Obviously it’s important that both women and men understand their finances! All adults need to have a basic understanding of money management. However, men are already ahead of the curve on this one. On average men are still the ones to manage the family long-term financial planning, including: savings, investments, retirement, management and insurance. Women who don’t manage (or co-manage) their finances with their spouse aren’t getting the valuable experience and knowledge to ensure they can be financially independent if needed.
But not only do women have less experience when it comes to managing the finances, there are specific factors that make it CRITICAL for women to understand finance and to be able to live independently.
Women live longer:
The average American man will live to age 76, according to the latest CDC figures, while the average woman in America will live to age 81. Why does this matter? Although overall living longer should be seen as a positive, that’s five more years of expenses! Five years of food, housing and especially, healthcare. The older we get, the more health problems we face. A healthy 55-year-old woman may end up paying $79,000 more for healthcare over the course of her retirement than a man the same age simply for living longer, not because she consumes more healthcare in a year. So it’s that much more important we pay attention to our retirement and insurance planning.
Women are more likely to stop working in the middle of their career:
This can be for many reasons, but often this is around the time when women get married, have children and/or are faced with caring for aging parents. Men face the same life stages at this time, but women are more likely to leave the workforce to care for the children or a parent. Why does this matter? A study published by the Harvard Business Review found that 93% of highly qualified women who leave want to return to their careers, but find it difficult to do so. This makes it even more challenging for women to advance their careers, make more money and be fully independent. Leading into my next point…
Women make less money than men:
I don’t like it, but the numbers don’t lie. In 2018, women earned 85% of what men earned, according to a Pew Research Center analysis of median hourly earnings of both full- and part-time workers in the United States. Why does this matter? If women make less money than men, they have less money…meaning it’s even more important that it’s properly managed. We have less money for necessary expenses, and ultimately save less than men. A 2015 BlackRock survey reported by CNBC found that American women approaching retirement had an average of $81,300 in retirement savings, while men had $118,400.
How to get started: I know “Understanding Finance” sounds like a daunting task. Finance can be complicated, intimidating and…well…boring (I’m a financial planner; I can say that officially). To get started, first organize your finances and take a realistic look at them. Create your net worth statement and budget and identify vulnerably areas. Where are you spending too much, and not saving enough? Next, create your short term and long term goals, and see if they are feasible with your current financial situation. If not, either spend less or take on a side hustle to make extra income. For those married women whose husbands are the financial managers in the family, tell them you want to become more involved and be partners when it comes to your families financial decisions.
