Getting Involved and Taking Charge of your Financial Well-Being
Ladies, we have come a long way in the last century, especially in regard to financial planning for women. As we celebrate 100 years of being able to vote this election year, we also celebrate the tremendous growth of the role of a woman at home and in the workforce. Long gone are the days when women had little to no input and power over their future. To highlight a few of these accomplishments, today, for those in the workforce, women represent 40% of all breadwinners. This is a significant increase (4x) in the last six decades. In addition, we have gained tremendous traction in business ownership, as 30% of all privately owned businesses are owned by women. What is even more impressive is that in today’s workforce, women now represent a larger proportion of management and professional roles than men, coming in at 52%. Way to go, Ladies!
While there is much to be proud of and much to celebrate as we wrap up the first-century post-women’s suffrage movement, it is important to note that along with these accomplishments, for most of us, we are still also considered the primary caretaker of our families. While I personally believe this means we are all superheroes, the reality is that this amplifies our responsibilities to our families, especially as it relates to personal finance for women. For most households, even though women are thriving at work and at home, they are still lagging in the financial planning department by leaving those matters to their spouses.
This unfortunate truth puts millions of women at risk financially. It is estimated that 90% of all women will be directly responsible for their finances at some point in their lifetime. It is easy to see why. No one gets married with the intention of getting divorced, at least, I hope. Yet, the divorce rate still hovers around 50%. Also, women live longer than men. There is a much greater likelihood of a woman becoming a widow than it is for a man to become a widower. According to the U.S. Census Bureau, the average age of a widow is 55 years old and a third of women who become widowed are younger than 65. At 55 years old, most couples are still working, saving for retirement, paying for college, and paying off a mortgage. This can wreak havoc on a family should the person who has been making all the financial decisions suddenly die. If the statistics show us that we are the ones most at risk, what can we do as the “Family Superhero” to protect the financial well-being of ourselves and our families?
Get Involved
The most important step we can take as women are to get involved in the financial matters of our household. I can’t tell you how many times I have heard women say “Oh, I don’t know anything about that because my husband handles (or handled) the finances”. It is heartbreaking to hear the stories of women who have recently lost their spouses either through death or divorce. Many times, these women have a massive amount of regret and anger for not being more involved in the financial decision-making of their household on top of not being prepared to take over the finances.
Investing Isn’t Just a Man’s Game
It is completely understandable that investing and all that goes with financial planning can seem intimidating. As with anything we learn how to do in life, the more educated we become, the more confident we become. Personal finance for women is no different. I highly encourage you to be an active participant in the investment decision-making and financial planning of your household. Your portfolio might thank you as there are numerous studies that show women are actually better investors than men. According to one Fidelity study, women investors outperformed men by about 0.40% on average because we tend to be more disciplined and more diversified. In addition, it was found that men are more likely to make speculative bets in the hopes of getting rich quicker rather than investing with the notion that “slow and steady wins the race”.
Life Insurance
It is imperative to have life insurance. There is nothing more devastating than losing a spouse. Unfortunately, as mentioned above, the statistics are not in our favor as many of us will experience the loss of our loved ones at some point in our lifetime. It is even more tragic when it happens prematurely and suddenly. Especially when there are people that are financially dependent on you or your spouse. Both you and your spouse should have policies in place. The payout should be enough to replace income, help pay off debt, or fund college for your children. Even if you work in the home, I highly recommend life insurance. While a stay-at-home parent doesn’t bring in a paycheck, should something happen to you, it will cost money to replace the work you do for your family. Life insurance doesn’t have to be complicated. In fact, all that most people need and should purchase is a term policy. Avoid insurance policies that combine insurance and investments. These items should be kept separate as you lose flexibility and increase the cost.
Estate Planning
Everyone should have some level of estate planning and medical directives. It is imperative to legally document what you want to have to happen to you, your assets, and your children should you or your spouse pass away. I know it can seem a bit morbid to think about dying. But the fact is, we are all going to die at some point. It is wishful thinking that your surviving family members will be able to sort out who takes the kids or how to divide up assets in a harmonious way. The last thing you would want to have to happen is for a judge to determine the fate of your children and where your assets should go.
Disability Insurance
Did you know that you are more likely to become disabled than you are to die prematurely? In many cases, becoming disabled creates a greater financial hardship than death, because your family will have to pay for your care without your income. The good news is that most employers offer disability insurance as a benefit. Both you and your spouse should have disability insurance that replaces a large portion of your income. If your company doesn’t provide disability insurance, you can obtain it through a private policy.
Education Planning
If you are planning on paying for college for your children, there are many ways to accomplish this. The most popular and best option is the 529 plan. The sooner you start to save, the greater the growth potential. One important thing to mention is that saving for college should not be a priority over saving for your own retirement. As a mother, I know how hard it is to think about putting your child’s needs second to your own. However, if you remember one thing, it is that your child can borrow for college, but you cannot borrow for retirement.
Conclusion
As women, we have accomplished so much in a relatively short period of time. It is incredibly exciting to think about what is yet to come. However, as it relates to personal finance and women, we have a lot of room for growth. Unfortunately, many women downplay their level of knowledge surrounding the topic. I promise that you know a lot more than you think you do. You don’t have to be an expert to take charge of your or your family’s financial security. I don’t want to downplay it. There is a lot that goes into proper personal finance for women, which is where professional guidance and advice comes into play. The topics outlined above are a great start to understanding some of the more important pieces of the puzzle so that you can take charge and get engaged. If you find that your family needs professional advice to accomplish your financial goals, hiring a Financial Advisor that you trust and connect with is a perfect way to start that journey. At ML&R Wealth Management, we stand out from other Wealth Management firms. We have a large representation of women at our firm. Half of our Financial Advisors are women, whereas, within the industry, women only represent 15% to 20% of all Financial Advisors. We are also fiduciaries, which means we put your interests ahead of our own. So, from one woman to another, stand up tall, put your shoulders back, and take charge! You’ve got this.
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