Here’s how to manage your money, increase your savings, and start investing

When it comes to dealing with money, many people don’t really know how to start.

Women are even further behind than men, earn less on average and save and invest less. They also don’t have as much confidence in investing as men, research shows.

Because women, on average, live longer than men, catching up is imperative, financial experts warn.

“Much of America’s wealth is in the hands of women, but much of that is still cash and cash equivalents,” certified financial planner Brittney Castro said on a CNBC set, Investing in You Ready Set: Grow Women in Money ” Thursday.

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“There is a great opportunity for women to really understand investing, understand the risks, and set up their investment portfolio to grow their wealth so they can have that source of income.”

In a 2017 study by Merrill Lynch and Age Wave, 52% of women said they felt confident about managing their investments, up from 68% of men.

However, studies have shown that female investors outperform men by 0.4% to 1% when investing.

The good news is that the pandemic has made women more focused on managing their finances.

Before anyone gets into investing, there are a few steps that must be taken to be ready, said CFP Carolyn McClanahan, MD and founder and director of financial planning at Life Planning Partners in Jacksonville, Florida.

“You have to take care of yourself first,” she said. “Women in particular are so good at taking care of everyone else, sometimes to their detriment.”

Build a base

To manage your money well, first make sure you have an emergency fund in a safe place like a bank account, even if it doesn’t deserve much interest, advises McClanahan, who is on the CNBC Financial Advisor Council.

This is not the time to invest aggressively.

The best way to start saving is to make sure that deposits are made automatically. Don’t just put in what’s left after you’ve paid your bills. Instead, define what you’re saving and treat it as an invoice.

When investing, know what your goals are. Is It Achieving Financial Independence? Is it Buying a House?

Dr. Carolyn McClanahan

Certified financial planner

“You need to start with a plan and determine your cash flow or budget,” said Castro, founder and CEO of Financially Wise in Los Angeles.

You can start small, save $ 25 or $ 50 a month, and then increase that as you see fit over time.

Another important part of your financial foundation is disability and life insurance, which can protect you and your family if you get sick or die, McClanahan added.

Trade vs. Invest

There is a difference between trading, which is buying and selling stocks, and investing, which tends to have a long-term horizon.

“I don’t recommend anyone trading unless it’s just a little bit of money and you’re doing it for fun,” said McClanahan.

“You should start investing young and doing as much as you can.”

If you have an employer-sponsored retirement plan, like a 401 (k) or 403 (b), and your company offers a match, you’re contributing enough to at least get that match, McClanahan said.

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If you qualify, take a look at an individual Roth retirement account. Contributions are made after taxes; You will therefore receive the funds tax-free in retirement. However, there are income limits. You can contribute a maximum of $ 6,000 (or $ 7,000 if you are 50 and older) if you earn less than $ 198,000 if you are married and filing together, or less than $ 125,000, if you are single.

When you have a bit of cash, it’s important to be in a broad-based, diversified portfolio, McClanahan said. That generally means index mutual funds.

As your wealth grows, you can start breaking it down into things like international funds and small-cap funds.

“Don’t be a herd fan”

Once you start getting more cash, you can add something to a brokerage account in addition to your retirement savings.

Remember to understand what you ultimately want to do with the investment.

“Money should be the tool, not the object,” said McClanahan. “So when you invest, you know what your goals are.

“Is It Achieving Financial Independence?” She added. “Is it a house to buy?”

It is also important not to get caught up in daily market movements as your investment will be long term.

“Don’t be a herd fan,” advised McClanahan. “When the market is doing badly, don’t jump out, and when the market is doing well, then don’t just choose to invest.

“It has to happen on the way.”

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