Boomer Couple in Front of Their Beach House

Women and Financial Power

Too many women lack the confidence necessary to take control of their financial lives. Women fear making investments, managing their finances, planning and monitoring their spending, managing investments, and increasing their wealth.

Why aren’t women more confident with their finances?

The answer is that women are stopping themselves from being assertive. Many women leave their financial lives to their husbands, boyfriends or parents, and because of this way of thinking, they lack financial power. Financial empowerment must come from within. Women must seize it with fervor, reflecting an unshakable determination to take control of their financial lives. You must tell yourself that you can become empowered, and that you will not let outdated notions of gender hinder your success. Keep “EMPOWER” in your mind as an acronym representing these concepts:

Education is critical
Motivation inspired by your values
Protection against risk
Ownership of your future
Work — claiming what is yours requires effort
Emotions should be kept out of decisions
Responsibility to yourself

Do you use any acronyms to motivate you with your finances? I’d love to learn about yours! Please let us know what you think by posting your comments on our Financially Savvy Women Fanpage.

Gibbons, EmpowHer! Why more women are taking the financial lead

Happy senior couple making diner

Your Sex Might Cost You Money

There is no federal law banning discrimination based on sex, race, or gender on the cost of goods and services. Some states have adopted their own anti-discrimination laws, but many of these statutes are up for interpretation and don’t protect you. Here is what you need to know about how your sex might influence the prices you pay.
Women earn less and pay more:

Earnings: 81 cents for every man’s $1.00
Banking: 32% higher interest on subprime loans than men
● Cars: Offered list price $200 higher than men
● Deodorant: On average costs women 30 cents more than men
● Dry-cleaning: $6.50 per shirt; men pay $2.00 a shirt
Health Insurance: 45% more than men
Kingsbury, Buyer Beware

Boomer Couple on Motorcycle

Why are Women More Risk Averse?

Women avoid risk more than men; this can come back to bite them

Perhaps it comes down to both genes and social upbringing – women feel greater pain when they lose money than men. The result is that women tend to shy away from stocks more than men do. This makes intuitive sense because stocks are more volatile and unpredictable — on average – than bonds or cash. Perversely, it’s the wrong direction for women; they need higher exposure to stocks than men do. Women live longer than men; stocks broadly should continue to outpace inflation over long stretches of time vs. bonds and cash. Inflation is the enemy of all retirees and is especially corrosive to women due to their relative longevity.

Financially Savvy Women have the wealth they deserve

5 Myths about Women and Wealth

There are several myths about women and wealth that you might not be aware of. Below are the top five myths about women and money:

  1. Women are not good at math: Nature, not nurture, accounts for the gap in math skills. However, there is a growing movement to expose more women to learning and mentoring opportunities in the fields of math, engineering, finance, and science.
  2. Women are impulsive spenders: Money is an equal-opportunity, all purpose mood changer. Just as many men impulsively spend and overshop as women. One major difference is how society labels it. Women overshop; men collect, a term that gives the activity an intellectual cast. However the underlying impulse behavior is the same.
  3. Women are too emotional to invest wisely: Female investors outperform men in the long run. Men try to compete with the market and chase returns, leading to more frequent trading and high transaction costs. Women take a long time to make an initial investment decision; they are committed to the decision in the long run. Women are less reactive to short term changes in the market, trade less frequently than men, and realize better long-term investment performance as a result.
  4. Women would rather let men manage the family finances: Women are the chief financial officers of their households in 66 out of 100 homes (2010 Women and Affluence Study by Women & Co.). Women in the ultra high net worth market reported they play a high to moderate role in the management of the family’s assets. When it comes to retirement, 90 percent of women participate in decisions that affect their household’s retirement and investment accounts.
  5. Women are not interested in wealth management: The gender gap in finance is diminishing as women enter the field. Advising clients lends itself to a woman’s strengths in relationship building and communication, allowing female advisors to have the opportunity to outperform men. Organizations like Directions for Women and The Female Affect offer forums and networking opportunities to facilitate the advancement of women in financial services.

