What if I told you that women—even the most accomplished among us—abdicate dealing with their financial lives more than not? And that this extends to younger generations as well?
I am not going to bury the lede. This isn’t good, full stop. Once you give up your financial independence to a partner, it’s over. Now you’ve introduced a multitude of risks to the point that, if any of these come to pass, your financial situation could be—shall we say—uncomfortable at best and miserable at worst. I will elucidate on those risks, but first... what makes me qualified to know that too many women are under-involved in their financial lives?
There is a dearth of women advisors who are fiduciary financial planners—this is a boy’s club if there ever was one. Less than 30% of us are women... and this is a major improvement from when I started a decade ago. I still recall when I started in the business looking around the office at one of the country’s largest wealth management firms—I saw maybe one out of ten advisors were women. I see the under-involvement in my field, which mirrors the kinds of clients who we serve.
Cultural Conditioning
From a young age, women are often taught to prioritize relationships and caregiving over financial independence. We're told that finding a partner who can provide for us financially is a desirable goal, and that being too focused on our careers or finances might make us less attractive, less feminine, or bad mothers, or whatever other excuse-making passes for old-timey wisdom. Many of us have internalized the message that we don't need to worry about finances because men will take care of us.
A study by UBS found that 58% of women worldwide defer financial decisions to their spouses (EEK!), with Millennial women being just as likely to do so as their mothers and grandmothers (DOUBLE EEK!). This blows my mind here in 2023.
I imagine it has something to do with the enormous influence that traditional gender roles have on all of us. It’s likely also a function of the stage of life that Millennials are in. Many Millennial women are in peak childbearing years—a time when many women drop out of the workforce temporarily or permanently if they have a partner who can fill the financial role.
Fear and Anxiety
Money can be a source of stress and uncertainty for, well, just about everyone. Women would rather talk about sex or death than money (!), and this is especially true for us who may not have been taught the financial skills needed to succeed. The idea of managing investments, budgeting, and planning for the future can feel overwhelming, and it's often easier to procrastinate. I get it.
According to a study by Bank of America only 48% of women say they feel confident about their finances and, worse, only 28% of women feel empowered to take action. Depressing, but true. I can’t say this enough: women can be some of the best investors out there. They are so much more capable than they credit themselves . I read studies like this and I want to bang my head on the desk.
Pay Disparities
I grit my teeth as I write this. Despite making significant strides in the workforce, women still face pay disparities that can make it more difficult to save and invest. According to the National Women's Law Center, women STILL earn just 84 cents for every dollar earned by men, on average. This means that women have less disposable income to put towards savings and investments, making it harder to achieve financial independence.
Discrimination
Whether or not you experience it, women often face discrimination in the workplace or in financial institutions, which can make it harder to access the resources they need to succeed. For example, women are less likely to be offered a loan or line of credit compared to men, and they may also be offered less favorable terms when they are approved for credit. These things can make it more difficult for women to start businesses, invest in their futures, and achieve financial stability. Infuriating, no? Remember what I said about risks? Allow me to scare you a little. Relying too much on others for your financial well-being is a recipe for pain. Here are five reasons why:
- Lack of control. When you rely on your partner for your financial needs, you give up control over your financial life. This can leave you vulnerable to manipulation and can make it difficult to leave a toxic or abusive relationship.
- Risk of deception. If your partner is in charge of your finances, there is a risk that they may not be truthful about the state of them. They may be hiding debt, mismanaging investments, or engaging in other financial behaviors that put your financial future at risk.
- Financial incompetence. Even if your partner is not intentionally deceiving you, they may simply be bad at managing money. This can lead to poor financial decisions, missed opportunities, and long-term financial instability.
- Risk of illness or death. If your partner is the sole financial provider, there is a risk that you may be left in a precarious financial situation if they become ill or pass away. This can be particularly devastating if you are not prepared to take on financial responsibilities on your own.
- Unequal distribution of assets. In the event of a divorce or separation, if you have not been actively involved in your financial life, you may not receive an equitable distribution of assets. This can leave you struggling financially, especially if you have been out of the workforce for an extended period.
What Happens When You Take Control
Women, you have what it takes to manage your financial lives quite capably, as well or better than many, many men. So, here's five things that can happen when women take control of their financial lives and not abdicate involvement:
- Financial independence gives you control over your life. When you are in control of your finances, you have the freedom to make your own decisions and pursue your own goals. You can choose your career, start a business, or travel the world without relying on anyone else's approval or financial support.
- It provides a safety net in case of unexpected life events. Life is unpredictable, and unexpected events such as divorce, illness, or job loss can have a significant impact on your financial situation. When you have a good understanding of your finances, you are better prepared to weather these storms and come out on the other side relatively intact.
- It sets a positive example for your children. By being actively involved in your financial life, you set a positive example for your children and show them the importance of financial responsibility. This can help them develop good habits and avoid financial mistakes in the future.
- It increases your financial literacy. When you take an active role in managing your finances, you become more knowledgeable about money and investing. This can help you make better financial decisions and avoid costly mistakes.
- It can help you achieve long-term financial goals. Whether your goal is to retire comfortably, buy a home, or start a business, being in control of your finances is essential. When you have a plan and a clear understanding of your financial situation, you can make better decisions and work towards your goals more effectively.
How to Get Started
It’s important to remember that financial independence is within reach for all women. By taking control of our finances, we can gain a sense of empowerment over our lives. But navigating the world of finance can be intimidating and overwhelming, especially for women who may feel like they lack the necessary knowledge and experience.
Here are six things that women should do to achieve financial independence:
- Educate Yourself. One of the best things you can do to take control of your finances is to educate yourself. Read articles, take courses, talk to financially independent women, and seek out advice from experts in the financial field such as financial advisors who work with women, tax advisors, and estate attorneys.
- Never Take Specific Financial Advice from Financial Celebrities. Generic advice might be ok, but I will say it loudly for the people in the back: what works for them may not work for you.
- Understand the Money That Comes In, and the Money That Goes Out. This is the one that can scare people. But it’s just information. Just data. And the data will tell you what you need to do next.
- Prioritize What You Need to Do. Start with the obvious—is the spending outpacing the income? If so, what can be done about that? What kind of debt exists, and is it decreasing or increasing? What money has been saved or is being saved? Where is that money living (retirement accounts, checking, savings, etcetera)? What is being done with the money being saved?
- Get Help. This is often where things fall apart. All the data in the world won’t help if you aren’t sure how to analyze it. I could go on about why hiring a financial advisor is the greatest thing ever. I am an evangelist. No one held a gun to my head to get into this work. No, I am a believer because I see how good advice changes lives. But don’t take my word for it. Read my piece on how to find a financial advisor.
- Talk is free. Ask people you trust for guidance or just schedule a call and save yourself some time.
Women’s financial independence is, at its core, a feminist issue, a basic right, that too many of us ignore at our peril. It’s a crucial aspect of living a fulfilling and secure life. So, take charge of your finances and make your financial dreams a reality.
Jennifer Kirby is a fiduciary financial planner who specializes in working with self-reliant women. She helps them balance today's wants and tomorrow’s needs—without depending on anyone else.
Download Jennifer’s free eBook, How Self-Reliant Women Can Feel Financially Confident