Conventional wisdom suggests women are great savers. Give them some money, they’ll save it. Most data backs this assertion up, too. One recent Vanguard survey, for example, found that women saved up to 16% more than the men, and were 14% more likely to set up 401(k) savings accounts than their male counterparts.
That said, women still don’t have as much money as men. The same Vanguard study found men have 50% more in savings than women. That’s nothing. Building a financial cushion isn’t just about improving one’s lifestyle — e.g. buying a loft apartment and a $400 haircut — it’s about being able to quit the job that is making you sick, having the cash to start your own businesses or being able to get out a rotten relationship.
“Money is power, independence, and freedom,” says Sallie Krawcheck, former Wall Street executive, and founder of women’s investing platform, Ellevest.
Krawcheck ought to know. Not long after graduating college, the former Citigroup CFO landed a job at investment bank Salomon Brothers, a notorious hotbed of toxic masculinity and testosterone. Thanks to some seriously savvy maneuvering, she rose above the fray and carved a successful career for herself in a field that was, to put it delicately, unwelcoming to women.
Now Krawcheck has a new mission: To get women to invest. Socking away $5,000 in a savings account is about as useful as hiding it in your freezer, given the current interest rate environment. If you invest that money, though, you could reasonably turn it into roughly $40,000 in thirty years’ time. It’s not rocket science, it’s just a matter of overcoming inertia.
Not sure how to start? Keep reading to find out the three things you can do right now to jumpstart your financial future.
1. Do it now, do it often.
Commit to investing. You don’t have to start with a huge sum. You don’t even have to sacrifice your small indulgences (we’re looking at you, grande latte), but you do have to figure out how much you can tuck away every month and actually do it. Ellevest, Krawcheck’s investment platform, makes it ridiculously easy to create a plan. All you have to do is plug in some basic stats, outline your financial goals, and in a matter of seconds, you get an investment strategy with specific suggestions of how to reach your target numbers.
Plus, while most traditional advisors charge upwards of $1,000 for a financial plan. Ellevest is working to close the gender investing gap, so they don’t charge a penny for this first key step in taking financial control. They believe that every woman should have a plan — and that’s why theirs is totally free. Plus, itr take less time to customize than watching an episode of The Office. You can save your Ellevest financial plan, come back to it, adjust it, or share it, whether you invest with Ellevest or not.
There is no better way to narrow the wealth gap than through a shrewd investment strategy. Done right, it shouldn’t be painful. In fact, it’s fun. It just needs to be done consistently.
“The right way to invest is a percent out of every paycheck,” Krawcheck says.
Diligence shouldn’t be confused with deprivation, though. Don’t restrict yourself to an exclusive diet of ramen or force yourself to eat on $3 per day. Broadly speaking, Krawcheck suggests 50% of your income should be allotted to your needs; 30% to fun; and 20% to future you.
2. Track down your money, make it work for you.
If you want to start investing, the first thing you need to do is get hold of all your money. Remember that retirement account from your first job out of college? Or that savings bond that was given to you by your grandmother for your 12th birthday? Go get it.
Yes, it’s commendable that you started that 401(k) when you were 22, but if you switched jobs twice and moved three times since then, you may have lost your hard-earned money in a black hole. Find it, consolidate it, and make active decisions about how to grow it. You can your multiple retirement accounts into one simple view: You don’t have to check a bunch of different sites and do the planning yourself. Ellevest groups all your retirement accounts — even those outside of Ellevest — into one place on your dashboard.
This means no mountain of paperwork or making you figure out everything on your own. If you decide to roll over your 401(k) to Ellevest,
“If we’re not investing, we’re doing most of the hard work around money (you know, going to work every day, turning in that amazing design, landing the difficult-to-close client, beating our sales projections), but we’re only getting about half the reward,” Krawcheck says.
3. Go easy on yourself.
No, you don’t have to stay up all night studying market fluctuations. You don’t have to harass your banker friends for stock tips. Don’t try to outsmart the market because the market (almost) always wins. “Women don’t invest enough in stocks or worse, sometimes they don’t invest in equities at all. Instead, they put money into bonds and money-market funds. Those aren’t bad funds, but they don’t generate nearly as high of returns over the long-term as stocks. The thing is even with downturns, historically, the stock market has returned 9.5% annually,” says Krawcheck.
If you park your money in an index fund (a fund that mimics a major market index, such as the Standard & Poor’s 500 Index), you don’t have to tend to your investments on an hourly or even daily basis. Sit back and let your money grow with the market. Since 1928, the market has delivered plump 9.5% returns. If you’re looking for a natural entry point to investing, start today by getting a free customized investment plan from Ellevest. and taking control of your financial future.
“Investing is one of the most important things you can do for yourself. It can build your wealth….not by a little, but by enough to make a real difference in your life.” – Sallie Krawcheck. Ready? your complimentary financial plan from Ellevest today — you honestly have nothing to lose.