10 Ways For Women To Achieve Financial Independence

“The question isn’t who’s going to let me; it’s who’s going to stop me.” 

Ayn Rand


“Everyone has inside of her a piece of good news. The good news is that you don’t know how great you can be!” 

Anne Frank


By being women, we have different financial hurdles to overcome:


Gender gaps persist 

Women’s pay is 10%-20% less than those of men. Even at the low end of the range, the cumulative effect of starting at a lower base at age 25, with raises on that smaller amount, will provide 38% less wealth for women by the time she reaches 85 based on a UBS study.

 Lower earnings impact social security monthly benefits

Average social security benefits for retired workers were $1,422  in 2018, with women receiving $1,049 versus $1,382 for men. Across all employer retirement plans, men have higher average account balances, which gets more expansive with age.

 Women hold two-thirds of the US student debt loan balances 

They account for 56% of undergraduate students and have more degrees in every higher education category, including doctorates, than men. However, this is not translating into higher earnings for women. The result is that women’s finances are squeezed by paying more student debt and earning less.

 Taking more time off 

Career pauses for women occur far more often (44%) than for men (28%). They take time off when having children and are nearly twice as likely to work part-time. Many take an extended hiatus from work. There is a greater likelihood a woman will be caregivers to her aging parents or even their spouses. During the pandemic, women left their jobs more often than men.

 Life expectancy remains longer

Women live longer than men in the US, by estimates of 6.7 years.


According to the US Census Bureau, a woman’s average to become a widow is 59 years.

 Divorce causes financial hardship

Divorce rates in the US for the 50+ population have doubled since 1990. While challenging for both parties, the split usually takes a more significant toll on women.

 A Merrill Lynch study with Age Wave has shown that as a result of the multiple impacts of lower earnings, parenting, caregiving, and reduced retirement savings opportunities, women will collect $1,055,000 less than men by their retirement age.

10 Ways Women Can Become More Financially Independent And Build Their Wealth:

#1 Be More Financially Proactive

Women in their 20s should be financially enterprising from the start of their careers. That means they should become more aware of starting salaries in their field and understanding its benefit packages.

Related post: A Guide For College Grads On Your Company Benefits

Glassdoor’s latest Salary Negotiations Survey found 40% of American employees accepted the first salary offer. Women negotiated less than men, with 58% of women negotiated offers versus 61% of men. This survey reflects a positive jump for women negotiating their salaries from the previous 2016 report when close to 60% of women took the stated offer.

The average employee could be earning thousands more per year more than his or her salary according to Glassdoor’s trademarked Know Your Worth, its personalized salary estimator. In a tight job market, especially for technology and healthcare, significant money is left on the table.

#2 Women Need To Negotiate

Negotiating skills are essential and don’t always come naturally for a woman. Speak up early and often at your interview. That’s when you have the most leverage. Ask for a raise just as your male counterparts do. Research what your worth is and be able to explain why that is so.

Foreign To Ask For Money

Midway in my career as an equities analyst, I was one of the only women working in my research department. They promoted me to managing director, the first of many of my peers (male or female) at a major investment bank.

I enjoyed what I did as, and it didn’t hurt that bonuses were generous. What was not to like? The thought of negotiating for my compensation was foreign to me. Frankly, it never dawned on me to ask for more until I started getting “headhunter calls,” that is, from executive recruiters. Several conversations later, I found out that my latest bonus was 30% below my male peers.

Negotiation gets a lot easier when you have a target to rely on, motivated by hard work, and gaps shouldn’t exist. Shame on me for not speaking up earlier for myself. Shame on you if you don’t use your leverage to gain more of your deserved share.

The earlier you can reduce your income disparity versus men in your career, the better for building your wealth.

Related Post: Challenges Women Entrepreneurs Face And Overcome

# 3 Saving for Retirement Early

Begin to save money for retirement through your company’s sponsored 401K plan. While you may want to set aside a smaller amount initially, aim to at least contribute the amount needed to get your employer’s match if offered.

