When it comes to managing personal finances, women are facing a stark new reality. Increasing lifespans, higher divorce rates and decreasing rates of marriage mean 8 in 10 women in the US will end up alone and solely responsible for their financial wellbeing one day. Not to mention that by 2030, American women are expected to control a massive transfer of wealth from the baby boomer generation, in addition to the tremendous levels of wealth women already control. But despite the indicators and trends that women should be closely involved with their finances, many still choose to opt out of participating in long-term financial decisions. In fact, data from UBS Global Wealth Management’s 2021 Own Your Worth report reveals that nearly half of women in heterosexual couples say their husband takes responsibility for long-term financial decisions, while a 2019 UBS report also showed that single women report feeling less financially confident than their male counterparts.
Why are women deferring major financial responsibilities? More than three-quarters (78%) surveyed feel pulled by other obligations such as household chores or childcare, and over half (62%) say they have no idea where to even begin when it comes to taking a more active role in these decisions. Yet, women who choose not to get involved with finances are not only risking their own financial futures, but they’re also putting their families at risk—indeed, there are real costs to women’s financial indifference. Participating in long-term financial decisions not only can allow women to unlock the life and legacy they dream of, but it also allows women to be prepared for any headwinds they may face over the course of their lives— divorce, sudden illness or loss, job loss and more.
Financial health needs to be a priority, just like physical and mental health—as financial well-being and overall well-being are inextricably linked. Talking about finances openly and taking some simple steps can be game-changing. But how exactly can women start talking about money more and engage in their finances more meaningfully, regardless of their current level of involvement?
Here are three ways to get started or take that next step:
Clearly Communicate with Your Spouse
One of the first steps for women who are in a partnership or marriage to initiate financial involvement is to have an open conversation with their partner to ensure both parties are on the same page in terms of financial goals and expectations. This can be an initial discussion that doesn’t touch on specifics, but instead gets the dialogue going on shared values, before locking down exact actions. Examples of this could be talking about long-term aspirations, retirement goals, key family members or childhood experiences around money that have shaped current opinions or concerns. As long-term finances are discussed, it’s common for partners to have disagreements or to see things differently, but finding a compromise that incorporates elements important to both individuals is key when coming to a solution in managing personal finances.
Once conversations around shared values have taken place, another important next step is to discuss shared access to account information with a spouse. Knowing usernames and passwords for all investment and retirement accounts is a critical step to sharing responsibility, so conversations can start by identifying where some of these important pieces of information live in case the unexpected happens. A next step can be understanding exactly what those accounts look like and why – how things are invested and where, and what the goals are for each account or financial vehicle.
Talk To Your Friends
While it’s important for women to be on the same page as their partner when in a relationship, friends can also be a great source of support and learning when it comes to managing personal finances. Similar to trading childcare tips or career advice, talking to trusted friends about money opens up a safe space to get third-party opinions that have your best interests at heart and also removes the taboo around the topic. Women can take the opportunity at any friendly gathering to broach the subject – or suggesting a dedicated time, such as a group “money date” with friends over dinner or a fun activity can allow for a no stress environment for “real talk” on these subjects. While UBS research shows that women believe they overestimate what’s required to be financially engaged, the reality is that everyone has something to bring to the table when it comes to their own experiences around money and what they’ve learned. This is also a beneficial opportunity for women who are actively engaged in their long-term finances to share this knowledge with others.
Involve a Third-Party Expert
Once a couple or individual has started an open dialogue about money and aligns on priorities, meeting with a financial advisor to develop a financial plan can help achieve both short-term and long-term goals and ensures the agreed-upon compromises are met for couples. If a spouse already has an existing relationship with an advisor, express interest in attending the next meeting to listen and ask questions. In these meetings, wealth across major factors should be coming into play, including short-term liquidity considerations for current cash-flow and emergencies, longer-term needs throughout the course of their lifetimes, and legacy goals to help improve the lives of children, beneficiaries or their communities.
Taking these actions can lead to women feeling more empowered when managing their personal finances – and the benefits are significant. UBS’s latest Own Your Worth report found 8 in 10 women believe that equal involvement in household finances would make them feel more prepared if something happened to their spouse, such as disability, illness, or death, and that the large majority of both women and men believe that women’s equal financial participation is critical to achieving gender equality. Openly having these difficult conversations and putting a financial plan in place can prepare women for the unexpected, while empowering them with knowledge to take care of themselves and take ownership of their financial independence.
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