Financial Tips for Women: Budgeting, Benefits, and Retirement

In this episode, we hear from an advisor round table featuring senior private wealth advisors Suzanne Miller and Sherri White, and senior family office planning specialist, Anehita Chie. They share financial advice and tips tailored just for women around budgeting, employee benefits, and best practices for retirement accounts and planning. 
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The information in these podcasts is provided for general educational purposes only.  It is not intended as specific individual advice. The clients’ experience may not be representative of the experience of other clients, and they are also not indicative of future performance or success. Opinions expressed may not be those of Ronald Blue Trust.

Trust and investment management accounts and services offered by Ronald Blue Trust, Inc. are not insured by the FDIC or any other federal government agency, are not deposits or other obligations of, nor guaranteed by any bank or bank affiliate, and are subject to investment risk, including possible loss of the principal amount invested.

Transcript

- [Announcer] Welcome to the "Wisdom for Wealth. For Life." podcast. Let's bridge the gap between your faith and your finances. At Ronald Blue Trust, we apply biblical wisdom and technical expertise to help you make wise financial decisions. Our goal is to help you leave a lasting legacy. In this podcast, you will hear inspiring stories, practical tips, and encouragement from the Ronald Blue Trust family with special guests along the way. Welcome to the Wisdom for "Wisdom for Wealth. For Life." podcast. Today, we have an advisor round table featuring Senior Private Wealth Advisors Suzanne Miller, Sherri White, and Senior Family Office Planning Specialist Anehita Chie. They share financial advice and tips tailored just for women. In this conversation, you'll hear tips on budgeting, investments, and best practices for retirement. Let's listen in now.

- Hello, ladies.

- Hello.

- Hi.

- So excited to be getting together today.

- Yes.

- We're gonna be talking about women and their finances. As we all know, it's no secret that currently women have a significant influence on financial decisions more than they've ever had at any point in history. And we also believe that women play a very significant role in their personal financial successes, but I just wanted to share some stats as to how women are doing in finances 'cause this is really very impressive. 51% or $22 trillion of American personal wealth is now controlled by women. Isn't that cool?

- Yep.

- Women control 80% of household buying decisions and they're expected to inherit $30 trillion of intergenerational wealth by the year 2030. And currently nine out of 10 women report that they're planning to take steps towards financial independence in their personal lives. So these are really very encouraging statistics. But as you know, as we work with women, we've also heard several recurring themes that come up over and over again. Things like, you know, I'm so busy taking care of family, my business, my career, fill in the blank, and I really don't have time to think about my personal financial situation. Or I don't know what I need to focus on, like what's step one? Another thing we've heard is I'm not comfortable talking about investing or savings. In fact, the stat on that is that 14% of women feel confident about talking about savings and investing.

- That's a pretty low percentage.

- Yes.

- Very low.

- And that's why we're here today, right?

- Mm-hm.

- We wanna begin this conversation and give women out there some thoughts on areas of their finances that they can either look into further or reach out to a financial advisor to help them address. Today we'll be talking specifically about budgeting, employee benefits, investing, and estate planning. So we're just starting the conversation. 'cause as you can imagine, we can very easily have a full-blown workshop on all of these areas, and we're not gonna do that, but our hope is that we'll highlight specific things that people can follow up on after they've heard our conversation today. As we go through the topics, we'll be sure to highlight specific considerations for women in each of those life stages. So I'm so excited that you're joining me. I have Suzanne Miller and Sherri White, colleagues of mine here at Ronald Blue Trust. So y'all ready to get started?

- Yeah. We're ready.

- Absolutely.

- Alright, well, Sherry, let's start with you.

- Okay.

- Budgeting. Do you have any pointers for women, maybe women who are single specifically, in the budgeting area?

- Yeah.

- And really, you know, the principles with budgeting apply to everybody across every stage. Just the details of it may look a little different depending on where you are. And it's so funny when you say the word "budget", people go . You know, they have this idea that it's a prison or just something really hard to do, but I like to think of it as budgeting is really just preparing a framework so that you can make really good decisions about what you're gonna do with your money. And it starts, there's two pieces, and I think the first step for any woman is just to see where are you right now. You can't decide where you wanna go until you know where you are.

