Andrea Lee, CFP® | July 14, 2020
Your money and your health are two of the most important things in your life and they influence every aspect of your life. Women have the health part down. We think about health more than men and do more about it. We are more likely than men to have health insurance and a regular source of health care.
But where money is concerned, we fall behind. There is a gender gap when it comes to investing and women under engage with our finances when compared to men. Nearly half of women associate negative emotions with financial planning, start working with a financial planner later, and are less confident about managing money.
All of this despite the fact that women control more than $20 trillion in wealth. This astounding figure is due in part to women in the workforce earning their own income and often being the beneficiary of inheritances both from parents and spouses.
We’re here to change all of this, to help women manage their money as well as they manage their health and to close the financial gender gap. We want to show you how to be a successful female investor.
Women Left Out and Left Behind
A report from UBS found that 56% of married women leave investing and long-term financial planning to their husbands and 85% of women who defer to their husbands believe their spouses know more about financial matters.
Why are women being left out and left behind when it comes to finances and investing?
Ideas about gender roles die hard including those around money. Handling finances has long been considered “men’s work” and while the majority of women do handle everyday financial decisions, financial planning and investment decisions are often left to men even when their wives are breadwinners too.
Lack of Confidence
Because financial issues are so important, no one wants to get it wrong and make a mistake when it comes to money. But doing nothing is a financial mistake in itself. And financial planning nor investing are as complex as some people think. If it is overwhelming, there is plenty of help available to help guide you through it.
The Money Taboo
Some people believe that money is not a polite topic for conversation, that it’s rude or crass to discuss money issues. And some feel awkward discussing money; maybe they make more than their spouse or family or friends, maybe they feel embarrassed because they don’t make “enough” or maybe they’re ashamed that they have debt or have filed for bankruptcy in the past.
But when a topic isn’t discussed, it lingers in the dark and we lose a lot of opportunities to learn, to get help, and to get advice.
While all of the reasons women are not as financially involved as they should be are understandable, none of them are reason enough to allow this to continue to be the case. Women have to take financial control.
You’ll Have No Choice
Whether you want to manage your own finances or not, at some point you will probably have no choice. Some 90% of women will be solely responsible for handling their own money at some point during their lives whether because they don’t marry, marry and divorce, or are widowed.
Ignorance is Not a Defense
Generally, you are only liable for your spouse’s debts if the debt is in both of your names. However, in Indiana, as well as a few other states, all debts incurred by either spouse during the marriage are equally shared no matter whose name is on the debt.
That means if your spouse were to do something like run up a lot of credit card debt or take out a second mortgage on your home, whether you knew about it or not, you’re on the hook. Claiming that you didn’t know because you let your spouse handle the family finances will not absolve you from the debt.
If you don’t take a hand in your finances, you could be hundreds of thousands of dollars in debt and have no idea.
Our Retirement is Longer
Women have a longer life expectancy than men by five years, 81.1 years compared to 76.1 years. The average retirement age for men is 65 and for women, it’s 63. So the average man will spend 11 years in retirement but the average woman will spend 18.
While everyone’s biggest fear about retirement is running out of money before running out of years, women have more years to go.
You can see why it’s absolutely essential for women to take control of their finances. Now let us show you how.
Whether you’re married, partnered, or single, take stock of your finances. How much comes in and out each month and where is it going? Do you have an emergency fund? If so, how much is in it and where is it? Do you have debt? If you do, how much and what kind. What investment accounts do you have and how much is in them? What is your net worth (it could be a negative number)?
You can’t make any sound financial decisions until you have a complete picture of your financial situation.
Get a Financial Friend
A financial friend is someone in your life with whom you can openly discuss finances. You don’t have to discuss “hard numbers” like how much your house is worth or how much you have saved for retirement. Those things are personal and there is nothing wrong with keeping them private.
But you do need to discuss financial issues so you can get constructive criticism, have a sounding board, have someone to vent to, and have someone to help keep you accountable. This can be tough but a gentle approach can help. Don’t demand to know someone’s salary or how much credit card debt they have.
Share first, tell someone about a small financial issue you might be having like trying to cut back on your restaurant spending. See how they respond. You might be surprised how willing and relieved someone can be to discuss financial issues because like you, they have had no one to do so with.
Seek Out Resources
If you want to make something a priority in your life, you have to create a place for it in your life and educate yourself about it. Many people, men, and women consider the topic of personal finance a dry one. And while it may not be as interesting to discuss as food or music or sports, it’s much more important.
So find a good book, podcast, radio show, news program, blog, or magazine that is dedicated to personal finance and make it a part of your life. Read, listen, or watch on a regular basis. Not only will you learn, but you’ll give the subject a more prominent place in your daily life, and doing so encourages you to be engaged when it comes to your money.
Know Your Options
What investment options do you have? Retirement accounts are the most important types of investing accounts because of the tax advantages and because retirement is our most important financial goal. So what retirement accounts can you participate in?
If you work for a large company, you probably have access to an employer-sponsored 401k. If not, you can open an IRA. If you are self-employed or a small business owner, your options will be different.
Saving money is not the same thing as investing money and saving money is not enough. Most of us, men and women, don’t make enough money from our careers to create real wealth, the kind of wealth that will ensure we have enough money to not only retire and outlive our money but to live the kind of retirement we dream of. To grow your money, you must invest.
Find the Right Help
A financial advisor can help you create a financial plan that will allow you to meet all of your financial goals including having enough money to fund your retirement. But much like finding the right doctor or hairdresser, it isn’t one-size-fits-all and you have to find the right fit for you and your financial circumstances.
Some advisors specialize in doctors, in retirement planning, and in women investors. Because investing and financial planning aren’t one-size-fits-all either. Do some research and get recommendations from family and friends to help narrow down the search for the right advisor for you.
I am Here to Help
As a woman in a male-dominated field, I understand the unique challenges women face when it comes to money and financial planning. If you need help taking control of your finances, I’m here to help.
The opinions voiced in this letter are for general information only and are not intended to provide specific advice or recommendations for any individual.