Retired couple gardening

Why Women are Less Decisive

Women worry more about their financial health but lag in decision-making and self-confidence:

This difference in self-confidence has an enormous impact on the financial planning industry. A LPL Financial “Women Invest White Paper” survey shows that 67% women want an equal role in financial decision making and only approximately 20% want their husbands to make all the decisions. Yet, data shows less than two-thirds of women actually attain an equal role in financial decision-making (note: financial decision-making here refers to “big ticket item decisions,” not grocery shopping level daily or weekly decisions).

An ideal advisor will listen to both women and men – regardless of the gender of the financial decision-maker – and will avoid being patronizing toward both women and men if they lack financial understanding. Women prefer to work with female advisors, when possible. Although women comprise more than half the financial planning/investment clients in this country, fewer than one-quarter of Certified Financial Planners® (or other credentialed advisors) are female.

Kaplan, Women and Money: Why They Avoid Risk and Lack Confidence when Making

Don’t feel patronized or left out of your financial future. Whether you’re single, married, divorced, or widowed, let’s talk about how I encourage women to take on a greater role in the decision making process. Contact me today.

Debt and Your Financial Health

Boomer women glowing
Most people believe that any debt is detrimental to their financial health. However, some types of debt aren’t bad – a mortgage, college loans, or business loans. These types of loans appreciate in value in your future. Bad debt is money that you owe for things that you no longer benefit from; try to eliminate these debts.

There are ways to change your financial situation. Use a spending chart to record how you are using your money. Write down everything you spend and where your money goes to. To reduce debt, look at your nonessential expenses and decide which ones you can remove. Limiting the way you use your credit card can help with your spending.

You can avoid the legal consequences of bad debt by resolving your debt before it becomes overwhelming. Start planning now. Repaying the debts you have accrued will not happen overnight. However, if you control your spending and attain professional help, you will resolve your financial problems over time.

(Morris, A Woman’s Guide to Personal Finance)

Money Issues Across Your Life Cycle

Some women are co-breadwinners while others are the only source of income. Throughout a woman’s life, she will experience many money issues unique to women. A woman may experience the following situations: lower earnings, lack of retirement planning, divorce, and fewer years in the workplace because of child-rearing or caring for older parents. Many of these issues can work against a woman’s ability to accumulate money and attain stable financial status.

Lower Lifetime Earnings

As a population, women generally earn a lower income than their male counterparts. The Equal Pay Act that passed in the 1960s was supposed to narrow the earning gap between men and women, yet a gender pay gap still exists today. Women who work full-time year-round still are paid 77% of a man’s pay ($37,000 for a woman compared to $48,000 for a man in 2009) (U.S. Census Bureau 2012). Inequities start early and worsen over time. Research has shown a 5% difference one year after college graduation and a 12% difference after 10 years. The only identified explanation for the unexplained gaps was gender discrimination (Arnst 2007; Boushey, Aarons, and Smith 2010).

Breaks in Career

Women are more likely to have gaps in their work years because of child-rearing (Duke 2010). Some women may leave their jobs for extended periods of time to go on maternity leave. Other women make the choice to stay home for an extended time, reentering the job market years later. During child-rearing years, some women may leave careers behind and choose to work part-time or find a job with hours that match closely with children’s school schedules. As a result, upon retirement age, women’s income and Social Security benefits are often lower than those of their male counterparts.
Women need to pay attention to any employer retirement plan or matched contributions that may have been a job benefit. Find out about retirement or savings before you leave the job. If money is invested in a retirement plan, can it stay until you are ready to retire? What are the options?

Divorce

The divorce rate in the United States is estimated at 36%–50% (U.S. Census Bureau 2010). In general, divorce creates a financial disaster for families and may leave a woman to raise children using less money. Spending may likely need to change when a divorce occurs. It is important to review monthly expenditures and establish a budget. Since cash flow may drastically change and not be the same from week to week, continue to review income and expenses. Depending on the number of years a woman was married, she may be entitled to part of her husband’s retirement income. Be sure all financial issues are revealed and resolved during divorce proceedings.

Care of Elderly Parents

Another family obligation that may interfere with building wealth is caring for an elderly or ailing parent or other family member. Women tend to be the major caregivers for sick or older parents. Some women may take a career break or retire early to attend to the full-time care of a family member. Even if a woman continues to work, caring for the family member may become a financial burden.

Widowhood

As women age, the likelihood of living alone increases. According to the U.S. Census Bureau (2010), among those 65 and older, 44% of women were married, compared to 75% of men. Widowed women account for approximately 40% of women 65 and older, but only 13% of men 65 and older are widowed (U.S. Census Bureau 2010). The average age of widowhood is 55 years old (U.S. Census Bureau 2010). A spouse’s death is not only emotionally exhausting, but also will likely end with financial consequences.

Lack of Retirement Planning

As a whole, women tend to focus less on planning for their retirement over the course of their career, having saved less for retirement than men. Because women are often the caregivers for the family, taking steps to ensure their financial future may take a backseat when other events occur.
Women are reluctant to taking risk. When women do put money into a retirement fund, it is often a conservative investment that earns lower interest rates than their male counterparts. Try to research investments and identify your best options.

What You Can Do to Prepare Yourself

Women can improve their financial status and retirement income. Financial planning and learning about investing are the first steps on the road to financial independence. Time is on your side when you start early. Small amounts of money saved and invested over time add up to a secure financial life.

(U.S. Census Bureau 2010)

Is Your Relationship with Money on the Rocks?

A relationship is defined as the way in which two or more concepts, objects, or people are connected. A relationship does not necessarily need to be between two people; it can also be between a woman and her money. Your money needs attention, respect, and understanding; all components are needed in a compatible relationship.

