feel like there's not enough to stash away for retirement. To add to the stress, rising life expectancies mean longer retirements and decreasing social security payouts.
Solution: There's good news: You still have time to save. If you're in your 20s or 30s and are just starting your retirement planning, try to contribute as much as you can to your 401(k) or IRA on a monthly basis. For women 30 or older, many financial planners recommend saving 19 percent of your annual income for slow, steady growth. If that's not possible, contribute the maximum amount that your employer will match, typically 3 to 6 percent of your pre-tax income, so that you don't forego what is literally free money. To avoid the pain of watching your hard-earned money disappear from your checking account, set up automatic contributions from your paycheck. That way, you won't feel like you're "losing" something.
Fear #7: Paying for college may be out of the question.
As you get older, it's not just worrying about retirement, but also about your kids' tuitions. With these and so many other spinning plates in the air, it's easy to feel overwhelmed.
Solution: There are tons of options to help you stretch your money further. For starters, check out 529 plans, state and prepaid tuition plans that allow you to pay today's rates for school tomorrow. Think of it like a forever stamp-it might cost you 42 cents now, but it'll still work when the price hits 50 cents in a few years.
So far as how much to invest, use your children's ages as a guide. If they're 8 or younger, 60 to 90 percent of your portfolio should be invested in stocks. After that, shift from stocks to bonds and cash, which carry less risk.
And don't think for a second that you have to foot the entire bill yourself. There are billions of dollars available to students who show aptitude in certain fields, especially STEM (science, technology, engineering, and mathematics), or express a willingness to enter a certain profession. Research available opportunities to find out what your children qualify for by going to finaid.org.
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