As you get salary raises, make sure to increase your contributions to your 401K proportionately until you get to the maximum amount allowed. Maximum 401K contributions are $19,500 (or $26,000 if you’re age 50 or older) annually. You should also contribute to an IRA or Roth IRA up to the maximum allowed, $6,000 (or $7,000 if you are 50 or older)  currently.

Related Post: Saving For Retirement In Your 20s

Roth IRA is preferable if you qualify.

The Roth IRA is a great place to start when your salary is at its lowest level, provided you qualify. Your 2021 adjusted gross income must be less than $140,000 if you are single and $208,000 if you are married and filing jointly. When you contribute it is with after-tax dollars, your retirement withdrawals, including accumulated gains, are tax-free.

When dealing with traditional IRAs, contributions are made at the pretax amounts and taxed upon withdrawal.

#4 The Compounding Magic

Through the power of compounding returns and a long time horizon, your retirement savings will grow significantly. Assuming you invest $1,000 every month beginning at age 25 until age 65, at a 6% interest rate, your retirement savings will amass to close to $1.9 million.

Upping it to the maximum amount allowed of $25,000 annually ($19,500 for 401K plus the $6,000 for the IRA) in monthly increments, your retirement savings will balloon to over $3.9 million.

# 5 If Married, Both Spouses Should Save For Retirement

Both spouses need to share household duties. Division of labor in the home is essential to grocery shopping, cleaning the dishes, doing the laundry, and putting the kids to bed. There is not as much an emotional stake as there is when it comes to money. That’s when things get testier between spouses. Many women felt their household duties expand when both spouses worked remotely during the pandemic. I can attest to that.

Married couples, if they are both working, should save in their respective employer-sponsored retirement accounts. They should take advantage of their employer’s match contributions, if available, by meeting the required minimums.

Shortchanging your nest egg when only one earner saves

Sometimes, only one spouse will participate in their workplace plan, usually the higher earner, often the husband, even though both are earners. This practice will shortchange the long-term nest egg for the married couple or complicate finances in the event of a divorce. It is usually more difficult for women in the event of a marital split.

Women need to either save for their retirement, if working, by setting up their own IRA account, staying-at-home or unable to fund their accounts, being involved in financial decisions.

Survivor Benefits From A Retirement Plan

You may also be entitled to survivor benefits associated with a company’s retirement plan, usually a pension plan. If you are married when your spouse retires, you are generally entitled to a survivor’s benefit if your spouse dies before you.

However, under certain circumstances, you may have waived away your rights by granting your right to a child, for example. Always consult with your attorney or financial advisor before waiving your rights.

Spousal IRA

The spouse who is not working should set up a spousal IRA (Roth or traditional) can be set up as long as the married couple files joint taxes. This contribution remains subject to the income limits.

Assuming her husband is not working, the working wife can contribute up to the $6,000 to her own IRA account and $6,000 to her husband’s account. Her husband’s IRA is not a joint account.

Social Security Benefits

To receive social security benefits, you are generally required to have 40 sequential quarters of work. However, if you left the workforce for caregiving, you may be eligible for benefits by accumulating at least 40 “service credits” or have had ten years of paid employment. Women account for 60% of the caregivers.

If you are married or divorced:

Married women have the option of claiming benefits on their work record or 50% of their spouse’s benefit. If there is a big difference in earnings, the spousal’s benefits may be better.

Divorced women may be able to receive benefits on a spouse’s record–even if the spouse remarried, but only if: if their marriage lasted ten years or more; the claimant is unmarried and age 62 years or older; the former spouse is entitled to Social Security retirement or disability benefits; and the benefit you’re entitled to receive based on work is less than the benefit you’d get on your ex-spouse’s work.

Survivor Benefits Associated With Social Security

Widowed women are eligible to receive their late spouse’s Social Security payment as a survivor benefit if it is higher than their monthly amount. The surviving spouse can claim the higher monthly benefit for the rest of his or her life.

So, for a couple with at least one member who expects to live into their late 80s or 90s, deferring the higher earner’s benefit may make sense. Strategizing as to when you or your spouse should claim benefits based on health issues is beyond the scope of our article but is discussed more fully in Viewpoints found on Fidelity’s website.

