5 Expert Financial Analyst Strategies Every Woman Needs for Personal Finance
- Davina Jackson
- Oct 27, 2024
- 13 min read
Updated: Nov 3, 2024
Welcome to The Woman CFO – a space crafted just for you, where we embark on a journey of financial empowerment.
Managing money doesn’t have to be overwhelming or limited to spreadsheets and bank statements.
In fact, many of the same strategies that financial analysts rely on to guide multi-million-dollar decisions can be your secret weapon for personal finance.
So, today, I’m going to give you a sneak peek into my world as a Senior Financial Analyst...
I'm going to share the top 5 financial strategies that financial analysts implement and use, and show you how to apply them in your own finances.
With over 10 years in the finance world, I know these strategies will help you build a valuable roadmap for your financial journey - whether you're looking to understand your financial picture like a pro, spot pitfalls before they happen, take charge of your spending, or finally feel confident in your budgeting skills.
Are you ready to start making pro moves with your money?
Let's go!
Key Points
Know Your Numbers: Regularly track your income, expenses, assets, and liabilities to make informed decisions
Assess Financial Health: Set a schedule to review your finances (quarterly works well) and spot trends or problem areas early.
Stick to a Flexible Budget: Create a budget you can adapt to changing circumstances, helping you stay on track financially.
Diversify to Minimize Risk: Spread your investments across different assets and sources of income to increase stability.
Forecast and Plan: Use forecasting to anticipate major expenses, prepare for future goals, and set realistic timelines.
Instant Gratification Zone: Skip to the Good Stuff
Strategy #1: Know Your Numbers
When it comes to finances, understanding your numbers is the foundation and first step of financial clarity.
This isn’t just about knowing how much is in your bank accounts, but rather having a full picture of your financial health because understanding where you stand financially enables you to make decisions from a place of knowledge and control, instead of stress or uncertainty.
Why Knowing Your Numbers is Essential
Financial analysts need to know the full financial picture of a company before making decisions.
For your personal finances, it's the same principle. Knowing your numbers gives you the insights to manage your day-to-day finances while also preparing for your future.
The more familiar you are with your earnings, spending habits, debt, and assets, the better you’ll be able to make choices that align with your goals - whether that’s paying down debt, saving for a trip, or starting an investment fund.
Key Numbers You Should Track
Here are the essential numbers that you should be tracking:
Income
How much are you bringing in each month? Account for all sources of income, like side gigs, passive income, or occasional bonuses.
Expenses
What is your spend? This includes fixed expenses (such as rent, mortgage and student loans) and variable expenses (groceries, subscriptions, daily coffee habits, and salon visits).
Make sure you track every dollar spent so you can see where it goes and who it goes to. This will also help you spot trends (good and bad).
Debt Levels
This one will hurt a little bit but you need to know how much you owe and who you’re indebted to.
Be very clear on all outstanding debts. This includes credit cards, student loans, car loans, payday loans and any other type of loan or credit.
Knowing these numbers is critical for building an effective debt repayment plan.
Savings
Are you saving any money? Make sure you know your current savings levels, both for emergency funds and other financial goals.
Your savings will be a safety net to fall back on if things get tight, so you want to make sure it is funded.
Net Worth
Your net worth isn’t just a number that wealthy people care about. It's a key metric that tracks your financial health.
It is the big-picture number that shows your total wealth (calculated by subtracting liabilities from assets), and serves as a snapshot of your financial progress.
Even if it's in the red now, tracking your net worth can help you see positive trends over time as you pay down debt and grow savings. That’s why understanding this metric is so important.
How Knowing Your Numbers Empowers You
Once you know where you stand, you’ll be able to make clearer, more empowered financial choices.
For example, understanding your expenses helps you identify where you might be overspending and find ways to cut back; seeing your debt levels can motivate you to tackle it strategically; and knowing your net worth gives you a snapshot of your progress over time - which can be incredibly motivating as you work toward your financial goals.
In other words, knowing your numbers isn’t about judging yourself; it’s about gaining control and building confidence.
And the more familiar you are with your financial health, the easier it becomes to navigate decisions, plan effectively, and feel empowered in your money journey.
