Women and Financial Freedom

Por Arantza Bayod

Women, on our way to freedom, have won many battles. Step by step. Without haste, but without pause, we have been able to conquer our freedom of choice and our freedom of expression and action: today we can choose without ties what we want to do with our lives: whether we work or not, whether we get married or not, whether we have children or not. We can freely express our views, our opinions, our moods: through the way we dress, the way we speak, the way we write, and even the way we dream. We can do what we want: go to college, work, travel… Yes, travel. It may seem obvious to you that women can travel wherever we want, with whomever we want, whenever we want. But, until not so many years ago, to go to another city or another country, we needed our husbands’ permission. Yes, as you can hear. And there is more. Incredible as it may seem to you, until 1931 we did not have the right to vote in Spain. And, until 1981, the community property or the custody of the children belonged to the men.

As you can see, since the last century, much has happened. However, there is still a long way to go, among other things in terms of women and finances.

Women, despite owning more than 40% of the world’s wealth, are still far from having the financial education necessary to be able to manage and invest this large amount of money. Women are advancing by leaps and bounds in the professional sphere, gaining access to more and more professions and well-paid jobs. However, we are not advancing as quickly in knowing how to manage our money, let alone how to multiply it. In fact, according to an article published in Fortune magazine*, women have 71% of our money in cash. Saved in the bank. Sometimes, we confuse saving and investing. But saving and investing are not the same thing. And an excess in savings makes your money lose value.

Why is it important to know how to manage and invest our money?

Among other reasons because:

  1. Every euro you earn costs you time and energy. The money you have has been exchanged for your time and energy, so you will agree with me on how important it is to be aware of what we spend our money on and be selective with our spending. Let’s suppose that your salary is 2400 euros per month and that last month you bought a last generation cell phone for which you paid 1200 euros. That cell phone cost you 15 days of effort. So, ask yourself, was it worth that effort to buy this mobile? The answer is only yours, and it is important that you ask yourself this question so that you can create a money mentality and learn to know and control your expenses.
  2. There are unexpected situations that can lead to large expenses: By managing your money well and generating savings, you will be able to cope with any unforeseen event, such as job loss in the most extreme case. Or a large medical bill.
  3. Your savings can work for you. By investing your “surplus” you will make your money multiply, generating a profitability and even an additional income. This is what happens when you have shares or investment funds or a rented house. You have assets in your patrimony, which in addition to being able to multiply (and do so if you play the long term), generate income every time dividends are distributed or you receive the monthly rent.

So, how can I manage my money better?

The answer is as easy to say as it is difficult to implement: by changing your financial habits. To do this, you must first be able to identify your current habits and decide which routines you want to change. Then, set concrete goals to help you adopt those new financial practices. Once your new habits become part of your behavioral routine, you will no longer have to pay much attention to what you do with your money, because you will just do it. For example, if you want to create a savings habit, you can set a specific goal of setting aside 5% of your paycheck the same day you receive it. You can create a savings account and transfer that 5% from month to month. It may take you a while to get used to “getting rid” of part of your paycheck, but once you get used to it and automate it, you won’t think about it anymore.

Financial freedom

Financial freedom is one of the vehicles through which women can achieve our true freedom. Whatever you mean by freedom, healthy finances will always help you. Because knowing that you have (and will have) enough money to have the lifestyle you want will free you from the burden of always thinking about money. Financial freedom allows you to be more confident about the future, to get rid of financial worries, and to be able to be yourself and do what you want with your life. But beware, this freedom is not achieved overnight. To achieve financial freedom, you need knowledge, goals, commitment, perseverance and a certain amount of risk-taking.

– Knowledge: acquire the basic financial education that allows you to know your finances and discern between different types of investments. This way you will be armed to make the best financial decisions at every moment of your life.

– Objectives: set your financial goals through your financial planning (a systematic savings and investment plan).

– Commitment: commit to putting your financial planning into action.

– Consistency: once you have started taking action, don’t stop, keep going!

– Risk: every investment carries risk. The value of investments is fluctuating and therefore not certain (at least in the short term). What is certain is that if you do not invest, i.e. if you leave your money in your current account, you are already losing money due to the loss of purchasing power caused by inflation.

The important thing about financial freedom and independence is that you learn to take control of your finances and your money. Being able to project your financial future through a plan, which, as you fulfill it, will give you more freedom, more security and more peace of mind.

And the basic tool to take control of your finances and your money is financial education, one of the legs that still limps in female empowerment.

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