At the very least, women need to be aware of their financial situation given their longer life expectancy and the potential of being derailed after a divorce.

#6 Women Need Financial Independence

Women need to know how to manage their finances. A recent Gender Gap in Financial Literacy study pointed out, 90% of women will be solely responsible for navigating their finances during their lifetime. Becoming more astute about managing money as early as possible will prevent harmful mistakes uncovered later on.

Have Your Money Accounts

Women should also have their own banking accounts. After getting married, couples often opt for joint bank and investment accounts. Things can get complicated when one spouse has inherited a lot of money or separate businesses.

Nearly half of couples with joint bank accounts also have individual bank accounts. According to a TD Bank survey, Independence was the primary motivator cited by 43% of women compared to 34% of men.

#7 Women Need to Become More Financially Confident

Eight out of ten women are uncomfortable discussing money with others. Paradoxically, 75% of women want to learn more about money and to invest. The confidence gap in women probably accounts for these percentages. As women gain more confidence, they will be able to handle their money and finances better.

A recent UBS study pointed out that 58% of women defer to their husbands when making financial decisions related to investing, including the younger women, ages 20-34 years. 

#8 Women Should Also Be Investors Outside Of Retirement Accounts

Women should use their earned income to invest in stocks outside their retirement accounts. However, studies point out that women favor cash over stocks because of their conservative nature and lack of confidence.  A Blackrock Investor Pulse Survey shows 72% of women rejected riskier equities versus 59% of men.

Women Can Invest Better Than Men

Only 9% of women believe they could outperform men concerning investor returns. Yet, in reality, women overall performed 0.4% better in investment returns in the Fidelity study. Other studies showed women having higher outperformance. Compounding that slight beat could amount to significant dollars.

Risk and reward or returns are positively correlated, meaning they move in the same direction. Opting for cash will not generate much wealth compared to investing in stocks which will rise over the long term.

Be More Aggressive In Investment Choices When You Are Young

Choose to be more aggressive about your investment choices in retirement and taxable accounts. Studies show that women tend to be more conservative and less confident about investing than men.

At age 25, you can afford to take on more risk by investing in faster-growing assets with 75% of your portfolio stocks while holding 25% in bonds. Some recommend investing up to 90% of your portfolio or even 100% in stocks based on higher returns. As you get older, you should reduce some of your risks to a more balanced portfolio that includes bonds and money markets.

If you don’t want to pick stocks or be in charge of making asset allocations, there are low-cost index funds or target-date funds.  Large mutual funds like Vanguard or Fidelity offer life cycle investments that will allocate your funds according to your age and target retirement year such as 2050 or 2060.

To Achieve Investing Goals Work With Financial Professionals

Women should work with financial professionals in actively planning for assets outside of retirement assets. They can help you determine where your assets should go. Among varying classes to grow your wealth are taxable investments in stocks, bonds, or real estate, whether in buying their own home to live in for many years, or alternatively, real estate investments.

Additionally, many mutual funds and Exchange Traded Funds or ETFs help women reach their investing goals as an alternative to individual investing or a financial professional. Some investors are not ready or don’t want to work with a professional yet.

See our related post: 10 Tips To Diversify Your Portfolio

Women tend to trade less frequently than men do, adhering to buy-hold strategies. The financial services industry is male-dominated. Women account for 17% of financial advisors and 23% of certified financial planner professionals.

# 9 Attend Financial Literacy Workshops Devoted To Women

According to the Boston Consulting Group, women now control about 64% of household spending,  although their influence may be more significant.

In Jean Chatzky’s latest book, “Women and Money” and in recent interviews, she forecasts that women will control 75% of discretionary spending by 2028, and by 2030, will have 66% of America’s wealth.

“I wanted to be an independent woman, a woman who could pay her bills, a woman who could run her own life–and I became that woman.”

Diane von Furstenberg

Women have been making strides in making their own financial decisions, but further work is needed. According to Women and Financial power, an Artemis Strategy Group 2014 study commissioned by Ameriprise Financial, 41% of all women make their own decisions alone. That number has upside potential as women gain comfort with their financial prowess.