Strategy #2: Assess Your Financial Health Regularly
One of the most powerful habits you can adopt in personal finance to build financial confidence is regularly assessing your financial health.
These consistent financial health checks provide valuable insights that will help you make informed decisions, track progress, adapt to changes, and stay focused on your financial goals.
Why Regular Financial Health Assessments Matter
Just as doctors recommend regular checkups to maintain physical health, financial health checkups help you maintain and improve your money situation.
This process is essential because it allows you to:
Identify Issues Early: You can spot areas that need improvement, like high-interest debt or a dwindling emergency fund.
Track Progress: View trends and observe changes/improvements over time - whether it’s reducing debt, building savings, or boosting your net worth. You will also see if progress is going the other way (worse case scenario)
Adapt to Life Changes: Life is unpredictable, and your financial needs will change. Regular checkups will keep you ready to adapt if something like a job change or unexpected expense arises.
Key Areas to Review in Your Financial Health Checkup
For a complete financial health analysis, here are some of the critical areas that I look at and how you can apply them in your personal finances:
1. Cash Flow
Look at your income vs. expenses. Ideally, you want to have a positive cash flow, where your income consistently covers your expenses, with extra left over for saving and investing.
Negative cash flow is simply the reverse of this - where you are spending more money than you bring in.
2. Debt-to-Income Ratio (DTI)
Your debt-to-income (DTI) ratio is how much money you earn versus what you spend. It's calculated by dividing your monthly debts by your gross monthly income.
The goal is to keep this ratio low, as it’s a good indicator of your ability to take on and manage debt responsibly. General rule of thumb is to keep DTI below 49%, with 35% or less considered as “very good.”
A DTI over 50% is considered high or significantly indebted relative to your income and can limit your financial options. (If this is you, don't worry. You just need to put more resources towards paying down debt and reducing this number.)
3. Savings Rate
Financial health is often tied to regular savings habits, especially in retirement and emergency funds. A common rule of thumb is to save 20% of your income, but this will depend on your goals and circumstances.
4. Credit Score
Your credit score gives you an idea of how lenders view you and the likelihood that you will repay debts.
A higher credit score indicates that a borrower is less of a risk, and can lead to better interest rates and more credit card options. A lower score indicates more financial risk to the lender, resulting in higher rates, fewer loan options and credit cards options.
Credit scores range from 300 to 850. Here's the breakdown:
800 to 850: Excellent credit score
740 to 799: Very good credit score
670 to 739: Good credit score
580 to 669: Fair credit score
300 to 579: Poor credit score
Quick note on credit scores:
Credit scores are produced by 3 credit bureaus - Experian, Equifax, and Transunion. Each may use their own models to calculate credit scores, and lenders may only report information to one or two bureaus.
To make sure you get a full picture of your credit, it’s best to get a credit report from each bureau. You can request your credit reports at the same time or spread them throughout the year.
By U.S. Federal law, you can get 1 free credit report every 12 months from each the 3 credit bureaus via Annual Credit Report here.
5. Net Worth Growth
Regularly checking your net worth (assets minus liabilities) provides a snapshot of your financial progress. It’s a great way to track how your financial situation is evolving.
How to Start Your Financial Health Checkups
Taking time every few months to review your numbers, assess your goals, and evaluate your spending and savings habits is essential.
So, just as a company does quarterly reviews, you should do the same (to start, at least). You’ll gain clarity on what you're doing well and where there’s room for improvement.
Strategy #3: Stick to a Budget and Adjust When Needed
Budgeting is one of the cornerstones of personal finance - and for good reason.
In the professional finance world, a budget serves as an essential tool to keep projects on track, align goals, and manage resources effectively.
In the personal finance world, a budget serves as a way to set boundaries that align with your goals and give you financial peace of mind.
And for women, especially, a budget serves as a way to fund aspirations, prevent unnecessary debt, and help build wealth. It's a source of empowerment to achieve life and financial goals without unnecessary stress.
Why Sticking to a Budget Is Important
In my years as a Senior Financial Analyst, I’ve seen firsthand how a solid budget can shape success.