Kingsbury, How to Give Financial Advice to Women

Understanding these myths will help you overcome and fears that you may have had when it comes to managing your finances. Do you know of any other myths about women and their wealth? Please let us know what you think by posting your comments on our Financially Savvy Women Fanpage.

 

Woman reading stock quotes from WSJ.

Ways Women can become Engaged in their Financial Life

Some women handle their money brilliantly all the time- in a perfect world. It is crucial to be connected with your finances. However, most of us are in dark about our finances for reasons like misunderstanding terms or not being involved enough. Luckily, there is always time for you to become engaged. The tips below will help you become involved with your personal finances:

  • Do you let your husband or partner manage money without your involvement? Change happens all the time in relationships, don’t start learning about your finances while you are in shock.
  • Do not sign your joint income tax return without reading it. Make sure you understand and thoroughly read your income tax return. If you need to, consult a professional; but don’t rush into signing anything.
  • Do you use your husband’s financial advisor, even if you don’t really like him, know him, or can’t stand him? At your next meeting with your Advisor, ask yourself how much YOU were engaged in the conversation. If not, consult with your partner and try to find an Advisor both of you can be engaged with.
  • Ask for confusing terms to be explained. Don’t let uncertainty and being uncomfortable get in the way of understanding your finances.
  • Not taking enough risk. We women tend to be more against taking risks. Women live longer lives; we retire with two-thirds the retirement savings of men. This calls for greater risk taking to earn a higher return. Many women HAVE to push themselves to do this.
  • Not seeing your money as a means to express your values. Value is defined as a person’s principles or standards of behavior. Many women express their values through the products they buy, the way they spend their time, and the companies they work for. However, few women view their investments as a tool for expressing value. Today, the new industry can represent a way for women to have their money work at more than just earning a financial return.

It is time for you to become engaged and find success in your finances! Take control now! Did you find this email helpful? I’d love to hear from you, please post feedback to Financially Savvy Women Fanpage.

 

Professional woman with man in the background

What Happens When You Decide to Earn More

You have decided to earn more money. Once you have made that committed decision, three things will happen:

  • There Will Be Coincidences
    • Decisions are like magnets, they draw opportunities to you. All you need to do is take advantage of the coincidences when they occur.
  • Other Areas of Your Life Will Change
    • You can’t make changes in one aspect of your life and expect everything else to remain the same. Sometimes the changes are positive while others are negative. Keep in mind that change is inevitable and will lead to bigger and better things.
  • You Will Resist
    • Anytime you set a goal or make a decision to do something different, you create a gap between where you are now, and where you want to go. This gap creates resistance. Be aware that you are resisting and use the tension to push you forward.

Barbara Stanny, Secrets of Successful High Earners

Do you find these events happening as you make changes in your finances? I’d love to hear some feedback! Post on Facebook.

female working on her finances

The Female Brain

All human brains have reflective and reflexive thinking. However, the way the female brain is structured makes women tend to be more focused on care-giving, passing on money and life values to the next generation, and using wealth to better the community as a whole. The three areas of the brain that will be discussed are the Amygdala and Limbic System, Hippocampus, and Corpus callosum:

Amygdala and Limbic System: The Amygdala is the center for emotion, fear, and aggression. It is located in the Limbic System and is the part of the brain responsible for the fight or flight response. The female brain’s limbic system is typically larger than the male’s. Scientists hypothesize that the larger limbic system contributes to women being more compelled to care for others.

Hippocampus: This part of the brain is the center of emotion and memory formation. This section of the brain is larger in women than men and accounts for a woman’s ability to remember specific details. The larger hippocampus also could contribute to some women wanting their Financial Advisors to remember personal details about their life.

Corpus Callosum: This part of the brain transmits signals and connects the left and the right side of the brain. Women have more connections between the left and right hemispheres, making them excellent at multitasking and verbal communication.

Kingsbury, How to Give Financial Advice to Women

Do you have any past experiences that reflect the new information you just learned about your brain?

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)