Why women need their own money and credit history


By :Monica McCoy

CEO, Award Winning Global Speaker, and Business Strategist at Monica Motivates, LLC

In 1960, fewer than 4% of U.S. women earned more than their husbands. Today, about half of us earn the same or more than our husbands or partners, according to a 2020 survey by TD Ameritrade. And that number is likely to keep rising in the coming decades as more women have been graduating from college faster than men for the past 30+ years.

Even if your accounts and investments are combined with those of a partner, you need to establish your own financial history and have direct control over your personal finances. Many millennials already report keeping at least one separate bank account from their partners, according to data from Credit Karma. But far fewer women are in charge of their household’s investment decisions.

To build your business acumen and establish a strong financial future, you need to play an active role in your family’s finances. Especially if you ever want to borrow money to found or grow a business, you need to establish strong personal credit, healthy savings and a basic understanding of investment principles. Here are some starting points.

Embrace your earning power. Recognizing your role as the family breadwinner, or as an equal or critical part of your family’s financial well-being, is an important step to feeling empowered, capable and justified in exerting financial influence and leadership. The TD Ameritrade study found that women breadwinners often described themselves as “secure, proud, independent and in control,” but they also often reported feeling guilty or embarrassed for earning more than a male partner.

That’s a mindset you can’t afford to keep, especially because women typically live longer than men and you are likely to need to manage your own money and investments at some point in the future, and to stretch your retirement funds over more years. Your hard work and talent have earned you the salary or business income you generate, so be proud of your accomplishments and the value you bring. Cultivating a sense of gratitude for all the women through the decades who fought for your right to control your own finances might also help.

Understand that credit means power. It’s only been since 1974 and the passage of the Equal Credit Opportunity Act that women have had the right to obtain credit cards separate from their husbands. Today, women and men have nearly identical credit scores, according to Experian’s “Women and Credit 2020” report. That’s critical because credit is a key tool of financial independence. You may want to borrow money to found or grow a business, buy a car or home or to help a family member or friend. Whether you can gain access to those funds, and how much they cost you in terms of interest, will rely largely on your credit score. If you don’t know yours, find out for free through AnnualCreditReport.com.

A simple first step to establishing good credit is to apply for a credit card in your own name, rather than jointly with a spouse. Then use the card and pay off the balance regularly. You should also have several regular bills in your name, such as home utilities. Pay monthly bills on time and in full to build sound credit. You should also have a well-established relationship with a bank or credit union with accounts in your name.

Follow the money. Marriage, life partnerships and business partnerships are founded on trust and hopefully that trust is never broken. However, your best protection against such an unfortunate circumstance is to remain deeply involved in your personal and business finances. You need to know the full range of retirement and investment accounts you and your partner share, all bank accounts, each of your credit cards in both names and any outstanding loans or debts that you could find yourself responsible for in the future. Make sure you have passwords to all financial accounts, access statements online and meet with financial advisors involved in your investments.  

Women too often find themselves stuck in unhealthy marriages or even dead-end jobs because they don’t have the financial security to make different choices. In fact, a study on women, money and divorce by Francis Financial found the biggest piece of advice formerly married women wanted to share with others was to get smart about money and to educate themselves about their own personal finances. Well over half said they wished they had consulted a personal financial advisor.

Continue to educate yourself around money issues with books such as, The Psychology of Money and The Millionaire Next Door, and podcasts like Brown AmbitionSo Money and Her Money with Jean Chatzky.

Remember to pay yourself. If you’re a business owner, there’s a good chance you plow the vast majority of profits back into building your business. While that’s often a sound investment, you can’t ignore the personal side of the house. Forbes reports that a surprising number of founders focus so much on their businesses that they actually become careless with regard to personal finances. Don’t be one of them. Make sure you develop a robust personal emergency fund, manage your personal credit carefully, invest outside the business for your retirement and tap into the expertise of a personal financial planner.

Earning money for your expertise and talents feels great and is a key step to financial freedom and independence. But it has to be closely followed by managing that money, making your own decisions about where it goes and how it grows, and establishing a strong personal credit history you can draw on when you need capital to jump on a new opportunity, or cash to help you weather a tough time.

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