Women often do not think of their financial situation until they’re no longer riding shotgun. For centuries, a woman’s traditional role has included homemaker and caregiver for her children or aging parents – and financial planning and wealth management usually was not part of the picture. Even when a woman works outside the home, her role continues to be defined by wife, mother and daughter while her partner focuses on career, the mortgage and saving for retirement. But what happens when she’s hit with a life-changing event, such as the death of a spouse or divorce? Where does a woman turn when she’s forced to begin making financial decisions on her own? How can a woman prepare herself today to become the household CFO in the future?
Susan Brown, co-director of the National Center for Family & Marriage Research and sociology professor at Bowling Green State University, found that if women get divorced after age 50, they should expect their wealth to drop by about 50%. Additionally, when women divorce after age 50, standard of living plunges 45%. According to the U.S. Census Bureau, Americans are projected to live 6 years longer by 2060, and women will live longer than men.
Tips on taking control of financial planning and wealth management
What does this mean in terms of women, their personal finances and wealth management? It means that women, at some point in life, will be responsible for managing their own financial affairs. Whether it is early in life, before partnering, or if divorced or widowed, a woman will become her own CFO and take control of her financial planning and wealth management. I’m advocating that women begin the conversation with friends and colleagues now – and break the taboo about money talk.
To gain financial confidence, start by educating yourself and acquiring the skills necessary to navigate a myriad of financial topics. Join a stock syndicate, listen to Technology, Entertainment, Design (TED) talks, and read books and articles on investing, budgeting and finance. Gather a group of women who are interested in the same topics and create a forum to discuss financial matters. Join your partner for a seat at the table when discussing investments, income tax returns or business opportunities.
Use the following as conversation starters on your learning journey. Don’t be afraid to ask; odds are that your friends have the same questions.
• Do I have an individual retirement account (IRA), Roth IRA or 401(k) and how is it affected by death or divorce? How do I maximize these today to build wealth?
• What are the benefits of my health insurance and do we contribute to a health savings account (HSA)?
• What kind of insurance do we have (life insurance, long term care and property insurance)?
• How are our tax returns prepared and how does our income and expenses affect our taxes? (Note: It’s essential that you learn to read your income tax return, especially if you or your partner owns a business.)
• Do we have investment accounts? Are they owned jointly? What are the survivorship benefits, if any, that affect these accounts?
• When is the last time you reviewed your will and really asked the questions to understand what it means?
• How much do you understand investing, including risk tolerance, investment strategies and types of investments?
• Do you have a trusted team of professionals to manage your financial situation, including a wealth manager, corporate trustee, banker, attorney, insurance agent and certified public accountant?
These are only a few topics that come to mind when I think about financial independence and security. Having been divorced and had friends and colleagues who have been widowed, I’ve learned that discussing money shouldn’t be frowned upon. It should be as much a part of our conversation as our children’s educations, local charity events or travel destinations. Join the conversation today. Make money a more common topic so women can increase their knowledge and confidence in making financial decisions.
So, let’s get talking!