Challenge Financial Gaps and Improve Financial Health

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A challenged world is an alert world. Individually, we're all responsible for our own thoughts and actions – all day, every day.” IWD

Each year, International Women's Day (IWD) is recognized worldwide on March 8th, to:

Celebrate the cultural, economic, political, and social achievements of women
Shine a light on women's equality
Focus on accelerating gender parity
Raise funds for charities geared toward helping females

IWD's campaign theme for 2021 is #ChooseToChallenge. It reminds us here at Women Who Money to challenge societal financial gender gaps and our individual “financial gaps,” too.

Gender gaps are the result of unequal treatment of individuals based on their gender. Gender gaps are just one of many ways that discrimination manifests itself. Still, they can have a significant impact on the financial well-being of women.

We won't erase these economic gaps overnight. Yet, we can take steps every day to raise awareness about them, object when we witness them, improve our own finances to narrow some of them, and help others do the same.

A gender-equal society needs empowered women and girls who take control of their lives, make their own decisions, and succeed in their chosen pursuits.” IWD

One of the critical aspects of being in control of your life involves being financially well. The benefits of good financial wellness go way beyond the ability to pay your bills on time or replace your worn-out couch.

Healthy finances enable you to make better decisions, save and invest for your future, give freely to others, explore new opportunities, and achieve financial independence.

group of women holding a sign that reads choose to challenge and raising arms in celebration — Happy IWD 2021 #ChooseToChallenge

What is Financial Health?

Financial health is a relationship in which you and your money are working together, in sync with each other.

Being financially well is achieving a state where your money is working for you rather than against you. This is the ultimate goal of any personal financial management plan.

The idea of financial wellness is really about understanding how money and your life interact. It involves identifying what you want in life and determining how much money you'll need to get there.

It's also about understanding the role of money in your life and how it affects your relationships, work, and happiness.

Most of all, it's about taking control of your personal finances and having an active role in how your money is working for you now and growing for your future.

If you aren't as financially well as you'd like to be, #ChooseToChallenge yourself and begin improving your money situation today.

If your financial health is sound, challenge a family member, friend, or co-worker to improve their financial literacy and help them achieve that goal!

Improving Financial Literacy

Simply put, financial literacy is your knowledge and understanding of how money works, and even more importantly, how to apply that knowledge. This includes subjects like how to manage debt, invest, save, and spend.

It also includes learning how to be a savvy consumer, challenge financial rules of thumb, and choose between hiring a financial professional or DIY investing with a robo-advisor.

When you think about what it takes to be financially literate, you might picture a numbers whiz who knows all the technical terms of personal finance.

But that’s not all financial literacy is. It also includes understanding how to use and manage money and how to avoid making mistakes with it.

Know Where You Are

You must know the current state of your finances, no matter how healthy or unhealthy they may be, to be in control of them.

Many people start with setting up a budget and sticking to it and calculating their net worth.

Once you know where you are, you can draw a map of where you want to go.

Determine Your Financial Goals

You’ve heard the advice before: set goals. If you don’t know where you’re going, how will you know when you’ve arrived?

When it comes to your finances, the same logic applies. While everyone has their own unique financial pursuits, the first step to meeting your money goals is to create them in the first place.

Start by asking yourself:

What do you want your money to do for you?
What are your financial priorities?
Are you saving for your next vacation, a new car, or a house?
Or are you saving for something more long-term, like retirement?

List all the short-term (1-2 years), mid-term (3-5 years), and long-term goals you can think of and include your partner's if applicable.

Identify Your Gaps

You might have a good handle on the financial basics: you know how much you're earning, how much you're spending, and how much you owe others.

But identifying your financial gaps—like not having a plan for how you'll pay for your kids' college education or how you'll afford to retire—is crucial so you can prioritize challenging them.

Challenge the Gaps – Learn, Practice, Improve

What do you need to learn to achieve your goals?

Will a book, online course, or other training be necessary?

Are there skills you need to acquire?

Do you need apps to help manage your money or financial tools to help track your finances?

Could a mentor or coach to help guide you be worth the cost?

Would gamifying your money management help you save more?

Gather the knowledge and resources you need to achieve your financial goals and build a secure financial future.

Financial Wellness

When you're financially healthy, you'll no longer be caught in the paycheck-to-paycheck cycle, your emergency fund will provide security when an unfortunate event happens, and money stressors will lessen.

You might even be able to pursue a new career or finally start your own business.

#ChooseToChallenge your financial gaps, improve your financial health, and then help others do the same.

Written by Women Who Money Cofounders Vicki Cook and Amy Blacklock.

Amy and Vicki are the coauthors of Estate Planning 101, From Avoiding Probate and Assessing Assets to Establishing Directives and Understanding Taxes, Your Essential Primer to Estate Planning, from Adams Media.