As we begin another new year, many of us will undoubtedly embark on journeys of self-improvement. Often, health and happiness are at the core of this goal, but I would argue that taking charge of one’s finances could certainly give those other goals “a run for their money” (pun intended). According to the Federal Survey of Consumer Finances [1], today, women control a third of total US Household financial assets. However, the financial industry has historically been a male-dominated field. As our life expectancies increase and, on average, women continue to outlive men, it’s wise to look ahead and engage in money matters well before it becomes a necessity. To that end, I encourage all my clients—especially those who would otherwise leave the financial decisions to their spouses—to take charge of their financial house, which often turns out to be an exciting and empowering new skill.
So, where to start? I like to start with what’s inspiring or motivating, so my recommendation would be to start with some financial goals. What’s important to you and what would make you happy? (And be both realistic and aspirational here). Short term, what’s needed? Maybe it’s a new furnace, or phone, or piano lessons, or a trip. Thinking about things that you look forward to can help set you up for success in achieving those goals. We women often have so much on our plates that we don’t have time to think about these things, so stopping to take stock of what’s important and committing to those things can be very healthy. And don’t worry if you have to start small–achievement is achievement.
Next, you need to understand your current situation. Knowing your financial position today will help determine your starting point, and although not exciting, cash flow is one of the most crucial aspects of our finances. With so much of our money moving electronically, reviewing bank statements, subscriptions, and electronic payments is key. The good news is you can likely pull a report from your bank, credit cards, and phone within minutes which outlines your spending. In many cases, this can also be enlightening and potentially cost-saving since understanding cash flow can illuminate inefficiencies and overspending.
Aside from understanding your cash flow and goals, one thing that is appropriate for almost everyone is establishing a cash reserve. A general rule of thumb is to keep 3-6 months’ worth of your committed expenses (think mortgage/rent, utilities, not movie tickets or travel) in easily accessible funds. This will ensure you don’t have to sell something you value or stock market investments that could potentially decline in the event you have a financial need. If you don’t yet have a cash reserve, consider allocating a certain amount from your income monthly to build that account. Once you reach your desired level, you can allocate those monthly funds toward longer term goals. Both cash reserve and money you will want allocated for longer term goals may need to be invested. The shorter the investment horizon the more conservative your allocation should be. However, understanding the level of risk you, yourself, are comfortable with is another critical aspect. I have some great resources you can access for free on my website to help determine your risk tolerance and guide you on investment options. You can then research investments on your own or work with someone like me to help position your dollars most appropriately. If you elect to do it alone, ensure you are using reputable sources and beware of the scams out there—they are becoming more prevalent by the day.
Although starting with goals, cash flow and cash reserve is key, there are items you may be tackling at the same time. If you’re still employed and your employer offers matching on your retirement account (such as 401k, 403b, etc.), consider this as a great opportunity to start long term savings. Matching employer contributions are essentially free money, so passing them up is often unwise. That said, consider the reduction in your income when you make that contribution and ensure it’s appropriate for your needs.
If you’re no longer employed, distributions from your retirement plans or IRAs need to be managed appropriately. There are tax consequences and, in some cases, tax benefits once you reach a certain age, so understanding your options for withdrawals is important.
Another aspect to consider is debt. At current interest rates, debt costs can be expensive. It’s important to determine the best allocation of your resources toward debt payments. Because this is such an individual dependent topic, I would encourage you review your options carefully or with a professional.
Finally, one thing people often miss that can adversely affect their family is ensuring beneficiary designations are up to date and appropriate on all accounts. Life changes quickly—people have kids, they divorce, they remarry, they pass, and all those things warrant a review of your beneficiaries as well as your executor, trustee (if you have a trust), and even things like your durable power of attorney or patient advocate. Additionally, a common misconception is that a spouse or family member could obtain access to your accounts if needed. In fact, neither a spouse nor family member would be able to obtain any information on your financial accounts without proper authorization such as a durable power of attorney, so if that’s something you’d like to prepare for, consider putting such an authorization in place. The good news is that beneficiary designations are now often visible and amendable online through your various accounts and many financial institutions offer options for account information authorization so adding or amending those documents should be a simple task.
I’m looking forward to an amazing new year with more women than ever taking charge of their finances. Although the above is a great start, there are many things you can do to understand your finances and help reach your goals. As an advisor, I’ve been lucky enough to make this my job and helping clients achieve their financial goals through the ever-changing landscape has been inspiring and rewarding. If you’re ready to build your financial confidence in 2025, feel free to reach out to me or access some great information on my website at https://www.ameripriseadvisors.com/eva.l.moulton/.
Eva L. Moulton, CFP® Financial Advisor, CERTIFIED FINANCIAL PLANNER practitioner with CornerStone Financial Group A financial advisory practice of Ameriprise Financial Services, LLC in Troy, Michigan. Eva specializes in fee-based financial planning and asset management strategies and has been in practice for 25 years.
To contact Eva, visit https://www.ameripriseadvisors.com/eva.l.moulton/ or call Office: 248.939.4545 | Direct Line: 248.397.1619 Fax: 248.939.4510 | Mobile (text enabled): 248.744.6984. Address 5440 Corporate Dr. Suite 205, Troy, MI 48098
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[1] Federal Survey of Consumer Finances: $100,000+ in wealth and 25–75 years old