#10 Women Need To Manage Money Better

Women trail men in general financial knowledge, though millennial women are faring better. Good financial habits are needed to manage money better.

Budget and Net Worth Tools – Understanding your monthly household budget and net worth are essential money management tools to manage your money and build wealth. They are very different, can be calculated monthly or periodically, and are interrelated.

Household Income Statement – A monthly budget is an income statement for your household. It reflects total income less total expenses equating to net income or a net loss. If you have savings at the end of each month, use it to pay down debt or invest.  A net loss means you will be incurring debt or will need to borrow.

Balance Sheet – A net worth statement is your household’s balance sheet. It tracks your assets which are what you own, and your liabilities, that is, what you owe. Total assets less total liabilities is a snapshot of your net worth or net wealth at a given time.

How your Budget and Net Worth Work Together

If you have savings in your budget, invest it to grow your assets, thereby increasing your net worth. On the other hand, if your budget is operating at a net loss, your liabilities will be increasing, reducing your net worth.

Related posts:

How To Control Your Spending With A Simple Budget

10 Reasons You Need To Know Your Net Worth


Manage your Fixed and Variable Costs – Your budget consists of fixed costs and variable or discretionary costs. Paying fixed monthly bills, such as your rent, mortgage, utilities, student loans, and car loans on time and in total is essential. They are predictable, and you should plan for them before increasing household discretionary spending. If you miss these payments, you will negatively impact your credit scores and ability to borrow.

Good financial habits – Spending less than you earn will enhance your budget with savings. That money can reduce your debt or invest more, increasing net worth over time.

Related Post: 10 Ways To Better Manage Your Spending

Don’t carry over credit card monthly balances – Zero out your debt on your cards each month by paying on time and in full. Carrying a balance is costly as the average interest rates are among the highest borrowing rates. If you can’t pay it in full, cut your discretionary spending. Use cash more often than your cards as you will feel that pain more quickly. This care will help you rationalize your spending levels.

Have an Emergency Fund

You need an ample emergency fund that can provide you with some liquidity in the event of unexpected expenses like home damages, a car accident, or a sudden need for root canal surgery. Your emergency fund is an essential asset that should be easily converted into cash to pay for these emergencies.

Related Post: Why You Need An Emergency Fund (And How To Overcome It)

The fund should be able to pay at least six months of fixed costs. You need to have access to this emergency fund though it does not have to stay in a non-bearing interest bank account. Consider a money market account or a mutual fund with money market securities that provide better yields.

Manage Your Debt

Have a plan to pay down your student debt, especially if a more significant proportion of loans for college are in higher-cost private loans versus federal loans. Manage your credit card balances so that you pay your bills on time and in full, so you are carrying high-cost debt.

Protect your family with Insurance 

You should get life insurance and disability insurance, especially if you are the breadwinner and have children. It is essential for protecting your income and assets for your family’s sake. Your company benefits plan may provide this insurance but usually in modest amounts. You need to get more protection in the event of your passing or becoming unable to work.

Related Post: A Beginner’s Guide To Life Insurance

You should enhance your insurance coverage in amounts dependent on your circumstances:

Your family situation –  Whether you are a single parent raising young children or married with older children planning to go to college will matter what future costs needed to be covered by a caregiver.

Estimate coverage amount  – Insurance needs are sometimes linked to a multiple of your earnings, say seven times net income. That is overly simplistic but a good starting place. You will need to replace your income, pay down debt usually taken out of assets, provide funds for college tuition and likely costs associated with the end of life. Estimate these costs for a better sense of how much coverage you need.

Final Thoughts

Women can achieve financial independence by being more proactive about money. They should take control over their finances: how they earn, save, invest and manage their finances. During most of my marriage, I have been the breadwinner, outpacing my husband in compensation due to a different career path, determination, and some luck. Yet, I have made some financial mistakes (investing in commercial real estate, for one).  I try to improve and learn as much as I can.

Thank you for reading!

How are you financially empowering and protecting yourself in financial matters? We welcome your thoughts. We want to hear from you!

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