Sarah Chisholm, Financial Advisor
O’Farrell Wealth & Estate Planning | Assante Capital Management Ltd.
Everyone knows a wealthy woman. She is inspirational, in control of her finances, has a successful career, and enjoys life to the fullest. As we celebrate International Women’s Day while enjoying a favourite cup of tea or coffee, let’s consider five habits that women can use to build their wealth.
Cashflow – Understanding cashflow means understanding the full picture of future expenses – monthly, annually, and one-time. Rather than relying on a credit card debt, create a sinking fund. With a sinking fund you plan for large expenses by setting aside the monthly equivalent. For example, if your next summer vacation is going to cost $4,000 and you have fourteen months to save, you need to set aside $286 per month until that point. You can then enjoy that vacation and begin saving for the next large purchase. Sinking funds are great options for property tax, vehicle maintenance, and sport registrations.
Automate – Growing your wealth starts with a plan. RRSP, TFSA and RESP contributions can help you meet those goals. Automate your savings but do not forget about them. Wealthy women will re-visit their strategies at least annually, increase contributions and re-allocate funds as targets are met.
Risks – Protecting your wealth means protecting your current income, your health, and your loved ones. An emergency fund, access to credit, and appropriate insurance coverages provide the protection needed in case of death, disability, or disease.
Diversification – wealth can grow from a variety of sources, but you should never put all your eggs in one basket. Make sure your investments (mutual funds, etfs or stocks) are diversified across geography and sectors. Build a portfolio that suits your risk tolerance and your time horizon. As their wealth grows, many women further diversify by starting a business, owning rental properties, or investing in private equity.
Weakness – wealthy women are talented, and they put themselves in careers where they can excel and achieve their goals. More importantly, they surround themselves with the resources that fill in their weaknesses. They do not waste their time with tasks that hold them back. Not good at paperwork – work closely with a great administrative assistant. Don’t understand cars – find a trusted mechanic.
What habits do you already have, and which ones do you want to improve? Take the first step by building a network of trusted women who practice these habits. Surround yourself with likeminded professionals, wise mentors, and supportive family members. Celebrate the wonderful women who are already in your life.
Speak with your Financial Advisor today and start implementing some of these habits. We welcome questions so please reach out!