They’re the most financially vulnerable demographic in America: Women with credit scores below 700. Elevate’s Center for the New Middle Class says a majority of non-prime women live paycheck to paycheck and run out of money more often. They also aren’t financially prepared for a $1,200 emergency. While ongoing research shows women are often the financial stewards in their families, the survey found that only 39% of non-prime women believe they have the skills to manage their finances. Jonathan Walker, executive director of the Center for the New Middle Class shares four tips on what financially fragile women can do to boost their financial confidence.
Tap into apps
The financial situation for non-prime women is precarious. They are three times as likely as prime women to have lost a job in the prior 12 months; they’re more than twice as likely to have had their work hours reduced, and they are much less likely to have a safety net to save them from emergency expenses. Walker says leveraging apps is one of the most effective ways for non-prime women to manage their situation. Savings apps can help them build emergency savings accounts without forcing them to feel the burn of setting aside a chunk of their monthly income. Apps can also help alleviate stress, by moving money management concerns to the back their minds. Non-prime women typically have a lot on their plates. They are often juggling responsibilities such as children and elderly parents living with them.
Don’t be content with what you don’t know
Walker says non-prime women are the group least likely to say they have the skills and knowledge to manage their finances well.
“Sometimes I joke that you need an undergraduate degree in personal finance these days just to understand how to optimally manage your own personal finances,” he says. “Women need to feel comfortable knowing that this is complicated, but it’s not out of their reach.”
Walker says if you don’t understand something, chances are that others don’t either. He says non-prime women should speak up about their needs with those creating personal finance content, including personal finance publications and websites, bloggers, authors and even financial services providers.
Get nerdy about personal finance
Prime women are twice as likely as their non-prime counterparts to have learned how to manage finances from their parents. Non-prime women most commonly learn from trial and error. If you have daughters, Walker says it’s important to teach them about personal finance and how to manage their money day-to-day. If you’re one of those women who did not learn financial management skills from your parents, he says you should take matters into your own hands. Take advantage of the plethora of personal finance management resources online, especially the ones tailored to women.
Walker says personal finance blogs are great places to start, and it is worth checking out what is available on social media. Many people in precarious financial situations are able to find community, support and creative ideas via social media groups. He says improving your knowledge is never outside of your reach.
Know your options
While it may seem counterintuitive to plan for problems, Walker says it’s important to look ahead and know what your options are. Ask yourself: how would I pay for an emergency $1,200 expense? If you plan for the unexpected, you will be in much better shape if the worst happens. Figure out which one of your family members or friends you can turn to in a pinch. Know how much money you need to put away in an emergency fund. Make sure you have room in your credit to borrow in case an emergency. He says if you do the research ahead of time, you can avoid walking through a payday lender’s door.
Financial fragility can cause an enormous amount of stress. Walker says women can benefit from knowing what they can do to relieve that stress. Find an outlet that will allow you to disengage from your finances. He says your escape will be even more constructive if it has a positive influence on your life.
“Take up a hobby that can earn a little extra money on the side, but take it up as a hobby,” Walker says. “Do more exercise to strengthen your health. Find an existence that is outside of our finances so that you can better approach the challenges that you face.”