How Today’s Women are Taking Charge of their Financial Well-Being
The concept of women and money has undergone significant transformations over the years. Many female baby boomers, who often filled traditional roles in child-rearing and household management, found themselves financially dependent on their spouses. Comfortable taking a backseat in managing the family’s financial affairs, many women struggled to find their footing in the event of divorce, the passing of their husbands, or when their spouses became unable to manage the finances.
However, things have been changing in recent decades. One-income households are becoming increasingly rare as both adult members of a household tend to work and contribute to the family’s financial security. Furthermore, the percentage of households where the wife’s earnings are on par with the husband, or where the wife is the primary breadwinner, has increased dramatically over the decades.
As a result, women are becoming more active in managing household finances, planning for retirement, and investing. This shift is both refreshing and empowering, as more women are asking questions, making independent financial decisions, and taking charge of their financial well-being.
As financial advisors, we see this empowerment as a positive trend. It is imperative that everyone, male and female, high earner or not, actively commits to being involved in their financial lives.
Understand your Financial Situation
When one understands their financial situation, sets goals, and makes informed decisions, he or she asserts control over their financial future and reduces dependence on others for financial support. Even if you’re not in charge of your household’s wealth management, it is necessary to have a broad understanding of your financial situation.
- How much wealth do you have?
- What are your household income sources and how may those change over time?
- Where are your bank and investment accounts? How can you access them? What are these accounts invested in and are you comfortable with those investments?
- What are your household expenses?
- Who are your primary financial contacts (advisor, estate-planning attorney, insurance agent, and accountant)? How can you be in touch with them as required or desired?
Be Prepared for Unexpected Life Events
Life is unpredictable, and unanticipated events such as divorce, widowhood, illness, or job loss can impact financial well-being. Active involvement in your financial planning will help you anticipate and prepare for such events, ensuring there are financial safeguards in place to weather difficult times.
- If you are dependent on another’s income, are you the beneficiary of a life insurance policy on their life?
- If your spouse is eligible for a pension, insist on being involved in deciding what pension option is selected. Is it more prudent for both of you to take a higher payout or one that offers survivor benefits?
- When should social security be taken? The timing of when and how a higher-income earner claims their benefits can impact the lower-earner’s eligibility for spousal benefits and survivor benefits.
- If you are considering assuming debt, be sure you understand the costs and your responsibilities associated with the obligation.
Ensure your Estate Plan is Consistent with your Understanding and your Intentions
Review your household’s investment accounts, employer retirement plans, life insurance policies, wills and trusts, and similar documents to ensure any beneficiary designations protect and reflect you and your partner’s current intentions. For example, does an old will, IRA or insurance policy still list an ex-spouse as the beneficiary? Or is there wealth being transitioned directly to your children, potentially leaving you at risk?
Insist on Working with Advisors and Professionals who Truly Listen to You
The professionals you work with must respect you. You must be heard and acknowledged and involved in all financial decisions. Avoid working with professionals who are not willing to explain things, who are hesitant to answer questions, who rush you or who belittle you.
When we actively participate in financial planning, we contribute our perspectives, preferences, and priorities to the decision-making process, ensuring that our needs and goals are adequately considered. No matter how big or small your household is, whether you are single, married or divorced, and no matter how comfortable or uncomfortable you are when it comes to money and finances, all of us must commit to be involved. We must take ownership of our financial well-being – we owe it to ourselves to be informed about our financial affairs and to stay engaged in our personal wealth management.