- Right.

- So you just start with a, the accountant in me calls it the balance sheet, but it's simply what do you have and what do you owe? So if you're just starting out, it might just be your checking account and a little bit of savings. You might have a car and maybe a car loan, and that's where you are. And that's something that as you progress in life and you accumulate more things and you earn more money, you know that's gonna change. But it's always good to know right where you are at any point in time. And then from there you move into what's coming in on a daily basis and how do I track my income and my expenses so that I can make progress from where I am right now to where I might wanna be in the future, buying a home or retiring even. And there's a lot of tools out there, and for most people I find that before you can start making a budget, you have to start by just tracking what you're actually spending. And it never fails, you're gonna get surprised by just where some of your money goes. You know, there's that extra Starbucks or that I didn't realize I spent that much at McDonald's or just wherever it might be that it adds up. But if you're tracking it, then you can make informed decisions about what you wanna do. There's a lot of tools out there. You can use a spreadsheet, you can use literal envelopes. Use cash if that's the best way for you. A lot of the banks now, if your checking account may have a tracking option just built into your bank online application. My personal favorite is Mint because it is on my computer, it's on my phone, I can pull it up at any point in time and say, "Oh, that's where I'm at." And the nice thing about Mint is not only can you put your budget in there, but it will send you alerts if you're over budget in an area or if something, like there's a bank fee that hits that you weren't expecting, you'll get a notification and it keeps you engaged with your finances so that you really are staying on top of it.

- Right.

- Now, when you're starting out, as you mentioned, you know, your main goals might be, well, let's just get an emergency fund in place. That's one of my first tracking things. I want to get that put in there. Just getting to know things that you've not had before, like renter's insurance, your rent, if you've just moved out from home, these are all new expenses for you that you're learning about. But as you progress and you're a little bit older and have accumulated, then you might be tracking things like mortgages or retirement savings and other things as you go along the way. Just one scripture that I love in Proverbs, the Living Bible translation as Proverbs 24, three and four, it says, "An enterprise is built with wisdom and attention to detail." And the last part of that verse I love, it says, "And it is abundantly blessed by keeping account of the facts." And that's what budgeting is. It's keeping track of where you are.

- You know, I really like the point you made about keeping track of the facts because I can't tell you how many times when we have, you know, clients come in, their budgets are always so pretty and it's like, you know, you really wanna know what exactly it is that you're doing.

- Exactly.

- So the tracking helps you set a realistic budget 'cause it's one thing to have a budget, it's another thing to make sure you're actually following it.

- Oh, that's so true because it's so easy, like you said, to make a pretty one and then life doesn't match that at all. There's all these things you forgot to put in there.

- Right.

- And it's just important to keep on top of it.

- Yeah, that's a really good point. Suzie, do you have any additional thoughts maybe for married couples?

- Well, I would add for younger people, I always tell them don't set your lifestyle before you set a budget. So a lot of people say, "Oh, I want this apartment or that car" and they don't know how it fits in their budget. And that's mistake number one and it usually multiplies. But for older, you go from different stages from struggling, to survival, to surplus.

- Struggling.

- Yes.

- And when you get hopefully to a point where married couples might get to a surplus, a lot of times you see a little bit of a tug of war that, "Well, you get to spend on this and I wanna spend on this." So a lot of times what we try and work out is say, "Let's take care of the important stuff and then give each of you an allowance that you can do what you want so you don't feel like you're answering to someone." But if you spend money, you say, "It's in the budget, it's in the budget." You know, some couples get okays, whether it's over a certain dollar amount. "Hey, I'd like to buy this. Is that okay? Within our budget." Some people have free reign. Where I see problems is that where it's not even discussed. The communication of this is our budget, this is our extra that we can play around with. Those are the important discussions to have, otherwise it just keeps getting swept under the rug and you get in a position where the discussions get a lot more contentious.

- Hmm.

- That's true.

