My favorite FIRE bloggers are men. Yet they rarely write about financial independence for women.
Sometimes the FatFIRE route for a woman is lonely, and I wish I can find others like me. Because women face unique financial challenges, we need specific tactics to achieve financial independence.
What are the strategies for women achieve financial independence? This guide will tell you my learnings and strategies!
WARNING: this guide will be both inspiring and scary. Get ready to stare the reality of the wealth gap in the face, and get ambitious toward FatFire!
- Historical View on Financial Independence
- Financial Independence by the Genders
- Six Ways to Financial Independence for Women
- Financial Independence for Women: Summary
- What’s Next?
Historical View on Financial Independence
Today, women are more educated and career-driven than ever before. But women make less, save less, have less net worth than men. Why?
Let’s look at history.
For thousands of years, women were properties. Properties of their fathers, brothers, and husbands. Properties of men.
As late as the 1960s, it was illegal for a father to pass his wealth down to his daughter. Only sons can inherit generational wealth.
So this wealth gap between genders is not just cultural, it’s legal and historical.
The stereotypes of women and money run deep:
- A woman is a gold digger
- The woman is a splurger of expensive shoes, the man is a savvy investor.
- If a woman ever manages money, she’s either scrimping and saving nickles or managing pennies to make things go further.
It’s an outdated reality that men are providers and women are spenders.
The financial advisory world today is dominated by men and serving men. It’s why women struggle to understand how to manage and grow their money.
Financial Independence by the Genders
A 2018 financial wellness survey of 3,000 Americans showed that
54% of American women are the primary breadwinners of their households.
More and more women are leading the charge in providing for their families.
But the gender wealth gap is wide. So wide that we know financial independence is almost completely a man’s game today.
Women are drowning in debts, barely saving and not investing.
Here’re the stats:
- Women on average carry $8000 of student loans. Men carry half as much.
- Women save on average $115,000 for retirement. Men save twice as much).
How is financial independence for women possible given this lag? Women are not on any path toward retirement. They’re hanging onto the edge of a cliff, barely struggling to survive.
And if you think this has to do with generational lag or women having kids, you’re wrong and wrong.
Wealth Gap Between Single Millennials
Single millennial women significantly lag behind single millennial men in wealth accumulation.
These women are more educated AND have no children. And the story holds for genders within every single racial group.
Take a look at this chart: red bar is women, gray bar is men.
- Single white men have…
- 80% more wealth than single White women.
- 279% more wealth than single Latino women.
- 600% more wealth than single black women.
- On average, men have 190% more wealth than women.
We need radical revolutions to close this radical gap.
I know some people are going to blame this on women. Why doesn’t she just work harder, save more, or invest as men do?
For any woman who’s ever worked at a male-dominated place: you know the playing field isn’t leveled. You can work as hard as you can, that promotion just isn’t guaranteed.
You’re too old or too young. Too single or too married with kids. You’re not smart enough, you’re too smart, you’re too combative, you’re too quiet. You are not to be trusted. Does this story get old? I hope so!
So what do you do? What do we do?
Here are the six strategies to achieve financial independence as a woman today.
Six Ways to Financial Independence for Women
#1. Negotiate Your Salary
Statistically speaking, if you’re a woman and a good performer, you are likely underpaid.
But you probably think you’re being paid well. Or even better. But you’re wrong. Because men are relentless and asking to be overpaid. And of course, as a woman, you wouldn’t dare to ask for it.
If women want to retire early then we need to know our worth.
And we need to ask for our worth. This means asking for a raise, charge a higher rate, raise your prices.
Assume your salaries should be 15% higher and give it a try. What’s the worst that could happen here? You get told no. That’s ok.
Why 15%? A recruiting company called Hired found that women set their expected salaries at $14K less per year than men for the same job and same role. Based on Hired’s base salary range, $14K translates to a 15% difference.
Hired also found:
- 69% of the time men are offered higher salaries for the same job
- Companies offer women a starting salary 3% less than for men
- The larger the firm’s size, the wider the wage gap between genders
- The more experience the candidate has, the wider the wage gap!
Imagine what a 15% raise can do to you and your family.
#2. Save Half of Your Income
Have you noticed that there are many ads on TV asking women to buy this and that in order to be more beautiful?
The average woman in the US spends around $300,000 on makeup in her lifetime.
An average woman also spends more than four hours a day doing unpaid care work for the elderly, the sick, and their children.
I’m not here to police your spending or who you want to care for.
I’m here to shed a light on why it’s hard for women to save.
Between spending money to look like a. modern woman and taking care of the village, there’s not much left to invest or save.
Our society needs to evolve to better take care of our women.
But women themselves also must evolve to resist the pressure to conform and to pick better partners who want to share the burden.
I want every woman to establish a golden rule: aim to save 50% of your income no matter how difficult life gets.
If you make $60,000 a year, live near the poverty line and save 50%. And if you make more, still live modestly and save 50%.
You don’t need a new car, a nice apartment, or brand clothing. Financial independence is more important and beautiful than all that “stuff”.
Besides, savvy women ALL know how to spend very little to look like a million bucks and make a cheap apartment look homy and nice!
Be the savvy woman that achieves financial independence. Starting today: save 50% of your income.