But staying true to a budget doesn’t mean restricting yourself from enjoying life. Rather, it’s a way to be intentional about where your money goes, helping you build toward the financial future you want.
Here’s why sticking to a budget is a game-changer:
Keeps Your Financial Goals Top of Mind: By tracking spending and saving against your budget, you’re constantly reminding yourself of your goals and priorities.
Prevents Unnecessary Debt: A realistic budget helps you avoid overspending and relying on debt, allowing you to live within your means.
Supports Financial Flexibility: With a budget, you have room to adjust spending in specific areas, like dining out or shopping, while still staying on track for your larger goals.
How to Build (and Stick to) a Practical Budget
Creating a budget that actually works for you is all about realism, regular check-ins, and a willingness to adjust. Here are some ways to build a budget that fits your life:
List Your Income and Expenses: Start with the basics by writing down your monthly income and necessary expenses like rent, utilities, and groceries. From there, allocate funds toward savings, debt payments, and any personal goals.
Plan for Fun Money: Allowing room for small indulgences keeps you from feeling too restricted. This can prevent overspending and helps make budgeting sustainable.
Use a System That Works for You: Some people like using apps, others prefer spreadsheets or even handwritten lists. Choose the system that keeps you organized and motivated.
Adjusting When Life Changes
Budgets aren’t set in stone, and they shouldn’t be. A good budget evolves as life and goals change, whether you’re tackling a new job, moving to a new city, or facing unexpected expenses.
Financial analysts regularly review and adjust budgets to reflect shifting market conditions. You can do the same in your personal finances by revisiting your budget at least once every three months or any time you experience a major life change.
If you’ve budgeted carefully, you’ll have a clearer picture of where to pull back and where you can afford to spend a little extra if needed.
Tips for Adjusting Your Budget
Review Monthly Expenses: At the end of each month, look at how your actual spending compares to your budgeted amounts.
Make Small Changes First: If you need to cut back, start by reducing discretionary spending instead of large, drastic changes.
Prepare for Big Life Events: Whether it’s a job change, moving, or starting a family, anticipate financial shifts by updating your budget proactively.
Budgeting isn’t just about numbers; it’s about empowering yourself to make choices that support your unique financial journey.
With this flexible and intentional approach to budgeting, you’ll be able to maintain financial balance, tackle unexpected expenses, and ensure that your spending aligns with your evolving goals.
Strategy #4: Diversify to Minimize Risk
If there's one principle we financial analysts live by, it’s this: do not (emphasis on the “not”) put all your eggs in one basket.
You avoid doing this through diversification.
Diversification is a safeguard against unpredictable market changes and unexpected expenses - therefore helping you build financial resilience and stability over time.
It is one of the most effective ways to minimize risk and protect your wealth, and it’s a strategy that works wonders in personal finance, too.
Why Diversification is Key to Reducing Financial Risk
The core idea of diversification is to balance risk and reward. When you put all your money in a single investment - say, one stock or real estate property - you’re completely exposed to the ups and downs of that specific market.
But by diversifying your assets, you spread your risk. So if one investment takes a hit, the others may stay stable or even gain, balancing out the impact.
Here’s how diversifying can help in your personal finances:
Minimize Loss Potential: If one asset underperforms, other investments in your portfolio can provide a buffer, reducing the overall impact.
More Stability: Diversification leads to smoother returns, as you’re less likely to experience significant fluctuations in the value of your investments.
Access to Growth Opportunities: By exploring different asset classes (stocks, bonds, real estate, etc.), you can benefit from growth in multiple areas, not just one sector.
Tips for Diversifying Your Personal Finances
Here are some accessible ways to apply diversification. Please make sure to do your due diligence before investing in any of these financial vehicles to ensure they align with your personal goals and financial situation:
Spread Out Your Investments: If you’re investing in stocks, choose a mix of companies across different sectors (technology, healthcare, consumer goods, etc.). Mutual funds or ETFs can also provide diversification with a single purchase, as they often include a range of companies.
Consider Other Asset Classes: Don’t just stick to stocks. Real estate, bonds, and even high-yield savings accounts are ways to diversify and bring more balance to your financial portfolio.