- So speaking of contentious, like do you have any advice for figuring out who does the budget? Is there a specific role?

- No.

- My kids would laugh that they'd ask what my husband did and they asked what I did. "I help people with money." "Well who helps us with our, who pays our bills?" I said, "Dad pays the bills."

- Wow.

- Because it's important to him. He's very organized and he likes to know what's going in and out. I know what's going in and out, but he does it because it's important to him. So it depends on your personalities of each of the married couples, whether or not, some people say, "I wanna pay the bills, I wanna be in control." Some people say, "I don't wanna have anything to do with it." They just need to know when's the limit.

- Yeah.

- So again, communication is important and personality is important on who handles the money.

- And when you say communication, you know, one of the things that we find as a good best practice is, you know, if one person is handling all the bills and they're seeing the cash flow, usually they're the ones who get anxious when they can see, okay, we have a bill coming up and the money's not there. So it's always a good best practice to make sure that you're having periodic meetings.

- Yes.

- You know, whether that's monthly or quarterly, just making sure that the person who's not very involved in the budgeting process for the household kind of knows what's going on.

- And reviewing the perspective that, I know a lot of times it feels like there's more month than money, but there are times where you say, "Well, I'm putting money in my retirement plan. My life insurance is auto debit, my mortgage is auto debit, I'm paying down debt." And so you are doing good things. It just may not feel like there's enough extra at the end of the month so that's an important thought.

- Yeah.

- And I think it, regardless of the stage, you know, the real key is making sure, like we always say, you spend less than you earn.

- Exactly.

- So that you don't start creating-

- And do it over a long period of time.

- Period of time, exactly.

- And that makes for the difference. So looking at it idly saying, "I don't feel like we're making progress", that's where meeting with an advisor is really beneficial. Where they can look historically, look where you were, look where you are, this is where we plan on you going. And it gives you the feeling like, okay, I'm making progress.

- Right.

- And unless you do it on your own and that's a lot of work, a lot of times you lose the vision of I am making progress and that's important.

- Yeah. And you mentioned putting things into retirement plans. So one of the things that we do have to budget at any life stage is not just what's coming out of the checking account but also also what's coming out of your paycheck.

- Hmm.

- So you've got employee benefits and I think that's another area we wanted to talk about. And, Anehita, were you gonna talk a little bit about some of the employee benefits things?

- Yeah. Yes.

- And how to budget for those?

- Yeah, employee benefits is really important, and especially for those starting out, I'm thinking of recent college grads, it can be easy to be overly focused on your base salary and your bonus and not really pay attention to those benefits. But the fact is that really is part of your total compensation and that adds significantly to your financial wherewithal. So some of the things I know people easily think about when they think about benefits, medical insurance, health, vision, you know, wellness support, those are all really great things. Some companies offer legal help like other employee assistance plans, legal help, backup childcare, all great things. But one of the things I really would wanna highlight is insurance. Short-term and long-term disability insurance, life insurance. We just find that insurance covers a multitude of deals. Like basically the point of having insurance is to have coverage in case you were to have a catastrophic event that you cannot cover. And so if you think about what would happen if you were out of work for several months or even several weeks or worse still if you were disabled and injured and couldn't work. The fact is that you are 3.5 times more likely to be disabled than actually to need life insurance. And so most people sometimes overlook disability insurance. But I would caution, especially when you're single and all of the income is on you to pay attention to your disability. We do have clients that realize that they have to get supplemental disability because when they look at the coverage that's provided, which is like 60% of your base, most times if you're single, it's like that might not be enough.

- Right.

- So those are just some additional things to think about as far as making sure that you're taking advantage of your disability insurance and making sure that it's sufficient for you. Suzie-

- I would also add to that another part of insurance benefits that you receive at work, an important thing for individuals is to make sure they have their beneficiary designations properly allocated. You may make a change, you may get divorced, circumstances may change and you may think that your benefits are going to your children or your spouse, but it's always good to check because it doesn't matter what your will says, it matters who your beneficiary designation is. Those are important things to look at relative to benefits that human resources may send you the information, but you have the responsibility, you need to check on it.

