Female Entrepreneurs Making Smart Financial Moves

01/22/2016
Kendra Galante

Being your own boss sounds great, right? Perhaps that’s why so many women are choosing not to answer to “the man,” or in this case, “the woman.”

TD Ameritrade commissioned a survey of self-employed Americans to understand the financial challenges they face, and the data on self-starting female entrepreneurs was especially interesting.

This ambitious group of women is making several smart moves when it comes to their financial futures. Here are some of the traits that the survey uncovered about women who are choosing to be their own bosses:

  • They’re self-starters. Seventy percent of self-employed women consider themselves to be running start-ups and 37 percent of new entrepreneurs in 2014 were female. The draw to running a business is strong for women who may feel traditional employment doesn’t offer enough flexibility or work-life balance. Robin Young runs her own firm, Northstar Financial Planning, Inc., and says, “My jump into entrepreneurship was fueled by a need to have the freedom to be both an awesome mother and an empowered career woman. I didn’t see any reason that I couldn’t have both.”
  • They’re seeing surprising success. Forty percent say being self-employed has been more financially rewarding than they had expected. Laura Tarbox founded her firm, The Tarbox Group, in 1985. She says that, “The years of long hours and struggle were hard, but I always felt I was on the right track and would ultimately be successful. I’ve always loved the quote, ‘As your own boss, you can chose to work any 80 hours of the week you want to!’ It is so rewarding to know that my success today was the result of my hard work and perseverance, and the choices I made (and risks I took) along the way.”
  • They’re savvy when it comes to credit. Women are more likely to live with family or accept financial gifts from parents or others in order to achieve their goals, versus taking a personal/unsecured loan or line of credit. And 43 percent either don’t have any debt or, if they do, don’t feel the recent rise in the federal interest rate will be a burden on them at all.
  • They’re careful. They view emergency savings as key to living a financially comfortable life, which is especially important given that two-thirds of Americans have seen their long-term and retirement plans disrupted by major life events. This careful preparation could help offset things like increased rates of widowhood or rising healthcare costs.

For female entrepreneurs, longer life expectancies and an absence of traditional employer-sponsored retirement plans can make saving for long-term goals a challenge. The fact is, self-employed women will likely need a big nest egg for the future … but they are making smart moves that can enable them to do it on their own.

“While it seems like the cards are stacked against them, it’s encouraging to see women entrepreneurs making smart financial moves,” said Dara Luber, senior manager of retirement at TD Ameritrade. “The survey showed that women are less likely then men to take out a line of credit for business purposes, are setting aside more money for unforeseen emergencies and they understand the big picture. They’re saving for both long and short-term goals like home repairs, vacations, emergencies as well as retirement. This group also realizes that they may need to work longer if they can’t save.”

This financial realism, coupled with a healthy dose of ambition and independence, could help this group of women lead the charge when it comes to saving, investing and designing the future they want.

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