Statistics show that women typically live longer than men, so it's important to create your own financial identity to protect yourself in case something should happen to your spouse. Here are some suggestions and tips on the best ways to make sure you're prepared in case of an emergency.
1) To have your own financial identity, the following things are mandatory:
- Some type of retirement vehicle -- either a 401(k), IRA (Roth, Traditional or Spousal) or a mutual fund.
- Your own checking account.
- Knowledge of how to access your family's accounts to avoid scrambling when a crisis hits.
- If you're planning to get married in the future, a prenuptial agreement is highly recommended.
- Understand the benefits of compounding interest on your investments.
2) It's important to plan for your retirement individually.
- Maximize the contributions you make to your 401(k) account, and set up an IRA. This is not an either/or choice -- you can invest in both!
- Stay-at-home moms should ask their husbands to set up a Spousal IRA.
3) Pay yourself first, and then your children. Keep the following things in mind when you're thinking about your own finances:
- Many women don't take care of themselves … thinking they are better mothers if they only focus on their children.
- Remember: there are no scholarships for retirees.
- There are thousands of scholarships and dollars available to students.
- I like to think of retirement planning like the oxygen mask on an airplane -- if you don't take care of yourself first, you won't be able to help anyone else!
4) You must build a nest egg.
5) Women live longer, so we require more money to live.
- That includes costs for health insurance.
- You can't just count on your husband's pension plan.
- Social Security is not the solution.
6) Women, you need to get informed about how to make money work for you.
7) Women generally timid/conservative investors.
- Playing it safe can hurt your portfolio.
- You want to make sure your investments outpace inflation.
- The stock market has averaged 10 percent per year over the long term.
Mellody Hobson, president of Ariel Capital Management (arielmutualfunds.com) in Chicago, is "Good Morning America's" personal finance expert. Ariel associates Matthew Yale and Aimee Daley contributed to this report.