Financial Advice to Women - Part One Get Control of the Money

Economic times are often described as a recession or depression. In personal terms, it is a recession where your neighbor is out of work. However, it is a depression when you lose your job. This is a particularly difficult time for single women with little experience in the financial world. Here are some ideas on how women can improve their financial situation (credit scores) after they have encountered problems with debt after a job loss and are returning to the work force.

The first thing to remember is that these problems did not happen in one big fell swoop unless there was a cataclysmic event (death or serious illness in the family) so the remedy will take longer than expected; much longer, and will require significant effort in terms of mental attitude, lifestyle adjustment, and habit modification. The mental attitude is probably the most difficult since the task can be very daunting and discouraging. The sheer scope of the problem will vary from individual to individual but the plight of a single woman (mother) is one highlighted each night on the evening news and can lead one to believe there is no use in trying. Hence, the resulting downward spiral into financial chaos.

I cannot solve all the problems here in this piece and some individuals reading this have taken the first step in solving their issues simply by reading this blog. The first steps to fixing a problem is identifying the problem then seeking information (help).

You are already in trouble so First things first: Gain control of spending NOW.

Four Ways to Trim Spending

We need to understand where the spending is occurring. It is a cliché’ to say create a budget. However, one must know where the money is coming from and where it is going I order to gain control of the financial situation. Most of us pay the important bills first unless we are facing a real financial predicament (unemployment, severe illness, etc.). The remaining spending gets us in trouble. Pay yourself first is always a good idea. I do not mean to spend money on your self. You need to build up reserves that you depleted during the emergency otherwise, you will be in worse shape when it happens again (we can hope and pray that it does not but Chance favors only the prepared mind.” - Louis Pasteur). The areas needing attention when building reserves include:

a. Current savings
b. Retirement

The amount put aside does not need to be a substantial amount at first but it is important to make it a habit.

In spending, we all need to determine why you are buying what you are buying. Spending money can be a great deal like comfort food. We eat not because we are hungry but because it makes us feel good. Nutrition is second. As a result, we gain weight, then we feel bad and the cycle begins again. Spending money follows the same cycle for many people, especially in the United States. However, do not say to yourself "I am not going to spend money unless I need to" – this will build a legacy of guilt, which can be counterproductive.

First, look at where you are and then determine where you want to be in three to five years in terms of savings. You notice I did not mention goals; these are like New Year’s resolutions – meant to be broken. Habits take time and prioritization. What are these goals?
a. Savings.
b. Primary home.
c. Retirement.
d. Education for children.
e. Rainy day fund.
f. Vacation home.

The clarity you receive from this analysis will aid you as you build the financial escape from chaos plan.

The next step is to prioritize spending. You notice I have not told you what NOT to buy. Prioritization does two things: It points you in the right direction to avoid short-term issues (foreclosure, pay garnishment, etc) and gives you rational reasons for not spending money you do not have (debt accumulation). Remember to pay yourself first in terms of savings.
a. Mortgage/Rent
b. Utilities
c. Food – Big area where savings can occur
d. Insurance
e. Education (children or self)
f. Clothing – another big area that needs prioritizing within the category
i. Business/work clothing
ii. Casual/entertainment clothing
iii. Other clothing
g. Other bill paying
h. Actual discretionary spending
i. Entertainment
ii. Dining
iii. Travel

Take small steps along the way – a staircase is a series of steps not one large step.