When it comes to controlling the purse strings and managing day-to-day budgeting and spending, many women say they feel confident. However, many women express to me that they lack confidence in managing their broader finances, including investing.
Women also take on many of the caretaking responsibilities at home. Women tend to earn less than men, work fewer years and interrupt their careers to raise children. Between responsibilities at home and at work, many women spend so much time caring for others that they forget to make themselves—and their financial futures—a priority.
Here are some tips to help ensure you—or your mom, daughter, sister, aunt, friend—are financially secure.
Talk With Your Partner about Money
Money can be a complicated and even controversial topic. The first important tip for women is to discuss their finances with their partner and their children as freely as they would any other topic. Open discussion about money makes it easier to develop a financial plan that takes into account family values and goals and is flexible enough to create security plans if Plan A doesn’t unfold as expected.
Women should also have an understanding of all the different types of assets the family holds. Often if a woman asks about financial planning or shows an interest in the family investments, it is sometimes threatening to her partner, making it difficult for her to learn about the status of financial affairs without coming across as confrontational.
Have a Financial Plan
It is important for couples to create a family financial plan, even if it’s just a preliminary one. Talking through the plan together, what kinds of events you need to plan for—education, second homes, weddings, when you might be able to retire, a lasting legacy—is the best way for women and their partner to see where all the assets are. When all the assets are disclosed, the topic of financial planning becomes shared territory, and conversations about money get easier.
Factor in Widowhood or Divorce
A woman turning age 65 today can expect to live, on average, until age 86.6, which means not only that your retirement could last 20 years or more, but you have also a high likelihood of outliving your spouse. Are you prepared to take on the responsibility of making investment and asset allocation decisions as a surviving wife?
All too often, women are unaware of the true state of family financial affairs until they are plunged into it due to the incapacitation or passing of their husbands. The same is true for divorcees, who suddenly find themselves responsible for their own financial well-being while coping with enormous emotional stress. Considering the things you’d prefer not to think about—death, divorce, disability, disaster—allows you to plan for unexpected detours.
Have the Money Conversation with Your Parents
As the population ages, more and more women will need to shoulder the responsibility of caring for an aging parent. Asking your parents about their financial affairs—wills, insurance policies, investment accounts, birth certificates, passports, long-term care plans—helps you understand if and how to include them in your financial plans.
Giving your parents the gift of a financial checkup will one day be the greatest gift you could have given them. They will be prepared for whatever lies in their future, and so will you.
Get Educated
If you need to boost your financial literacy, educate yourself—and don’t be afraid to ask questions. Many women are reluctant to reach out to their financial advisor, either feeling intimidated or just reluctant to ask simple questions. It is important to entrust your wealth management to someone you can develop a relationship with and who not only understands your needs, goals and risk tolerance but can also help you understand those as well. iBi
Cathy S. Butler, CFP, CRPC is a financial advisor with Morgan Stanley. For more information, visit www.morganstanleyfa.com/cathy.butler.
