Women, You Should Know These Financial Terms

Studies show that women do not feel as though they know enough about finances. It is every woman’s responsibility to make sure they are financially literate. There are things, such as the following terms, that all women should know.

First, ladies, you should be familiar with stocks and bonds. Do you know what they are? When you purchase stocks you are basically purchasing and then owning a part of a company. So how do stocks work? When you purchase stocks in a company you wait and see how that company does. If it does well you can sell all of your stocks for a higher price, thus making money. You may have heard the term “buy low, sell high”. This applies to stocks. You want to buy them when the price is low and sell when the price is high.

So what about bonds? These are simply just and IOU. With a bond you are lending money to the government or a corporation. Then the government or corporation will pay you back the amount that you lent, plus interest. Both stocks and bonds must be purchased through a broker, and most require about five thousand dollars for a minimum deposit. If you do not want to pay that much, you can look around for a broker who has a lower minimum deposit.

Next is equity, which is the current value on your home, but minus what you still owe on your mortgage. Equity is the portion of your home that you actually own. Some people take out loans on their home’s equity, keep in mind that this can be risky, so you must make sure that it is a good time to do it before you do. If you take out a home equity loan and then your home’s value is decreased because of a poor market, you may end up owing more than your home is worth.

Do you know what your net worth is? Add up everything you own, such as: equity in your home, retirement accounts, stocks, bonds and so on. Then subtract all that you owe from that amount. Student loans, credit card debt, mortgages, car loans, and so on are all examples of debts you must subtract from the first amount. What you are left with is your net worth.

Ladies do you know about estate planning? Estate planning is doing things such as: making sure you have an updated will, health insurance, long term care insurance, a health care proxy, and so on. Doing this will make things much easier on your family. It will also make sure that those you want to have certain things and those that you want to have certain responsibilities are able to do so. Many studies show that women tend to live longer than men, so there is a chance that you will not have your husband to take care of everything when you go. This is a big reason why you want to stay on top of your estate planning.

All of these are terms that all women need to know, whether single or married. Becoming financially educated is the first step toward financial freedom. All women whether married or single should strive for financial freedom to secure their financial future.

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