Women Need to Take Control of Their Finances (Right Now)
Financial advisor and Scarsdale resident Rachel E. Gottlieb, CFP, CDFA, explains why women need to break the cycle of abdication and take their financial destiny into their own hands.
Adobe Stock/Sergey Nivens
Although many women may not believe it, it’s inevitable that they will take sole control of their finances at some point in their lives. Many women will become widows or divorcees—and eight out of 10 women will be solely responsible for their financial well-being. Whether caused by an unexpected inheritance, the death of their spouse, or a divorce, women often wait for this “Aha” moment to start facing their finances. For women who have never been involved in their financial planning, this can make an already emotional time even more daunting.
In a recent study of divorced and widowed women as well as more than 1,500 married couples titled, “Own Your Worth,” UBS found that 56 percent of women leave financial planning and investment decisions to their spouses. Although women are making great strides when it comes to equality in the workplace and beyond, many continue to take a passive stance on their finances. In fact, millennial women are more likely to leave investment decisions to their husbands (61%) than older generations (54%), showing that this trend is actually getting worse.
Sometimes when women get involved in their financial planning, they are surprised to learn they don’t have the financial stability they thought, or even worse, they are in debt. Often, men and women think differently regarding financial priorities and risk tolerance. Getting involved with financial decisions as early as possible can help women avoid surprises later. Poor financial decisions have lasting effects that cannot be undone and can cause a drastic lifestyle shift or a halt in retirement goals. Over 90% of widows or divorcees advise women to get involved with their finances now. They’re not just giving out the advice, they are taking their own instruction: 79% of women who remarry take a more active role in their finances. But women shouldn’t wait for a divorce or the death of a spouse to take an active role in their finances, now is the time for women to act and get involved.
Financial planning requires many decisions, and many times spouses have conflicting priorities. By being active in financial decisions, women can help ensure that their voices are being heard.
Fortunately, breaking the cycle of abdication is possible. The best way to start is by turning to the experts — financial advisors who advise women who have been there and have learned from their experiences. Both women and men think men know more about investing, and women are less confident than men in making major financial decisions. Women consistently underestimate their own abilities while overestimating what is required to be financially involved. Taking an active role in household finances does not mean becoming an expert; it simply means becoming more involved and aware. Think of getting involved in your financial life as a form of self-care, much in the same way you take care of your health. The following steps can be taken to get involved with your finances now:
Own your worth by making sure you have a financial plan and are actively involved in the implementation of it. If it’s already been created by your spouse, attend meetings with your financial advisor and play an active role in the plan.
Understand what your assets and liabilities are. You should have a full list of where your assets and liabilities are held, the titling of them and the value. Once you know where these stand, you can properly follow the 3 Ls: liquidity, longevity, and legacy, and weigh them according to your financial plan.
Find your voice. Schedule time to meet with a financial advisor and don’t be shy about asking questions. Your financial advisor is there to guide you in making financial decisions for your family. Make sure that you not only ask the questions but understand the answers and how they impact your financial future. If you are uncomfortable or unsatisfied with their explanations, start interviewing new ones.
Set an example, educate your children. Talk to your children about spending, saving, giving, and investing. According to UBS’s survey, women repeat the gender roles they witnessed growing up. Show your children the importance of being active in the family’s finances.
Although becoming active in your financial planning may sound like an intimidating endeavor, nearly seven out of 10 women overestimate what it takes to be financially savvy. By taking control of our finances and understanding how to help protect and grow our wealth, we have the opportunity to shape our future and legacy.
Rachel Gotlieb is a financial advisor with UBS Financial Services Inc, in New York City. She was just named to The Forbes 2018 Top Women Wealth Advisors list.