I mean really, do you want to meet your worst fear of becoming the dreaded “bag-lady”?

I didn’t think so! However, we’re not off to a good start. Although more than half of all baby boomers are unprepared for retirement, women are falling behind at a faster pace.

• The number of women filing bankruptcy is increasing rapidly, especially single women
• According to Women’s Institute for Secure Retirement, women’s average retirement fund is about 2½ times lower than the a man’s average retirement fund.
• Women tend to be unsure of the how much they have in their retirement accounts
• Women are not as confident as men in their investing skills, and feel underserved by the investment community

Women’s needs are different than men’s when it comes to preparing for retirement. Women live longer than men, earn less in their lifetime, and have less saved. This is a double whammy for women because not only will they need more, they have less opportunity to prepare.

Facing the reality and getting prepared today, whether that’s by saving or by lifestyle reduction, is critical to avoid future disappointment.

Here are five actions women can do now to begin shifting the way they think about money, start creating a sustainable future, and enjoy living more fully while making adjustments.

1. Create a 5-Year Plan
Having a clear picture of life in 5 years is critical to actually making it happen. Of course a vision for 10, 20, 30 years is necessary too, but 5-years is a solid time frame from creating goals and action steps. When creating a 5-year plan multiple areas of your life should be considered; health, relationships, career/business ventures, community, travel/leisure, legacy, etc. are all necessary to have a balanced life plan. Remember, if you do not have clear goals, you will not have much chance of actually attaining them.

2. Be Willing to Make Changes
When you commit to achieving your 5-year goals, guess what? Your life will have to change. You will find that you need to spend your time differently, use money differently and perhaps change your relationships. Why? Because if you don’t, and you keep doing what you’re doing, do you think you’ll achieve your 5-year plan? If everything was already on track, you’d already be living those goals. So, in order to achieve them, you must do things differently. It’s not uncommon that if one is serious about achieving their goals that their lifestyle changes. Sometimes downsizing while investing in a new business, or leaving a stagnant relationship, or spending time getting educated or researching areas that will help them achieve their goals.

3. Master your Cash Flow
Understanding how wealth building works is critical, and it starts with mastering your cash flow. There are two elements to cash flow that must be mastered; your income and your expenses. Often when addressing money you’ll hear ways to reduce your spending or stay within a budget. But that’s only part of the equation. Mastering your income is just as important and managing your expenses. In fact it’s even more important because you can only cut back expenses so far, but you can increase your income infinitely. But, the key is making sure that you have positive cash flow, where you are spending less then what you are bringing in. You can’t build wealth if you don’t have positive cash flow. And don’t forget, if you’re not planning for your future now, then you’re not living within your means. Living within your means has to include saving for your future.

4. Understand How to Build Your Net Worth
Your net worth is the difference between what you own and what you owe. What’s left over is your net worth. The way you build your net worth is by having positive cash flow. When you have positive cash flow you can only do two things with it; 1) increase your assets, or 2) decrease your debt. Either way, your net worth increases. It’s just like weight loss. In order to lose weight you can either increase your exercise, or reduce your calories (or both!). Once you understand this core concept then you can make decisions about the best placement of your excess cash flow. For example, would it be better to pay down debt, save or invest? Answers to questions like this depend on your 5-year goals, and the amount and type of debt you have. With a clear 5-year plan, you can choose the method that will help you achieve your goals the fastest and safest.

5. Work Your Plan
The biggest problem with creating a financial plan with an advisor is the lack of implementation. Everyone I’ve talked to who has paid for a financial plan says it’s still sitting on their shelf. That won’t happen to you because you are going to create the plan yourself, and you are going to work it regularly, right? Create an accountability system that will help you stay focused each week, and take small steps consistently. Use a mentor, a Money Coach, a trusted friend or advisor to discuss any concerns that come up, and to help you stay on track. Following through and becoming disciplined is what will allow you to see success. Commit to being a success and don’t stop when things get difficult. Build a support system that you can rely on.

So, to be financial independent and avoid becoming that dreaded ‘bag-lady’, make sure you start making the necessary changes today that will build long-term financial sustainability. Paint the picture of success for yourself and take regular steps toward it. Face the reality, address any disappointments you might be holding onto, and begin an exciting new journey for yourself.

Author's Bio: 

Angie M. Grainger, CPA/PFS, CFP(r), Certified Money Coach
President at RETHINK Money Coaching, Inc. Helping people master their money so they use it to transition into their NEW desired ideal life.

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