#3. Find a Financial Independence Partner
The truth is, you are never going to fatFIRE if you have a partner who isn’t financially savvy. This is true for both men and women.
Financial compatibility is one of the most important factors to a lifetime of happiness.
Because when you find a partner, financial independence for women is no longer enough, it needs to become financial independence for us.
One of the best things about my relationship with my husband is the fact that he and I are very financially compatible.
We both believe in living modestly, only spending money when it makes sense, and saving and investing aggressively.
My husband and I do a monthly to review our expenses using personal capital. It’s a ritual that has brought us closer, shaped our relationship into a true 50/50 partnership, and strengthened our understanding of our values, hopes, and fears.
It’s not a coincidence that our combined net worth has skyrocketed since we’ve started dating. We lift each other and together, we are not twice as powerful, we are ten times more powerful.
Let’s be clear: being financially compatible does not mean you must find someone with the exact same financial goals as you do. Nor does it. mean you must find someone who’s rich and making a lot of money.
My husband doesn’t want to fatFIRE like I do, he only wants to FIRE. And that’s okay because he’ll support my risk-taking jobs and I’ll support his steady career.
What’s really important is that both of you have good financial habits when it comes to saving, spending, and investing and that both of you are open and honest about your financial decisions.
My best advice for EVERYONE is to find a financially compatible partner, someone with a healthy relationship with money so that you can work together to fast-track your FIRE journey.
#4. Work Insanely Hard
Many career-ambitious women in their 20s cannot imagine doing something as antiquated as giving up your career later in life.
But data suggests that 40% of women eventually take extended time off to take care of children, parents, or to pursue a new passion.
But a 10-year break in a woman’s career costs her $1.3 million in retirement savings.
Before I had kids, I didn’t understand why mothers would ever choose to stop working after having kids.
Now that I have kids, I completely understand. It’s really hard raising children and working full time.
So what do you do? Well, in your 20s, you work insanely hard. Instead of shopping, go learn something. Instead of partying, go build something.
Don’t waste time getting high or drinking alcohol, it’s lame and weak. Work your ass off at work, and then get a second hustle or learn a side trick. Get promoted faster than everybody else.
And what happens when you have kids? You still work. insanely hard. You work hard on the job, come home and take care of your family, and maybe if you have time, you start your business on the side.
Does this sound crazy? Well, welcome to the reality of financial independence for women.
This isn’t about having more ambition in life. This is the reality of being a woman. You need to be radical to break down barriers and get even.
#5. Invest Like a Girl
Studies show financial independence for women is slow because we are conservative when it comes to investing, and over the long term, conservative investments earn substantially less.
Men are more aggressive in their investment strategy.
But studies also show that female investors consistently outperform men over the long run because men are overly confident.
This means that if women just invest in stocks, then they’ll likely outperform men. The trouble is women are so conservative they never put their money into the stock market.
If we recognize this, then we can win by doing the right thing: invest. So tap into your feminine side and invest like a girl by appropriately balancing your risks.
How do you invest like a girl? You:
- Buy diversified index funds.
- Balance your assets across stocks, bonds, and cash.
- Buy and hold. Do NOT day trade, or trade, period.
- Minimize your fees.
You can achieve all of the above by investing your money at Vanguard. It is really the ideal play to find diversified index funds with assets across stocks, cash, and bonds, with very low fees.
I wrote a very popular guide about my favorite funds at Vanguard, you can read it here: Best Vanguard Funds for Every Stage of Your Life.
#6. Start Your Own Company
There is a world of opportunities that can massively increase your wealth and that is to start a company.
But entrepreneurship is not for everyone. A successful company requires years of hard work and loads of sacrifices.
Owning your own business can be emotionally draining and financially unstable, not something many women, especially mothers, can afford.
But starting a company can also be liberating, life transformative, and the best thing that could ever happen to you.
Decades ago, we think mothers who work are not good mothers. I wonder if decades later, we’d be laughing at ourselves for assuming that mothers can’t juggle startups and motherhood?
I believe that more women should start businesses despite all the barriers that prevent women from succeeding.
You can start a business today for next to nothing. You can create a massive empire by just starting a nice blog. Here’s a step-by-step guide to starting a blog.
Success in entrepreneurship only comes after years of hard work and relentless drive to keep going despite all other signals telling you to quit.
But if you have an idea and the drive to try something, don’t wait for someone to allow you to jump in. Decide for yourself today.
Financial Independence for Women: Summary
Are you a woman who hasn’t thought much about massively increasing your wealth? Or a woman who’s already well on her way to FatFire? Comment below and share with us your story!
Studies after studies already show that women are bringing home the bacon for their families. I want to start a revolution for women to start thinking about achieving financial independence for themselves.
As a society, we haven’t built the right structure and mindset to guide women toward savings, investing, and wealth.
If you’re a woman or if you love a woman, share this blog with them, and talk about where you. are in achieving my six strategies.
Because when you change a woman’s life, you change the village. And when you change a village, you transform the world.
Scared for your stock investments and wondering when you should pull out? Read Will the Stock Market Crash? Complete Analysis
Know how I write posts quickly without grammatical errors? Read Grammarly Review: How to Avoid Epic Typos Every Time
Looking for index funds to invest your money? Read Best Vanguard Funds for Every Stage of Your Life.