Okay, girls, it's time to stop spending and start saving. A new T. Rowe Price survey has revealed a large savings gap between millennial women and men when it comes to planning retirement. Women who are contributing to a 401(k) have a median balance of $11,000—just half of what's in their male counterparts' accounts. And a Wells Fargo study last year revealed only half of millennial women have started saving for retirement, compared to 61% of millennial men.
Why? Well, a few things actually. According to the survey, millennial women are statistically deeper in student loan debt ($20,000 as opposed to $14,000 for men); there is a gender pay gap (average is $48,000 while men earn $63,000); they are less financially confident than men; and they usually take time off to have children, which means they aren't capable of saving or contributing to their 401(k)s as much in that time as men who work straight through. Despite the odds, saving for your future needs to happen. Scroll down to read a few of our financial tips to get you started.
Start Saving in Your 20s
It's first on our list because it's so important, and the younger you start, the better. We also completely understand how difficult it can be. Don't let your expenses become an excuse: Start finding a way to save money today. The amount doesn't matter either; it all adds up. Take time to figure out how much you can set aside without significantly impacting your life. Just remember that starting a savings plan from a young age is a huge advantage if you want to be rich in retirement. Save a little now and reap the rewards later.
Pay Off Your Debts
It's so important to keep your debts under control and pay them off as timely as possible. One of the simplest ways to get rid of debt quicker is to pay a little more than the minimum each time. Even if it's just $5 more, you'll be surprised at how much it adds up over a year. It could probably pay off the interest. Sometimes you just have to compromise your social life or a few little luxuries to do it, but just think about how good you'll feel and how much more money you'll have in your pocket when you finally have that debt paid.
Contribute to Your 401(k) Earlier
This is one of the smartest ways to protect yourself from taxes so you can keep more of the money you earn. Why? Any contributions you make can reduce your taxable income that year. So why should you start saving at such a young age? According to Jeffrey Alford of Fidelity Investments LLC, compounding, or “the ability for your money to make more money over time,” is “one of the most powerful things out there, especially when you start saving earlier.” Even if you don’t have a lot to save, as a young professional, you do have time on your side.
Discover how you can save for your future with our favorite financial books, below!
Do you have any financial advice to share? Let us know in the comments below.
Getting Started: The Financial Guide for a Younger Generation by Brian T. Jones ($9)