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If you're familiar with my work on women and financial independence you'll know that I suggest saving 15% of your gross income, every year. While the precise split of that 15% will depend upon your personal circumstances, as a personal finance expert for women I typically find that allocating 5% toward your emergency fund and big-tickets items and 10% towards your retirement is a solid mix. When it comes to successful money management for women, identifying your end goal the critical first step. So if you (like many people) can't save 15% of your income today, don't beat yourself up. Knowledge is extremely powerful. The way you'll translate that knowledge into action is with a budget.While I've yet to meet a female who didn't like the thought of women and financial independence... the concept of budgeting rarely gets people fired up. This is because most people don't realize that budgeting is really just a process designed to make sure that your hard earned money is being spent in the areas of life that bring you the most happiness.When it comes to promoting women and financial independence, my favorite tool is called the "Power Trio of Budgeting." This simple tool will help you see where you need to make shifts in your spending habits so you are able to save 15% of your money for your future needs. It works like this: For most of us, Uncle Sam takes about 25% of our gross (that's fancy speak for pre-tax income. That's leaves the average American with 75% of their gross income to spend or save. Enter the "Power Trio of Budgeting." Think of your spending as falling into 3 categories - Foundation (needs), Fun (wants) and Future (savings).If you are saving 15% of your gross income, the math is such that after taxes, you are left with roughly 60% of your income to spend on Foundation and Fun expenses. To become the embodiment of the phrase women and financial independence like Ria, your key "budgeting challenge," will be to make sure your combined Foundation and Fun expenses are not too high, so that you have money left over to save for your Future. If you are having trouble saving 15% for the Future, it's time to do a 3-month "reality check." For three straight months write down literally every single thing you spend money on. At the end of each month, review your list. See if there are items you can cut back on that don't dramatically reduce your joy (e.g. drinks out with people you don't like, electric bills for a home that feels too big for this stage in your life, etc.). The goal of this reality check is two-fold: (1) To make sure that your spending and your life goals are aligned, and (2) to make sure that you balance today and tomorrow and are able to save for your future. With the handy rules of thumb referenced in this article you, like Ria, can be on your way to owning your finances and owning your life. To learn more about women and financial independence, visit us. | | | | | | |  | |  |
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