Why Women Need to Start Taking Control of Their Finances

When reading an article on women taking control of their finances, I read something that peaked my interest.  Did you know that more than a third of American women are now the family breadwinner?  Although that is pretty awesome, women still tend to pass the buck on important money matters, including investing and retirement.  Have you ever heard of phenomenon called “the female financial paradox?”  Basically, this describe millions of women who are perfectly happy to pinch pennies and track down the best sales, but they haven’t the slightest interest in big-picture financial planning.  Are you one of those women?

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How is it that we as women have more power and earning potential than ever before; are graduating with more college degrees than men; and climbing farther up the ranks in nearly even industry, yet we still lag behind men in important actions necessary to build wealth and security?  “Because we’re fighting against centuries of societal norms in which women were excluded from discussions about finances, many simply aren’t interested in these topics,” says Amanda Steinberg, the CEO and founder of the women’s personal-finance community DailyWorth.com.  Eileen O’Connor agrees with Steinberg, saying that traditionally, women have taken a “head-in-the-sand approach” to long-term financial planning.

The phenomenon of the female financial paradox highlights the need for women to take charge of their financial future and overcome societal norms that have discouraged their involvement in long-term financial planning. While women have made significant strides in education and professional success, there is still a gap when it comes to wealth-building and financial security. Empowering women with the knowledge and tools to navigate the investment landscape is crucial. They can learn more about Vigilant Wealth Management and how their team can support them in building wealth and securing their financial future. They believe in providing women with personalized strategies and guidance to help them overcome barriers and achieve their financial goals.

According to the Employee Benefit Research Institute, a nonprofit based in Washington, D.C., “Roughly the same number of full-time employed men and women participate in retirement plans.”  “However, men contribute far more to those plans: Their median account balance is $31,388, compare with women’s $20,877,” according to Vanguard, an investment company.

Experts have identified four key reasons underlying these findings: (1) Women tend to be insecure about the subject of money; (2) we focus on scrimping instead of investing; (3) we rely too heavily on others for financial know-how; and (4) we don’t always understand how to translate abstract figures into concrete goals.

Financial Barrier #1: We Lack Confidence

There are so many women that radiate competence and authority on a daily basis with their careers (i.e. brilliant doctors, strong managers, cool and collected stay-at-home mothers).  But when it comes to long-term financial planning, so many women just kind of let it bounce off their head and it doesn’t really sink in.  Experts say this is an understandable reaction to women being unable to access the male-dominated financial world for such a long time.  If you take a peek at any mutual-fund prospectus, you’ll find tons of language that makes no sense at all, such as 12b-1 fee, market capitalization, front-load, back-load, no-load.  I don’t know about you, but I just looked at those and went, “Huh??”  “Some men savor this jargon and feel a sense of pride when they master it, whereas women tend to see it and immediately shut down,” says Galia Gichon, the founder of the women-focused financial-education firm Down-to-Earth Finance, in Westport, Connecticut.  That is pretty much what just happened with me.

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“Many women think that since they don’t know the language, they can’t ask questions – or they worry that their questions sound dumb,” says O’Connor.  She also says, “Women tell me that their adviser talked about things they didn’t understand or spent the entire appointment speaking to their husband.”

If you are one of those who start feeling overwhelmed when it comes to discussing long-term financial planning, you need to start talking about your finances more, not less.  “To eliminate the intimidation factor, include topics of spending and saving in your regular conversation with your spouse or a trusted friend,” says New York City-based financial therapist Amanda Clayman. She clarifies doubts regarding any financial terms used and explains that a self directed IRA real estate is an easy way that can be used to hold real estate as an investment. As with regular IRAs, you can open a Traditional, Roth, SEP, or SIMPLE self-directed IRA. Unlike regular IRAs, however, you directly pick, buy, and sell real estate assets in your account.

It’s also a big help to have an adviser you can depend on, even if you can only contact her once a year.  Make sure your adviser speaks clearly, without excessive use of jargon or acronyms, and that you feel totally comfortable talking to her.  The other thing that will give you more confidence is knowledge.  A blog on Immediate Code says starting out, be sure to review your financial statements on a monthly basis so you know where you stand.  Then consider picking up a personal-finance book or visit a website that is filled with money information and study up on any concepts that might be confusing or overwhelming to you.

Financial Barrier #2: We Sweat the Small Stuff

For many of us women, we think that being smart with money means knowing how to stretch the family dollar, because that was typically what we were taught growing up.  “For generations, the idea was that men earned the money and women decided how to spend it,” says Laura Vanderkam, the author of All the Money in the World: What the Happiest People Know About Getting and Spending.

Today, it is not too much different.  We still make most of the household purchases, and many of us are master deal finders.  Just look at the television show, “Extreme Couponing” – master deal finders!  The overwhelming majority of women (76 percent) still regularly clip coupons, and 38 percent buy in bulk, according to a recent Citi Economic Pulse survey.  “Sales and coupons provide the instant gratification of saving,” says Gichon.

“When they find themselves hitting up the sale racks, women need to remember that even the best deal they find is worth far less than a smart investment in their retirement fund,” says Eleanor Blayney, the president of the Washington, D.C. – based financial-advisory firm Directions for Women.  While saving nickels and dimes is great, experts say that we need to start thinking bigger!

Financial Barrier #3: We’re Waiting for Someone Else to Fix the Problem

The Mad Men era wasn’t that long ago, and there are many of us who were raised to believe that our husbands would handle the finances.  Few people now in their 40s and older were raised by mothers who were the key financial decision-makers, says Gichon.  “Often neither parent counseled daughters about saving or investing,” she says.  And there are even some women in their 30s or younger who have grown up “with the idea that they would be secondary earners and a man would be responsible for investing and long-term saving,” says Vanderkam. Today, with the rise of crypto, financial autonomy is paramount. Platforms like 500intal.com offer accessible avenues for investing, empowering individuals to take control of their financial futures.

There are those women who learned to handle their own finances out of necessity, such as single women.  However, even today there are some married women who ignore these issues until they are forced to pay attention.  “Unfortunately, for many of my clients, it takes a major life event to change their behavior,” says Gichon.

Financial Barrier #4: We’re Focused on Goals, Not Numbers

In the world of finances, there is much emphasis on that bold-faced number on your bank statement.  However, we are after a lot more than that number in our investment accounts, says Clayman.  “I don’t care about how much money I have on paper,” says Sarah, a 33-year-old writer.  “I want to know if I can make the choices that are important to me.”  We want to know if we can afford to buy a new home, send our children to college, or travel after retirement.  These are the concrete goals we as women tend to focus on.  “And that means the financial conversations about saving and investing that we have with our planner or spouse need to be directly connected to the results we want to see in our lives,” says Clayman.

That’s why it’s best for us to think specifically about what we would do with that pot of money.  Each of us should make our financial goals as detailed as possible (including an estimated cost) to increase the likelihood that we’ll follow through with the actions necessary to achieve these goals.  Clayman recalls a woman in her 40s who couldn’t get her plan into action until she envisioned spending her golden years in Florida.  “Once she calculated what she needed to accomplish that target – as opposed to a large, vague amount she had to save – she became less anxious and more proactive,” says Clayman.

Being financially savvy doesn’t mean that we have to make more money just to increase our account balances.  “Think of money as a tool to help achieve your goals, take care of yourself, and do things for the people you love,” says Vanderkam.  “It’s a means to getting the life you want.”

This post was inspired by Genworth Financial. All opinions expressed in this post are 100% mine. For more information about long-term care, visit the Genworth Financial website.