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Traditional roles in family life are prevalent throughout the world, with women often taking more responsibility for the care of children and the home, for example, than men. While these stereotypes are increasingly being challenged, the fact remains.
However, when it comes to the financial affairs of individuals and their families, men are still very much wearing the trousers. They will often make the final decisions that affect themselves and their family, even if their female partners are managing the purse strings day-to-day.
Understanding your finances is vital no matter whether you are a man or a woman, but the extent of financial literacy varies greatly. Surprisingly, the gender gap in financial literacy among the majority of college graduates is growing, according to recent research in the US from Financial Finesse Reports, with women significantly lagging behind men in two critical areas: basic money management, which is a cornerstone of financial planning, and investing.
Given that 90% of women will be solely responsible for their finances at some point in their lives because of a divorce or their partner dying before they do, this is a real concern that needs to be addressed. Interestingly, the research showed that women do a better job planning for their long-term financial goals, but find the day-to-day basic money management skills a lot harder to deal with. For example, more women than men are in their company pension in the States, and more than half have got long-term disability cover to replace their income in case the worst should happen. Also, 80% of women – almost the same as men at 81% – have made sure the beneficiary details for their insurance and retirement plans up to date.
Other key statistics have gone backwards for women, including vitally the number of women who have money set aside to cover a financial emergency has fallen in the past year.
We need women to take a greater interest in their financial affairs, and that message is not getting through loudly enough. But even more importantly, what I want to get more women to accept is that when we talk about understanding your financial affairs, we are not just talking about the financial affairs of your family. We mean understand your financial affairs.
You see no matter how much women try to think about their own affairs, they often find it hard to differentiate their own finances from their family’s finances. The two are linked, but they can be separated while being mutually benefited, providing you are getting the right advice.
I speak to many women on a regular basis who want to deal with their financial planning, but what they are really thinking about, at least when they first arrive, is their family’s financial well being. That is not something that is as obvious with male clients – don’t get me wrong, of course they want their family to be taken care of. But it is usually as part of their overall financial needs, not instead of. Products such as life insurance or healthcare are discussed alongside items such as retirement and portfolio planning.
Women will often come to see me and want to secure everything to do with their family first, and will then think of their own financial affairs afterwards, if there is any money left. That is not the way you should always look to deal with your money.
My point is that while this is laudable, it is not necessarily the most sensible course of action for them. We all want to take care of our families, that is a given, and if nothing in your life changed and was always perfect, then sacrificing your own financial well being for your family would seem a reasonable course of action.