Bayport Blog

Becoming a financially independent woman

It’s the year 2021, yet many women still believe that money is complicated. Instead of ignoring issues of long-term financial wellness, the time is now to become a financially independent woman.

Ample evidence exists that women are good with day-to-day money management. Many of us have seen our mothers, grandmothers and aunts feeding and clothing their families on very little cash.

Often, however, women fail to look beyond making ends meet. Across the world, women don’t pay enough attention to empowering themselves financially, and tend to leave financial decisions to their male partners. One of the biggest consequences of this, is that thousands of women end up trapped in relationships and marriages because they don’t have the means to fend for themselves and their children.

Reema bint Bandar Al Saud, Saudi Arabia’s first woman ambassador to the United States and a successful business woman, once said: “I truly believe that liberty for a woman comes from the ability to make financial decisions for her life.”

In the spirit of these words, we look at what you can do to become a truly liberated woman.

1. Stop thinking that a man is your financial plan and telling yourself that your man will take care of your finances. Not only is it a myth that men have an innate ability to work with money, but they are unlikely to be around forever to manage the money. Statistics show that the majority of women will be solely responsible for the finances of their family at some point in their life.

2. Draw up and stick to a personal budget. You need a clear picture of all the money flowing into and out of your household. By keeping track of your expenses, you will identify savings opportunities, and be in a position to spend your money on things that are really important to you. A budget is the difference between never having enough money and achieving your financial goals.

3. Secure yourself against unforeseen emergencies. A good place to start is by building up an emergency fund. Too many women stay in unhealthy relationships or terrible jobs because they don’t have money to break free. And even if you are happy at home and at work, emergencies happen. When they do, it is far better to use your emergency fund than getting into debt.

4. If you are struggling with debt, get help. It might be as simple as relooking your budget and being more disciplined with payments, or as comprehensive as debt consolidation. If you have multiple loans, a consolidation loan could be the perfect debt solution: instead of several payments you repay only loan every month and, if you have done your homework properly, the consolidation loan will be smaller than the sum of your multiple loans and carry a lower interest rate. As a result, your cash flow will improve immediately, giving you the money you need to balance your budget and to save.

5. Have the money talk with your husband or partner as soon as possible (the best is to have the conversation before you get married or move in together) so that you both know how money will be managed in your relationship. In this discussion, make it clear that you will be building your own wealth, in addition to what the two of you are doing together.

6. Have a proper retirement plan built with investments. Saving and investment are two different things. Don’t only save, invest as well. Saving will help you cope with rainy days, but only investments will help you live comfortably after retirement.

7. Understand how to improve your credit score so that you can get credit in case of an emergency that your savings cannot cover.

8. Put money aside for your children’s education, wedding expenses, and so on. However, more important than providing for your children, is teaching them how to deal with money responsibly.

9. Keep educating yourself about money and investments – but remember that you don’t need to know everything before you can start saving and investing. In fact, you will never have all the answers. Getting started is the most important step.

10. Teach your daughters about money and how to manage it. This will give them the confidence to be their own financial hero.

Financial wellness and independence depend less on how much money you have than on what you do with that money in the short term and the longer term. Financially independent women are essential for the financial wellness and overall wellbeing of households, societies and the global population. Visit Bayport’s Information Centre for tools and information that can turn your day-to-day money management skills into long-term financial independence.  

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