The basics of financial planning for women are not much different than for men – spend less, save, and invest more, and work from a plan. And yet, studies show many women feel overwhelmed with financial planning information and decisions. They find the numbers overly complicated or they do not feel confident in making good financial decisions. Or maybe it is the phrase “Financial Planning” that seems intimidating, maybe it is too broad. Financial Planning really only comes down to the basics!
According to a Women’s Institute for A Secure Retirement (WISER), a third of the women in the U.S. will be widowed before they are 60, and that number rises to 50% once women hit 65 years of age1. Whether you are a widow, divorced or you have never married, it’s important to plan for the fact that at some point you will be solely responsible for your financial wellbeing. As the financial planning industry developed, men often took the lead when handling family finances. Now it is your turn to take action so you can protect and provide for yourselves and your loved ones — whether you’re single, engaged, or married.
Longer Life Spans – Statistics show that, on average, women outlive men by 5 years2. Many women are faced with caring for their husbands later in life, but after his death, they may be left with no one to care for them. That is why it is important to consider not only Long-Term Care insurance, but more retirement savings to sustain you through your additional years.
The good news is that taking charge of your finances does not have to be difficult. You have probably already successfully tackled way bigger challenges like your career, raising a family, and caring for aging parents. What it takes is simply a willingness to educate yourself and a financial plan that changes with your needs. These steps will help put you on the path to financial confidence.
Conduct an Inventory – One of the challenges women face when it comes to financial planning is not knowing where all their records are. Some women learn, to their dismay, that they have no idea where their money is invested or that they are deeply in debt and suddenly need to change their lifestyle or perhaps even return to the workforce. At a time that is stressful enough (death, incapacitation, divorce), facing these decisions only compounds the fear and anxiety already felt.
Write down all your account information – joint and otherwise: investments, bank accounts, savings accounts, IRAs, etc.
Take inventory of all sources of income. Present income (wages, interest income, investment income), future income (pension, social security, IRAs, inheritance)
Check your Wills. Review your life insurance and disability insurance. Know your mortgage balance and credit card debt.
Work with an Advisor – Develop a relationship with a financial professional now; someone who is easy to talk to and whom you can trust so that when life events occur – good, bad, or indifferent – the plan has been discussed and all involved can feel more comfortable dealing with the challenges at hand.
Take Investment Responsibility – Unfortunately, most women still defer the investment responsibilities to their husbands. And in the face of a crisis, too many women are forced to abruptly take the reins of financial planning. Since there is no better teacher than experience, you may want to consider a portfolio of investments separate from your husbands to learn about investing firsthand.
Take an Active Role – While today’s marriages encourage the division of responsibilities, financial planning should not be one of them. If paying bills and managing investments rests primarily with one person, regularly reviewing and discussing financial decisions should always be shared together.
Keep Learning – Whether you are working full time, or you have chosen to stay at home, it’s important to continue to enhance your work skills. Do not expect to go back to work right where you left off. Seek opportunities for additional training and education.
Plan on a Long Life – Modern medicine has and will continue to provide advances in technology to extend and enhance our lives. Therefore, women need to make life expectancy an issue when discussing financial planning. The key to planning is to start saving early and own a globally diversified portfolio that reflects your goals, time horizon, and risk tolerance.
Unlike your mother or grandmother, you have the financial planning resources and support you need to manage your money. And it does not have to be overwhelming. You can juggle a career, a family, friends, and the complexities of the modern world; you can master your financial planning needs as well!
“An investment in knowledge pays the best interest.” Ben Franklin.
Taking steps to further your client's financial goals is easy. Simply complete the short form below and we will contact you about becoming an Avantax financial professional.