Women & finances: 5 ways to take control of your money

For years, it seemed men and money went hand in hand. Heads of households and primary breadwinners tended to be male. And they stood at the helm of financial decision-making. But overtime, that paradigm has shifted. Women are more involved in finances than ever before. Today, they control nearly $11 trillion in assets—a number that McKinsey & Company expects will hit $30 trillion by 2030.

Experts chalk up this change to the unique financial landscape women face—including a longer life expectancy and different approaches to often-overlooked areas of retirement planning, investing and protecting assets.

Reflecting on how to navigate these considerations can reveal new opportunities to reach your own financial independence.

Simply put, financial independence means having enough income or assets to pay your living expenses for the rest of your life without having to be employed or dependent on others. It's a goal for women and men alike, especially going into retirement. So how does one accomplish it? Start with two foundational steps.

Be purposeful and forward-looking with your financial resources. That starts with knowing exactly how much you earn, give, save and spend—and how to adjust each of these levers as life changes.

Taking control of your finances often involves looking through a different lens. Don't think of having money as a mere aspirational item on your checklist. As a tool, money opens doors rather than closes them, allowing you to envision life without the need for active income—in other words, to be financially independent.

This level of financial clarity can position you to meet your needs as well as the needs of others. That freedom might help fund passion projects or even a deeper purpose, such as investing in businesses, values, people or communities.

Achieving financial independence isn't always easy. And understanding what gets in the way of that can help you step over hurdles and reach financial success along the way. Many circumstances create a disconnect between women's experiences and men's. This extends even to common elements of financial planning—such as retirement, investing and protecting assets.

Here are some of the biggest challenges for women concerning money management.

Despite shrinking over the past few decades, the gender pay gap persists. Women still earn less on average than their male counterparts—around 84% of what men earn.

On top of being paid less, women also spend less time on average in the workforce. Women are more likely to leave a job, work fewer hours and even retire early in order to care for children, spouses or aging family members.

Put together, the gender wage gap and amount of time spent out of the workforce can have a significant impact on women's lifetime earning potential.

On average, women outlive men by about 5 years, meaning retirement income may need to last longer. Yet, more often than not, women have less saved for retirement compared to men.

More than two-thirds of men feel that they will retire with enough savings to support themselves, while only 19% of women report feeling the same. Additionally, the Social Security benefits that women receive are on average about 80% of what men receive. Prioritizing a retirement plan that accounts for a longer life expectancy could go a long way toward ensuring financial independence.

Investing has become increasingly accessible as investment options and resources expand. However, women are still less likely than men to invest in the stock market. Of the 56% of Americans who invest, less than half are women, potentially due to a lack of confidence in investment decisions or an aversion to risk.

With fewer investments in the stock market, women tend to hold onto more cash. High-yield savings accounts or cash equivalents, such as money market accounts and certificates of deposit, are less volatile but offer lower returns on average. Without the opportunity to grow, money is more exposed to inflation—as prices rise, that cash loses value. For many women, this hesitant approach to investing leaves potential earnings on the table.

Investing with a careful yet opportunistic mindset can help you find a firmer financial footing.

With these challenges in mind, what are tangible steps you can take with your money now for financial independence later? Take action on these five strategies.

Having a clear understanding of where your finances currently stand gives you the ability to visualize your financial path forward.

• Know your cash flow. Taking control of your finances starts with knowing and managing how much money flows in and out. Monitor your monthly income and expenses so you know what's available to fund your financial goals.
• Set financial goals. Maximizing income and minimizing expenses leaves more available for giving, saving and investing. Setting specific goals around these pillars can keep you moving in the right direction.
• Create a budget. A budget can help you track your spending and make sure your money is going where it needs to.

Women need to prepare for a longer retirement. So, how can you make your retirement income stretch as far as possible? It's all about planning ahead.