- Yeah. I think that's a key point. It is your responsibility to review those benefits. That's not the HR department's role. They provide the benefit-

- Right.

- But it's up to you to make sure what fits your situation. I really liked, we had one of our employees at Ronald Blue Trust that's young and single, had a just really neat perspective on beneficiaries. Particularly like the life insurance. If you're getting started out, you don't have a family, there's not as much of a true need for life insurance, but it's provided. And she offered up the idea that, well, you know, I could use this beneficiary designation to benefit maybe a friend that could, it would really help them out or a charity or just be a little creative in what you do because you're in a unique position at that stage of your life, whereas later you really need the life insurance, you know, to pay off mortgages, provide for children, replace your income for someone else, but I just thought that was a neat perspective for that particular stage of life.

- And most insurance provided as a benefit through an employer, you don't need insurability necessarily, which is something very important that people don't think about is maintaining their insurability. So if I were to come down with some disease or an issue and I wanted to get life insurance later on in life, it may not be so readily available or it may cost a lot more. Whereas the benefits you get through work are-

- That's a good point.

- Usually, it doesn't matter if you have some health issue, it's great to have, and sometimes it's portable too, meaning you can take it with you after you've left employment.

- You know, that's a really good point.

- It is.

- 'Cause the insurability risk is reduced when you get it from an employer versus handling that personally. Another area in the benefits that I wanted to hit on was healthcare specifically. Most employers provide really great plans. You could have a high deductible health plan or a PPO where you're paying a little bit more. I particularly like the high deductible health plan and I just wanted to bring that up. It's actually a really good tax saving strategy as well. So with the high deductible health plan, basically your premiums are a lot lower than some of the other plans that are offered, but my recommendation there is if you do sign up for that, it's a good idea to take the difference between the traditional medical plan and the high deductible health plan and save that. Especially when you're just starting out on those plans, 'cause again, your deductible is gonna be really high and tied to the high deductible health plan is something called a Health Savings Account, HSA. So did you do wanna talk about HSAs?

- HSAs are, they're the golden child. They are tax deferred, tax free. It's the most advantageous tax account that you could possibly have. And so if you are in a high deductible health plan, I wish I had done this for more of my working years, 'cause you look at the premium difference, you go, "Ah, if I have that $10,000 deductible, that'll ruin me." But when I look at what I'm paying premium wise comparatively, a lot of times you're just equally as well, but if you have money that you can put in a Health Savings Account and not take it out for health expenses, you're developing what I'd call a health sinking fund. It's almost an alternative to long-term care, but it can grow well into your late years and use it for healthcare expenses later on. And it is the most tax advantage account. Now, would I say put money in that over a 401k? I think we'll talk about that. There, if you get a matching contribution, that would be the first place because it's free money, but a health savings account is a wonderful way, especially if you have some extra cash to leave it in there beyond paying for your health expenses.

- 'Cause essentially the money that you put in an HSA is yours.

- Right.

- Yes.

- You never lose it.

- Right.

- So you're building a sinking fund, like you said.

- It's different than a flex spending account that you gotta use it or lose it, this one, it stays in there. It's like an IRA almost.

- Which is really key when you're getting that big packet of benefits to just recognize the difference because there'll be a list of options that you can choose and so it's always really important to make sure you know which one you're picking because the acronyms start sounding alike and just understanding how those work and the difference. But like you said, between the HSA and the FSA, and how they can work in your particular situation.

- And if it's really confusing to someone, there's always people who are happy to help, whether it's in human resources, they can explain the difference and maybe graph it out for you, but if you don't have an advisor, I'm sure there's always a friend who can help you work through that decision.

- No, really great point. And of course we can't forget about retirement benefits.

- Right.

- That's one of the really significant benefits that you get from working for an employer. So a lot of times they would have a retirement plan like a 401k or 403b if you're a non-for-profit, and basically employees are allowed to contribute to these plans to save for their retirement. And most times the employer gives them a match.

- Right.

