How- and why- to take control of your finances
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BY JENNY SMITH MATTFELDT Published October 18, 2024
There are many layers to wellness and living a healthy lifestyle, one element that's easy to push to the back burner — financial wellness. In a world where financial security is a cornerstone of personal freedom it’s crucial for women to feel empowered and confident navigating the world of money management. Whether you're just starting your financial journey or looking to refine your current strategy, understanding your financial health is key to achieving the freedom and security you deserve.
When I sat down with Becca Dammann, AIF® (Accredited Investment Fiduciary) and CFP® (CERTIFIED FINANCIAL PLANNER™), and Rachel Black, private client tax advisor, I was prepared for some hard hitting financial facts. While they did provide a wealth of advice for taking control of your finances, the conversations went much deeper: examining your relationship with money and where it might stem from, the advice they would give their 25 year old selves, and how to prioritize yourself — always.
"Go to therapy," Rachel joked when asked what advice she would give her younger self. "Money is power, and money is choice but you have to figure out how to be involved in your finances and make yourself care about it." She added that women are often taught or conditioned to believe they "aren't good with money" and it's important to take the time to untangle those preconceptions. Rachel herself had a very eclectic journey to where she is now. She began her education in engineering and even spent time as a pastry chef before landing in the world of taxes. She was drawn to the field in her late 20s when she observed the majority of women getting divorced had no idea what was going on with their finances. This reinforced her philosophy that you have to care about what's happening with your money. It doesn't matter if you're single or in a healthy relationship, you need to have your finger on the pulse.
Becca took an unconventional route to her current position as a wealth advisor as well. After earning her degree in Exercise Science and Sports Medicine she found herself in Big Sky, Montana. While waitressing there, she was offered a role with the financial services firm DA Davidson by a customer who saw her work ethic. "In any role I've held I'm always trying to excel and step up," she told me, a quality that showed up repeatedly throughout her story. Her commitment to being the best, no matter the job title, is something we should all strive to implement in our lives. When asked what advice she would want to give her 25 year old self she commented, "Spend your money on experiences, not things, but also start saving more for the long term." You're never too young to start prioritizing your future, which was a common theme as we explored some ways to start being more proactive with your finances.
How can I feel more in control of my money?
When it comes to financial planning, knowledge is power — but you have to put it into action. By learning about some of the accounts available you can make smart decisions that align with your long-term goals. Whether you're saving for retirement, building wealth, or simply trying to secure your future, having a clear financial plan is the key to confidence.
401(k): A retirement savings account offered by many employers that allows employees to save and invest a portion of their paycheck before taxes are taken out. You can have a specific portion of your salary automatically deducted and your employer will usually match a percentage of it, meaning they're contributing to your retirement savings as well (hello free money). 401(k) plans often allow for Roth contributions as well, allowing for post tax dollars to grow tax free.
If you have multiple 401(k) accounts from past employers it's easy to forget about them. Not to mention having all that money in the same account will increase your compounding power, meaning your money will earn more money. To combine your accounts there are a couple possible options: you can roll the old accounts into your new 401(k) if your plan allows for it, or you can roll the old accounts into an IRA. Your plan administrator will be able to help you with the process.
HSA (Health Savings Account): A tax advantaged savings account designed to help you pay for qualified medical expenses. When you're enrolled in a high-deductible health plan you can contribute pre-tax money to an HSA, reducing your taxable income and preparing you for medical bills. Your HSA offers a triple tax advantage: the money you contribute is pre-tax, your earnings grow tax free, and you don't pay any tax on distributions taken out to use on qualified medical expenses.
IRA (Individual Retirement Account): There are two types of IRAs: Traditional and Roth. In a Traditional IRA contributions are tax-deductible the year you make them, which reduces your taxable income for the year, but are taxed as ordinary income when you make withdrawals in retirement. In contrast, Roth IRA contributions are made with after-tax dollars which allow for tax-free withdrawals in retirement. Each type of IRA has its advantages and an advisor can help you make the best decision for your situation. There are income limits that may effect your eligibility to contribute to one or both types of IRAs This is also something you can discuss with an advisor.