If you are struggling with or misunderstanding your finances, there are a couple steps you can take to acquire the relationship you WANT. First talk to a professional; make an appointment with a financial advisor. Next, educate yourself about money. Read something about finances everyday, that way you UNDERSTAND the other half of your relationship. You can also ask your money savvy colleagues for advice. Finally, be careful of rumors and scare tactics; those facts are generally skewed. Once you have defined and developed a healthy relationship with your money, you are on the road to success!

Source: Stanny, Time to Have a Love Affair with Your Money

If you won the lottery would you…

We all talk about winning the lottery, some just talk about it while others consistently buy tickets in hopes of winning the “Big Pay Day”. Whether it’s the lottery, a substantial inheritance ,or sudden financial windfall, how would you use that money? Without thoughtful preparation, a windfall can become your downfall. Consider the following:

  • If you won the lottery tomorrow how would you spend the money?
  • What would your objective be or what would you hope to accomplish with this money?
  • How can I make this money last my lifetime and beyond?
  • In what ways can I use this money in meaningful ways?

Estate Planning: A Woman’s Issue?

While estate planning is important to BOTH men and women, it often has a greater impact on women. Women (on average) live longer and tend to marry older spouses, which makes them three times more likely than men to be widowed at 65. So for women, estate planning is a crucial part of retirement planning. Since they usually survive their spouses, women more often have the last word about how much wealth goes to family, charity, and the taxman.

Source: forbes.com

The Four Rules of Money

Financial independence comes from respecting and appreciating money by taking care of it. How do you take care of money? There are four rules that you should follow:

Spend Less

Spending less means never buying something that you can’t afford. The big secret to achieving higher earnings is to stop creating debt.

Save More

Saving more means paying yourself first. Consistently put money in your bank account until you have enough to cover emergencies and any unexpected loss of income.

Invest Wisely

Put money in assets that will grow faster than inflation and taxes can take away. The biggest risk for women is that they will outlive their money. A portion of money earned needs to grow faster than inflation.

Give Generously to Causes You Truly Believe In

Give thought about where you want to make a difference and create a plan.

The goal for you is to have choices, to have freedom to live life on your terms, and to create a fulfilling outcome from your financial decisions.

Source: Barbara Stanny, Secrets of Successful High Earners

Preparing for an Investment

There is no best investment product for everyone. What is important is to determine your investment objective and needs, then assess which product is suitable for you. Do not rush through the process of investing. Take time to understand the product and consider whether it meets your needs before you finalize. Read all documents and forms before you sign anything. Remember that you may have to bear fees, expenses and/or investment losses if you change your mind about purchasing the product. There are also key questions that you should consider before committing to any investment product such as structured deposits, unit trusts, investment linked insurance and life insurance policies.

Investing can be confusing and difficult at times. Before you make any decisions, ask yourself these 10 helpful questions:

  1. What is my investment objective?
  2. How much can I afford to invest, after setting aside funds for daily needs and savings to provide for emergencies?
  3. Do I intend to invest in one single sum or fixed sums on a regular basis (e.g. monthly, quarterly, annually)?
  4. How much return on investment do I need, after taking into consideration the effects of inflation, to meet my investment objective?
  5. Does the product I am considering meet my investment objective and needs? Which benefits are guaranteed and which are not?
  6. What is the potential return offered? Is it realistic?
  7. When are the proceeds payable? Can I afford to stay invested for that duration? Do I need the proceeds earlier?
  8. Am I comfortable with the level of risk that comes with the product I am considering? How much losses am I prepared to incur? What are the potential losses in the worst-case scenario for the product I am considering?
  9. Have I read and understood all the information, including the prospectus / term sheet / benefit illustration and product summary, contracts, warnings, exclusions and disclaimers, terms and conditions, relating to the product I am considering?
  10. Are there alternative products that offer similar benefits and risks to those of the product I am considering?

Source: moneysense.gov, Key Questions You Should Ask Yourself before Buying an Investment Product

Do you have a “Whisper Letter”?

As women accumulate wealth, their focus often turns to their children; how can I help them and how will my money support them when I am gone. It’s easy to assume they will use it in ways that will better their lives and provide the security we want for them, but this can be “wishful” thinking. For more affluent people, trust is often an effective way to control distribution and even put stipulations on how the money can be used, yet this doesn’t always convey our wishes and desires. A “Whisper Letter” is written before your passing, and communicates to your children what your hope is for this money you are leaving behind. It’s not designed to control but to encourage your children to be more thoughtful in how they use this money. You might encourage tithing or investing; you may inspire them to save more or even to splurge a little bit. Giving your children some gentle guidance by using a Whisper Letter can provide both parties some guidance.
If you wrote a Whisper Letter, what financial philosophies and principles would you want to encourage?

4 Tips For Women Investors

A recent Fidelity study shows women are more cautious with their investing compared to men. With economic times a bit more weary this more conservative mindset seems to make the most sense, but remember avoiding risk all together can jeopardize your ability to grow your savings.

  1. Apply these four tips to your investing strategy to find the right conservative/risky balance:
    Diversify. Help dampen the impact of the market swing (either it is up or down) with a well thought out and strategic investment mix.
  2. Remember stocks offer the most growth potential. US stocks have consistently earned more than bonds over the long-term, despite ups and downs.
  3. Check In, but not too often. Periodically check your investment mix and make changes when necessary.
  4. Turn to a professional. Work with a trusted advisor to help you understand the investments you own or need to add to your portfolio.

Following these four tips will help you find that sweet investment spot that is oriented toward long-term growth, yet does not make you nervous when the markets go up and down.

Source: https://www.fidelity.com/viewpoints/personal-finance/investing-tips-for-women