A Guide For Women: Financial Independence On Your Terms

The first step to achieving financial independence is to define what it means to you. For different people, it means different things. But basically, it’s your ability to pay your bills, manage your debt and save money for your future — without being dependent upon your partner, your parents, the government or anybody else to help.

No matter who you are, achieving financial independence is important. Having financial resources to make decisions for yourself, plan for the future and overcome any bumps along the way is key to your overall happiness and security. This is especially true for women, because women must overcome a unique set of financial and social challenges.

The Equal Pay Act became law over 50 years ago, but women are still paid about 17% less than men. Based on median earning data from the United States Census Bureau’s Current Population Survey, women who were full-time, year-round employees made 83 cents for every dollar men made in 2020.¹

According to the Population Reference Bureau, women outlive men in almost every society. In more developed countries, the average life expectancy at birth is 79 years for women, 72 years for men. So their retirement savings needs to last longer.²

Women, across all ages, have higher rates of disability compared to men.³

Women are more likely to take on more responsibility for dependents, childcare, healthcare and taking care of their parents.⁴

Everybody's definition of financial independence is a little bit different. Figuring out what is important to you is key. What is it you want to do? What do you need to do to make yourself happy? What are you afraid of losing?

Your financial objectives are unique to you. Think about your long- and short-term goals. Do you want to retire early? Travel the world? Send your kids to college? Or simply live modestly and enjoy not having to count on anyone but yourself?

Women are the ultimate multi-taskers, so of course they’re going to have multiple goals. Whether it’s paying off debt, saving for a house, a new car, vacation, whatever — write them down. Keeping them in front of you will make them easier to achieve — and be a friendly reminder of why you’re working so hard.  

Planning for the unexpected is one of the most important things you can do to reach financial independence. Without an emergency fund, what would happen if your car needed an expensive repair? Or worse, you lost your income or were injured in an accident? Experts typically recommend that you have an emergency fund with about three to six months’ worth of living expenses in an easily accessible account.

Once you know what you want, it’s time to go get it. Start by taking a look at your money. It’s all about cash flow. How much do you have coming in and how much do you have going out?

Use our Budget and Savings Goals Calculators⁵ to see how much you can put away in savings based on your monthly income and spending. See what the numbers tell you. Are there ways you can put more money toward your goals? Are there monthly expenses you can cut? Be realistic in the choices you make.

Create a budget that:

1. Eliminates unnecessary spending
2. Meets expenses
3. Pays down debt

To make budgeting easier, take advantage of United Bank’s personal financial tool available through Online Banking. You can see all your accounts and your spending in one spot.

If you can’t find enough ways to cut back on spending, think of some ways you can bring more money in. Consider a side gig — it’s a great way to make some extra money, meet some new people and it’s something you can do on your own terms. Or maybe it’s time to ask for that well-deserved 17% raise. Wouldn’t that be nice?

3 Budgeting tips to help you save more

1. Automate your savings through direct deposit or automatic transfers from checking to savings accounts.
2. Turn your paid-off debt into savings — when your debt is gone, make the same payment to your savings account.
3. Put any unexpected money such as gifts or bonuses directly into savings.

Trying to pay off your debt can seem impossible at times, but there are strategies that can help. Two popular methods that can help you prioritize your debt are the “snowball method” and the “avalanche method.” Cold and calculated, each will have you paying off your debt in a nice orderly fashion.

If you prefer to see progress quickly, try the "snowball method." You pay off the smallest of all your loans first. Paying off small debts quickly can feel rewarding. Once that debt is paid, you take the money you were putting toward that payment and roll it onto the next-smallest. The amount “snowballs” and the debt that is reduced gets bigger and bigger.

Some experts recommend the "avalanche method." You pay the loan with the highest interest rate first. You’ll pay less interest over time, saving you money in the long run. It may take time to pay off the debt with the highest interest rate. But once you do, your debt can start dropping fast.

Another way to take care of your debt and reduce the amount of interest you’re paying is debt consolidation. Instead of having multiple payments for different credit cards and loans, you pay them off with a new loan at a more affordable interest rate. 

Building credit is one of the most significant steps a woman can take toward financial independence. Good credit also gives you more options for making the most of your money. The best way to build good credit is to understand why credit is so important, and what steps you can take to maintain good credit is the first place to start.

Here are some suggestions on how to boost your credit score:

• Make payments on time, every time.
• Avoid making charges too close to the credit limit of your revolving accounts.
• Be mindful that formally closing accounts can impact your credit score negatively.
• Avoid frequent credit applications.

You can find out your credit score from multiple sources, including from a credit card or other loan statements, from a non-profit credit counselor, or for a fee from a credit reporting agency. AnnualCreditReport.com is a government-authorized site for free credit reports where you can get started with your credit score research.