- And the matches are very generous. I mean, some employers match up to 50% of your contribution. Some employers match a dollar for dollar. So you know, if you put $100 into the retirement plan and your employer matches 50%, before you've even invested the money, you've already gotten $150 before it's exposed to market appreciation. So, you know, we strongly encourage taking advantage of the retirement plans at your employers and at least getting to the point of receiving the match. 'Cause we don't wanna take all of your savings and put it into your retirement, 'cause you have a lot of living to do before retirement happens, but you know, it makes sense to take advantage of that and not leave free money on the table.

- Exactly.

- Right.

- You double your money almost immediately.

- Exactly.

- And then of course there's also the tax element of that, right? There is the 401k, traditional 401k, where you are reducing your taxable income today. So currently any contributions you make to the plan reduces your taxable income and then when you withdraw it later on in retirement, you have to pay taxes on that. There's also something called a Roth 401K where the contributions that you're making to the plans are not tax deductible now, but when they appreciate and you get to withdraw them down the road, you get to take out those distributions tax free.

- Right.

- So those are some things that you should probably work with your CPA on, especially if you're likely gonna be in a very high tax bracket.

- Right.

- It's worth considering whether you should be investing exclusively in one or a combination or hybrid of both.

- Right.

- And I'd also add a lot of 401ks have a loan provision. It's not something we want to plan on taking advantage of, but in the event you have something come up where you have an emergency need for money, you could always borrow up to a certain percentage of what is in that retirement plan as opposed to an IRA. There's no borrowing from that. So there's some ins and outs with that, but it's an advantage for people should something happened. It's a little bit of a insurance policy of knowing you have money somewhere.

- Right, and I would say, we talked earlier about those who are just getting started. So the really, the younger you are, it's just amazing how much difference, just a little bit going into that retirement plan, even if it doesn't seem like it's making much progress, when you see the graphs of what it can look like if you start at age 25 versus waiting till you're 35, makes a tremendous difference in what's available to you in retirement. So do encourage you as you're starting out, part of that budgeting process is if you can block off that amount to at least get that employer match you were talking about, it can make a significant difference for you down the road. Even if you have to stop later on contributing because of what's going on in life, you've already got that in there working for you during that time period.

- It's so important that a lot of providers and companies now have where if you get a new job, you're automatically enrolled unless you check off I don't want this. And then every year it might increase a percentage. So you might start out at 3% of your salary and you might not miss it very much. And the next year it might go to four, again, you might not miss it very much. And pretty soon you've acquired a nice sum of money and say, "Hey, I didn't even miss it."

- Wasn't that painful.

- Yeah. It wasn't that painful. So a lot of plans have gone to automatic enrollment or escalation of plans. So that will show you that it's important. It's important.

- I mean I definitely subscribe to starting out making that initial investment because as your income grows, even if you maintain the same 5%, as your income grows, you're essentially contributing even more.

- Exactly.

- Right.

- But as you said, once you establish that practice of saving, you don't miss it and you just learn to live within the 95% or however much you have outside of those contributions.

- Right.

- Yeah, it's actually sometimes much easier to save through your employer plan, like you said, because you never see it

- Absolutely.

- It's not like you have to stop and deliberately write a check or move money, that's harder. If it never makes it to you, it's just on autopilot and it's just a really, a great option for you.

- [Announcer] Thank you so much for listening to the "Wisdom for Wealth. For Life." podcast. If you're looking for financial advice, please contact us. Please visit ronblue.com. That's ronblue.com. Thank you for listening and please subscribe to wherever you listen to your podcasts. Trusted investment management accounts and services offered by Ronald Blue Trust, Inc, are not insured by the FDIC or any other federal government agency, are not deposits or other obligations of, nor guaranteed by any bank or bank affiliate, and are subject to investment risk, including possible loss of the principal amount invested. The information in these podcasts is provided for general educational purposes only. It is not intended as specific individual advice. The client's experience may not be representative of the experience of other clients, and they are also not indicative of future performance or success. Opinions expressed may not be those of Ronald Blue Trust.