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New Year, New (Financial) You

Five healthy financial habits for women investors to weave into their 2022 goals.

With a new year around the corner, self-improvement may be top of mind for many. We hope that resolve applies to your financial plan too. Statistics show the percentage of people who stick to their resolutions is somewhere in the single digits, but these financial resolutions are well within reach, with a little professional guidance.

Close the gender gap in life insurance

We’ve known for decades about the gender gap in salaries and how important it is to close. Progress is being made, but there is still a way to go. Unfortunately, the gap also exists when it comes to life insurance. According to findings from the 2021 Insurance Barometer Study, just 47% of women have life insurance versus 58% of men, and 32% of those with no coverage admitted to needing it. Additionally, women tend to place a lower financial value on their lives than men when buying policies.

If you don’t have life insurance, it’s worth a conversation with an advisor to help you determine how much coverage you need. The age-old formula of buying five or 10 times your annual salary is no longer advisable as there are considerations that go beyond your W2, like women’s unpaid labor in the household (think: laundry, childcare, cooking and cleaning). If you do have protection, revisit the policy’s value; you may need more coverage than you once did.

Put your financial health first

Women are still more likely to be caregivers for their children and elderly family members, and they may set aside some of their peak earning years to do so. Additionally, women generally live longer than men, even though they tend to make less throughout their lifetimes. Because of this, retirement savings often suffer and women may find themselves trying to play catch-up in later years. To boot, women often think of their earnings as benefitting the family rather than their future self.

The same way you’re supposed to put your mask on first in a flight emergency, you should prioritize ensuring your retirement savings are on track to cover what you’ll need later. The start of the year is a good time to reexamine how much you’ve saved and how much you’ll need to retire the way you envision. Give yourself as much time as possible to up your contributions or alter investments if need be.

Budget to lighten the load during business times

It’s happened to all of us: Someone’s out of clean socks or the leaves are piling up in the backyard. We live busy lives, trying to keep up with work and family and take care of our homes – never mind squeeze in time for leisure every once in a while too. Maybe dialing back on how many chores you’re packing in each weekend will give you that time around the fireplace with family or cocktails with friends that makes you feel balanced. But you can’t just let the fridge go unstocked or abandon the dry cleaning.

Consider outsourcing some of the most time-consuming and (dare we say) dull chores to get more meaningful time back in your life. To make it happen, set aside funds in your 2022 budget. As we head into the new year, make a list of the chores that give you the biggest headache (or the ones that will give you the most time back in your week) and calculate how much it would cost to outsource them. Apps like TaskRabbit, Thumbtack and Handy allow you to book services only when you need them, instead of making a regular commitment.

Keep the giving going

One silver lining from the pandemic? Charitable giving is up. According to the Giving USA report, Americans gave more money to charity in 2020 than the previous year – up 5.1% year over year, or a 3.8% increase when adjusted for inflation. Despite the financially challenging year some faced, the desire to help was high. And studies show single women, holding consistent income and wealth, are more likely to give to charity than single men.

If generosity feels good, work with your advisor to create a plan to keep the kindness going. Create your giving goals, vetting specific institutions, at the outset of the year so you can allocate donations accordingly. We all want the opportunity to help when we see a story on our Facebook feed or a local news report, but earmarking a certain amount at the start of the year allows you to be purposeful with your giving and align it to your values. It will also ensure you’re maximizing tax benefits.

Set up a monthly check in

It’s important to regularly assess your financial health. While automation ensures bills are paid and money’s being invested, it could mean you run the risk that your investments are no longer aligned to your current situation or newly formed goals or you haven’t accounted for changes in your financial life.

It’s as simple as asking Siri or Alexa to remind you to set a financial goal for that month. During one session, you may want to sit down with your advisor and discuss the risk level of your portfolio. In the next, you might want to reevaluate your budget with your spouse or partner. The idea is that you remain in touch with your finances and are continually setting new objectives for your financial endeavors.

Even if you don’t make formal resolutions, these healthy financial habits are something to keep in mind throughout the year to ensure you’re on track for building safety and security – and wealth – in 2022.

Sources: lifehappens.org; theconversation.com; fortune.com; cnbc.com; moneyning.com; discoverhappyhabits.com

*Raymond James is not affiliated with the phone apps mentioned above.

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