• Identify your retirement goals. Start with your expected retirement age and how long your retirement income should last. Plan as though your money will outlive you—the alternative is that you outlive your retirement income.
• Estimate your retirement expenses. Will you live in the same city when you retire? What about the same home? Will your mortgage be paid off? Do you plan to make any lifestyle changes, such as traveling more? Your cost of living can change dramatically in retirement. Other common cost increases to include in your estimate are health care, prescription medication and inflation in general. Try your best to get an idea of your monthly expenses based on how you see yourself in retirement.
• Consider every source of retirement income. Social Security, company pensions, 401(k) funds, and individual retirement accounts (IRAs) are just a few types of retirement income you'll want to factor into your estimates. The Social Security Administration offers a Social Security calculator that can help you estimate your benefits upon retirement. For more help with calculating retirement income, you can also connect with a financial advisor or use this calculator.
• Mind the gap. Compare your projected monthly retirement income and expenses. Is there a gap? The sooner you identify the difference between what you need and what you're expected to have, the more options you'll have. If you notice any gaps, you can work to close them, such as by adopting a more aggressive saving strategy, doing freelance or part-time work, or delaying retirement.

Getting comfortable with the idea of investing starts with building your knowledge and creating a realistic plan for what you want to achieve.

• Set investment goals. Different investment options serve different purposes. Some investments prioritize potential growth, while others focus on the least amount of risk. A third group of investments targets a steady flow of income. Identifying your goals will help you devise a portfolio with the appropriate mix of assets. Within each of your goals, think through your growth expectations, risk tolerance and time horizon.
• Start now. How much risk and uncertainty are you comfortable with? That will play a big role in determining your income needs and your moves in the market. Because investing is a long-term strategy, the earlier you start, the more time you have to ride out market volatility and take advantage of compounding interest. One way to potentially lower your risk is to employ strategies such as building a diversified portfolio and taking a long-term view of investing.
• Monitor performance. A check-in on your portfolio once or twice a year will give you an idea of how you're performing against benchmarks. Be sure to look at your average returns as well as costs and fees. As you monitor your portfolio's performance, think through any major life changes that may impact your investment strategy.

One way to take better control of your finances is to obtain insurance designed to protect what you've worked for, especially during unforeseen events. These three types of insurance can help.

• Life insurance. This provides funds for your beneficiaries if you were to pass away within the term of your coverage. These funds can replace your income, allowing your spouse and children to maintain a similar quality of life. Even if you aren't working, the payout from life insurance can help cover services you would have otherwise handled, including child care, cleaning and managing finances.
• Long-term care insurance. This option pays a specific amount of money each day for long-term care. The type of care covered depends on the contract. If you anticipate needing long-term care, this insurance can be especially helpful given that women outlive men on average.
• Disability insurance. This type replaces a portion of your income if you become disabled and can no longer work. There are a few ways to access disability insurance, such as through your employer, private insurance companies and Social Security benefits.

Consider the role you play in your household, whether it's earning an income or providing critical services that keep the household running. Use this to determine how and what type of coverage is best for your family.

The only constant is change. As the market, your finances, your situation and your goals shift, be willing to make adjustments.

• Keep an open mind. Don't let what you don't know stop you from getting started. Try, make mistakes and adjust. Above all, stay willing to maximize your options and modify your goals as you build your knowledge.
• Dive deeper. Pay attention to financial topics that pique your interest. Do you enjoy reading about mutual funds? Do you have more questions on the importance of insurance? Don't be afraid to seek out resources and answers. Books, podcasts and expert advice are out there, and meeting with a financial advisor at least once a year can give you in-depth access to financial areas of interest.
• Get connected. In-person and online communities of women come together to support and encourage each other on their financial journeys. As part of your financial planning, build your support system—share your goals, learnings and challenges with trusted family and friends.

When it comes to women and finances, there is a tremendous opportunity to find financial empowerment. Women face unique financial challenges, but smart planning in retirement, investing and protecting assets can help you make strides toward financial independence.

If you're wondering where to begin, consider working with a financial advisor to get started. With the help of a Thrivent financial advisor, you can gain financial clarity as you set goals and pin down the strategies that can help you achieve them.