Many women consider financial security to be a top priority. That means being proficient with managing money, investment concepts and handling the household finances. Although everyone should be knowledgeable about financial matters, it is especially important for women to take control of their finances for several reasons:
- On average, women today spend more of their adult lives unmarried than married – the consequence of later marriages, more divorces and widowhood.* According to CalSTRS, 64% of its pension benefit recipients are women, and of those, 58% are unmarried.**
- With longer life expectancies, women spend more years on their own later in life. According to the U.S. Department of Labor, a female at age 65 can expect to live another 19 years, three years longer than a man the same age.***
- Working women are more likely than men to interrupt their careers to care for children and/or aging parents, thus contributing less toward retirement plans and achieving lower lifetime savings.***
The bottom line is nine out of 10 women will be solely responsible for managing their finances at some point in their lives. As a woman, you need to be prepared to handle this responsibility, so take a proactive, informed role in financial decision-making.
The following steps can help put you on solid financial footing:
Establish credit in your own name. Even women who have been responsible for paying bills and managing household finances for years may find a loan or credit card application in their own name refused because there is no official record of their responsible use of credit. If you're married or in a registered domestic partnership, find out what kind of accounts you and your spouse or partner have. If it's not a joint account – even if you are an authorized user – it will not appear on your personal credit report. You might want to contact the creditors and ask them to report the account’s activity to both your partner's report and your own. In addition, whether you are single or part of a couple, establish credit in your own name. Begin by opening your own credit card account. (Check out the credit card offers exclusively for members at the CTA Members Benefits site) Pay off the balance each month. That will help you establish a good credit history.
Learn about finances and investing. Here is some homework for you:
Use hands-on learning. If you're single, you have to rely on yourself to manage your finances. If you're married or in a domestic partnership, you need to maintain an active role in financial matters throughout your life. Don't hand over complete control to your partner, because if you find yourself suddenly single, you may be in financial trouble as well as emotional distress.
If you're married or in a relationship:
- Sit down with your partner to review the household accounts.
- Create an inventory of insurance policies, investments and bank accounts. Review how each is titled. Have some assets in your own name, especially if you are part of a couple but aren't married. If something happens to your partner and everything is in his or her name, you may have little or no legal claim on the assets, even if you've contributed financially throughout your relationship. To learn more, read the insurance and estate planning articles.
- If one of you typically handles the bill-paying, trade off paying bills and managing a checking account each month.
- Maintain your own checking account. Even if you have a joint account for household expenses, consider having an account of your own (and your partner should have one, too), for money that you have complete control over. Use direct deposit so that some of your paycheck gets directly transferred to your checking account. Review the offerings at the two CTA-endorsed credit unions, Provident Credit Union and First Financial Credit Union.
If your partner has been handling all the finances, he or she may be reluctant to cede some control. Reassure him or her that it's in both your best interests to be informed and educated about financial matters.
Be a wise banking consumer. Too often we tend to open an account at a bank just because it's convenient, paying little attention to fees or interest rates. Instead, do a little comparison shopping. You can check out your local banks and credit unions, or compare rates online at www.bankrate.com****.
Credit unions tend to offer lower rates on loans, higher rates on savings and fewer fees than banks. There are many credit unions dedicated to teachers, and CTA endorses two: Provident Credit Union and First Financial Credit Union.
Here are some tips on choosing your basic banking accounts:
- Don't pay for checking. Find a bank or credit union account that has no monthly fee and a low (or no) required minimum balance. Be wary of interest-paying checking accounts. The interest paid is generally very low, and you may be required to keep a large balance and pay a fee if your balance falls below the minimum. You could easily end up paying more in fees than you earn in interest.
- Use online services. Make sure you get free online banking and free online bill paying with your account. Online banking can help you keep tabs on your account. Paying bills online can help you avoid late payments. You'll save time and the cost of a stamp. Another plus: It is generally easier to update your online bill payments through your bank or credit union, rather than having automatic payments through your utility company, credit card, etc.
- Beware the ATM trap. Your own bank or credit union should not charge you to use their ATMs. That should be absolutely free. However, you could end up paying a fee if you use an ATM from another financial institution – sometimes more than $3. Paying $3 to get $20 from an ATM doesn't make a lot of sense. Your bank or credit union should have a list of ATMs that you can use without paying any surcharges. If a surcharge-free ATM isn't available, you can sometimes get cash back at no extra charge from a merchant if you make a purchase using your debit card.
- Balance your checkbook. Make sure to record every transaction and balance your account to avoid bouncing checks. According to Bankrate.com, the average bounced check fee is $28.95. Bounce five checks a year and you've thrown away nearly $150.
Be smart about pension rights. Federal law requires that married participants in most retirement plans – including your CalPERS or CalSTRS benefits, 403(b), 457 and 401(k) plans – name their spouse as a beneficiary so that he or she will receive at least a portion of the benefits or account balance if the participant dies. Read more about spousal rights at on calstrs.com or calpers.ca.gov (requires login).
A spouse or registered domestic partner can sign a statement waiving these rights, but why would you want to? If you're married or in a registered domestic partnership, you and your partner are working toward a mutual retirement, regardless of the monetary contributions of each party. Don't sign away your rights without good cause.
Enjoy Peace of Mind
By staying informed and involved with financial matters, you can recognize whether you're taking the steps necessary to build financial security. You may even find you enjoy learning about financial matters! Use the resources on this Web site to increase your confidence and take charge of your financial future. Schedule time to read the articles, use the calculators and view the videos – consider it as important as a medical appointment or meeting with a parent. Spending just a few hours a month can speed you on your way to a better understanding and more control of your financial picture, now and in the future.
* Source: www.pathtoinvesting.org.
** Source: CalSTRS November 2007 Policy Report, Vol. 1, Issue 4.
*** Source: "Women and Retirement Savings," U.S. Department of Labor.
**** Website is provided for information only. No endorsement is implied.