Build Multiple Income Streams: Think beyond investments. Diversifying income can mean having a side hustle, freelance work, or rental income, so you’re not dependent on a single paycheck.
Balance is Key
Diversification doesn’t mean you have to spread yourself too thin.
It means creating a balanced financial picture that incorporates your unique financial goals and risk tolerance, then choosing a mix of investments that align with those factors. This may look different for everyone and that's ok.
The point is that you're setting yourself up for a future that's resilient and ready for whatever comes your way - a tried-and-true strategy from the world of financial analysis.
Strategy #5: Forecast and Plan for the Future
Forecasting and planning are essential for anyone looking to make sound financial decisions.
Corporations understand this very well and invest considerable time into preparing financial forecasts and plans (including profit and strategic plans)
As a financial analyst, I am constantly making educated predictions about future market movements and adjusting plans based on those forecasts.
It’s a proactive approach that I believe everyone should apply to their personal finances if they want to achieve both stability and growth.
Now, don't get it twisted, “forecasting” your finances doesn’t mean you need a crystal ball or have to “time” the market.
It simply means looking at your current financial picture, predicting potential changes, and planning for the future with flexibility.
Life often has its surprises - whether it’s changing career goals, family needs, or personal milestones - and a strong financial plan can make these transitions smoother.
Why Planning Ahead is Key to Financial Success
Creating a financial plan isn’t about strict rules or eliminating fun; it’s about preparing for future possibilities and making your money work for you.
Here’s why it’s essential:
Reduce Financial Stress: Having a clear plan for savings, retirement, or large purchases can bring a huge sense of security. You won’t have to “wonder” where the money will come from.
Stay Focused on Long-Term Goals: With a financial roadmap in place, it’s easier to resist the urge for short-term splurges, allowing you to stay committed to long-term financial goals.
Adjust for Life Changes: Planning with flexibility means you can better manage changes like a new job, relocation, or family milestones without losing financial footing.
Tips for Building Your Financial Forecast
Forecasting for your finances can start with a few simple steps. Here’s how to make it effective and manageable:
Set Clear Financial Goals: Knowing your goals gives your planning structure and purpose. Start by defining what you want to achieve - whether that’s a new home, retirement savings, or an emergency fund.
Map Out Your Future Expenses: Take time to predict your future expenses. Consider both your regular costs (housing, bills, and groceries) and variable ones like travel, big-ticket purchases, or family expenses.
Create “What If” Scenarios: Financial analysts often create different scenarios to anticipate various outcomes. In personal finance, try asking, “What if I switch careers?” or “What if I have a big medical expense?” This is a very effective way to prepare for the unknown.
Review and Adjust as Needed
A forecast isn’t set in stone and will change as your life (and circumstances) change.
At minimum, review your financial plans annually, or any time there’s a big life change, and make regular adjustments to ensure your goals stay achievable and your plan remains realistic and adaptable.
This way, you will not only be better prepared for what’s next but you will also feel more in control of your financial journey.
- Speaking from the financial analyst realm, a forecast can change every single month (phew!) It's not required for personal finances but it is an option -
Strategies Every Woman Needs for Personal Finance and a Stronger Financial Future
Managing personal finances doesn’t have to feel overwhelming or complicated.
As we’ve discussed, the top 5 strategies every woman needs for personal finances are strategies used by financial analysts that are just as powerful in person as they are in the professional world.
Adopting these practical habits - like knowing your numbers, assessing your financial health, diversifying, forecasting, and sticking to a budget - brings clarity, purpose, and control into your financial life.
For women, these strategies are especially empowering because they allow you to approach finances with knowledge and confidence.
Remember: Financial security is about setting goals, making informed decisions, and creating a plan that feels right for your unique life path. Each step forward, even small ones, can make a big difference over time.
So, whether you're just beginning to look at your finances in a new light or you’re ready to level up, using these strategies is a powerful way to secure your financial future.
Embrace the habits, keep learning, and take control - your future self will thank you for it!
Ready to embrace your inner CFO? Join our community. Share your financial goals, budgeting tips, and success stories in the comments.
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