Just this morning, a friend who received an inheritance was sharing her struggles with how to plan, manage and invest her money. She is not alone. Especially among my female friends and among our financial advisors’ female clients, not feeling financially confident is far too common.
I believe the primary reason for uncertainty around financial decisions is simply a low level of financial empowerment. A recent study, conducted by Jha and Shayo at Stanford and Hebrew University, provided a nudge for women (and men) to trade stocks for just four to seven weeks. Even this limited participation in the financial markets was found to have generated knowledge and confidence, especially among women. The fact that just the participation, with no additional educational content, significantly improves financial confidence, measures of financial knowledge and risk tolerance is strong evidence that empowerment and opportunity is a prime driver for women to build comfort and muscle to handle wealth management.
Unfortunately, not all of us receive these nudges. But we can initiate and provide nudges to others, and consider this a nudge to ourselves, if we’re having trouble getting started.
Here are some simple ways to get going.
Find An Advisor – Your OWN Advisor.
If you and your partner have a financial advisor who works for both of you, consider taking a fraction of your collective wealth and finding your own financial advisor. One just for you – independent of your spouse or partner. This may sound extreme, but you may find this step to be incredibly empowering, and you may be surprised how much you’ll learn when you know the information is being curated just for you. When your advisor can focus solely on you, there’s no danger of them deferring to your spouse or partner without your opinions being considered. (If your spouse or partner tends to be the dominant decision maker, then you’ve probably seen this happen before!) Also, taking steps to understand your money by yourself can prepare you for future in the event of divorce or the death of a spouse.
Don’t Think You Don’t Have “Enough” To Get An Advisor
Today, with the proliferation of independent advisors and with fintech-enabled businesses that help with wealth management, the minimum amount you need to invest is getting increasingly lower. Firms such as Personal Capital, Facet Wealth and Farther Wealth are all examples of hybrid human plus machine advice models that are also relatively new to the block. While many men don’t get an advisor because they think that they don’t need one, many women don’t get one because they assume that they don’t have enough wealth. The truth is that everyone can benefit from talking about their money, no matter how much of it they have.
Empower Others To Build Your Own Financial Confidence
We all have a responsibility to teach our daughters, nieces, and girls around us to invest. They can start early and with a small amount. Teach them about the “three jar” approach – one jar for “spend,” one for “invest” and one for “give.” Have them split their money into these three physical jars. With your guidance, (and possibly your offering them an “employer contribution” to their “invest” jar if you’re feeling generous 😉 ) they’ll work out a budget that works for them sooner than you think. As they grow, look into giving them their own trading accounts, and seek to help them understand how their investments can make a real-world impact. In other words, help them draw a link between the future they want, and the ability to put their money behind it.
Empowerment, like investing, can compound over time to create astounding results.
- HerMoney Podcast Episode 257: How Women Over 50 Can Reclaim Workplace Confidence And Power
- Invest Like You Shop and Watch Your Money Confidence Skyrocket
- The New Rules For Being And Finding A Mentor in 2021
SUBSCRIBE: Sign up for our free weekly newsletter. Subscribe to HerMoney to get the latest money news and tips!