Next steps: It's time to start building up a taxable savings account. This can look like an investment account that is non-tax deferred or non-qualified. The specifications classify the accounts tax advantages. At this stage it will be beneficial to speak with a financial professional who can help you pick the right accounts for your goals.
How much will I need for retirement?
When it comes to saving for retirement it's hard to find a straight answer on how much you will need, as it depends on your individual situation. However, most 401k accounts will have a calculator that can give you a general idea. For a specific amount it's beneficial to start working with an advisor who can help you make a personalized long term plan. It’s easy to feel intimidated by the question of where to begin, but luckily the CFP Board now offers a tool called Let's Make A Plan, that allows you to search for a CFP® professional in your area and within your budget. Some even offer services at an hourly rate, which helps dispel the misconception that you need a fortune to seek out financial advice.
How do I balance the responsibility of saving for the future with other forms of spending?
A good place to start, Becca suggests, is to set up your paycheck to automatically draft 10% into a Roth or 401k. She emphasized the mentality of "paying yourself first," where you consciously make yourself a priority as early and as aggressively as possible. It's important to remember that whether you're single or married, it's your responsibility to plan for your future.
So where do I go from here?
Take a deeper look at your relationship with money and where those preconceptions are stemming from. Our subconscious mind heavily influences our financial decisions. I love these journaling prompts from Spiritual Primate;
What are your earliest memories of money, and how do you think these might influence your current relationship with money?
How do you define financial success? Do you think it's based on your personal values or societal expectations?
In what ways has your family's financial background influenced your beliefs about money?
What role does money play in your self-worth? Are you using financial success as a way to validate your worthiness?
What are your financial fears? How might those be holding you back from achieving your goals?
Where do you see the concepts of abundance and scarcity play out in your life?
How do you feel when you spend money on yourself? Are you comfortable treating yourself or do you feel guilty?
Are your financial goals aligned with your values and passions?
How do you react when others achieve financial success? Are you genuinely happy for them or do you feel jealous and resentful?
How can you change some of these limiting beliefs to create a healthier relationship with money?
Continue to educate yourself. There are so many resources for learning about personal finance, some of which are even catered specifically to women. A few of my favorites include;
HerMoney — This site is a wealth of information tailored to women and their approach to personal finance. It's full of articles, podcasts, and resources that will help you learn about everything involved in saving, investing, and protecting your money.
Rich Dad, Poor Dad — This book explores two contrasting approaches to personal finance. It will challenge your conventional beliefs about money and provides a blueprint for achieving financial success through education, asset acquisition, and an entrepreneurial mindset.
The Psychology of Money — This book explores the relationship between people and money. It emphasizes that financial wellbeing isn't just based on education its heavily influenced by our upbringing, our emotions, and the psychology of decision making.
Set some goals, "SMART" goals should be specific, measurable, achievable, relevant, and time bound. Whether that be setting up a 10% auto transfer for your retirement account, seeing a specific amount in your savings for emergencies, or making a budget and sticking to it you are more likely to find your financial success if you take the time to articulate your goals.
"It's not always about net worth, it's about quality of life" was one of the main takeaways from my conversations with Rachel and Becca. You can make financial decisions that simplify and empower your life. Our discussion really helped to reframe personal finances from a chore into a tool that allows you freedom and choice in life when it matters most. Their journeys into the finance world were so inspiring because they remind us we don't have to have everything figured out by 25 — if you keep pursuing excellence, the right opportunities will find you. Taking control of your finances is an essential step toward overall well-being. It’s not just about dollars in the bank it's about reclaiming your power, reducing your stress, and creating a life where you feel secure and confident in your financial decisions.
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