10 Money Secrets Every Woman Should Know

That everyone else knows about money, and you’re just left nodding along? You’re definitely not alone. Unfortunately, being smart with your money is one situation where you really can’t fake it until you make it. It’s important to get the basics down. But once you do, you can stress less about money and enjoy more of the fun things in life.

Being smart with your money is one situation where you really can’t fake it until you make it.

But don’t worry, you don’t need to spend hours poring over personal finance books. We’ve got you covered with 10 basics every smart woman should know. Consider this your Cliffnotes version to being great with your money.

1. Spend Less Than You Earn

If you remember only one thing from this article, let it be this point: spend less than you earn. The bigger the gap between what you earn and what you spend, the better. This is the holy grail of accumulating wealth.

The bigger the gap between what you earn and what you spend, the better.

You’ve probably heard this tip 8,452 times, so there’s no need to go on and on about it. There may be times when you actually can’t make this work for you (for example, if you need to buy a suit for your first big job interview or your need to borrow money to finance your education), but follow this rule as often as you possibly can.

2. Know How Your Money Flows

When I got my first job out of college, the best thing my mom made me do was to sit down and create a budget. I didn’t necessarily stick to every detail that I wrote out, but it was eye-opening to see that if I planned to spend $X on rent, I wouldn’t have enough for groceries.

While creating a budget isn’t the most exciting thing in the world, the more you understand where your money goes, the more you can control it. This doesn’t need to be anything fancy. Take out a piece of paper and write down how much you earn each month and subtract the main things that you spend each month, like rent, food, your cell phone, etc.

If the number at the end is positive, congratulations! You spend less than you earn. If that number is negative, take some time to see what you can change to get it to be positive. It may be something as simple as eating out less, or it may take a drastic change like moving into a cheaper apartment. But knowing where your money goes is half the battle.

3. Save for Rainy Days

Once you’ve gotten the hang of spending less than you earn, it’s time to put that extra money somewhere. Rather than leaving it in your checking account, where you’ll be tempted to spend it, transfer it to a high-interest savings account and start building your emergency fund.

An emergency fund is a savings account with money that you can access quickly. For example, if your car breaks down and it’s going to cost $400 to fix it, you can dip into your emergency fund to pay in cash rather than reaching for your credit card.

An emergency fund is a savings account with money that you can access quickly for emergency expenses.

Experts suggest having 3-6 months of expenses saved in your emergency fund, but if you’re just getting started saving that amount can feel overwhelming. If that’s the case, start with a goal of saving $1,000 in an emergency account. That amount will help you in a pinch, and you can work on adding to it later.

4. Pay Off High-Interest Debt

There’s really no way around this one: high-interest debt is terrible and expensive. If you have credit card debt, you could be paying interest rates over 20%, which can make it really difficult to pay off that debt. For example, if you have credit card debt of $3,000 with 20% interest and you make monthly payments of $100, you’ll end up spending $1,193 in interest before the debt is paid off!

If you have high-interest debt, work to pay it off as quickly as possible. Take a look at your budget to see if you can find some extra money to put toward your debt each month. If you can’t possibly find extra money in your budget, consider picking up extra work on the side to help pay off that debt faster. You have exciting things to do in life, and you don’t need this debt weighing you down.

5. Take Advantage of Employer Retirement Plans As Soon As You Can

If you work for a company that offers to match part of your contributions to a retirement plan, take advantage of that as soon as you can. Not only is it great to start saving for retirement early, but the employer match is basically free money.

Not only is it great to start saving for retirement early, but the employer match is basically free money.

Let’s say your employer matches 100% of what you put into a retirement account, up to 3% of your salary. If you put 3% of your salary (or $1,500) into your 401k, they’ll also put in another $1,500. You’ve just earned another $1,500 — for free.

6. Compound Interest Can Be Your Best Friend

Every personal finance book says to start investing early. Why? Because you have more time to let compound interest do its thing. Compound interest means you’re earning interest on interest. If you invest $1,000 one year and get a 5% return, will have earned $50 ($1,000 x 5%). If you earn another 5% the next year, you’ll earn $52.50 ($1,050 x 1.05%).

Compound interest means you’re earning interest on interest.

I know this doesn’t seem like much of a difference, but it can really add up. Let’s say you invest $1,000 per year from age 25-35, with a 5% return. At 35, you decide to stop investing. The $10,000 you invested over those 10 years would grow to $35,042 by the time you’re 55.

Now let’s say you decided to put off investing and wait until you’re 35. You then invest $1,000 every year with a 5% return. You’d need to invest twice as much money — $1,000 a year for 20 years — to have $34,719 by the time you’re 55. 


7. Establish Good Credit

You may not need it now, but establishing good credit will help you with a lot of things you may want to do in the future: rent an apartment, buy a home, or open a credit card. Luckily, establishing good credit isn’t that complicated.

Having good credit means that someone who is lending you money — like a bank or a credit card company — is confident that you’re going to pay them back. For them to have that confidence in you, you need to have a history of repaying loans.

The easiest way to get started building your credit is by opening a credit card and paying off the balance in full each month. This shows creditors that though you borrow money, you’re able to pay it off at the end of each month when it’s due.

8. Set Exciting Goals

Saving money and investing can be boring. I mean, how excited can you really be about putting money away to use 30 years from now?

When you save for the fun things that you want, you’re teaching yourself the habit of saving.

If retirement planning isn’t getting you as excited about money as you can be, try setting some goals that are fun. If you love to travel, save for a dream vacation. If you want to try a new hobby, like photography, save up for the camera you’ve been eyeing. Or if you really need to update your closet, set a goal to save up for that. When you save for the fun things that you want, you’re teaching yourself the habit of saving. It won’t make saving for retirement more fun, but it may help to make it easier.

9. Don’t Worry about How Other People Spend Their Money

One of the most difficult things about money is understanding that everyone spends it differently. You may have friends who love spending a lot on an extravagant dinner or living in a fancy home, but that doesn’t mean that’s how you need to spend your money too.

We all have different values. One person may love indulging in daily luxuries while another person prefers to save all their money to travel and see the world. Whatever you value is what you should spend your money on. The sooner you can align your spending with what you value, the richer your life will be.

10. Know Your Worth, and Ask for It

Saving money and investing is incredibly important, but there will be times when you need to make more. One of the best things you can do for your financial health is to believe in the work that you do and learn to negotiate a fair salary. Research the market rate for your position using online salary calculators, build a network of people you can turn to for salary and career advice, and get comfortable asking for more.