Getting women to take charge of financial management

Years of social change have broken the old stereotype of men being the traditional breadwinners and managers of their family’s finances. Women are no longer sitting on the sidelines of financial management.

In fact, many women are taking on the role of money manager and financial planner on their own. According to Pew Research, 40% of households now have a female breadwinner and 63% of “breadwinning moms” are single moms.

If you are a woman who wants, or needs, to take charge of your family’s finances, here’s how you can get started.

Study Up On Your Household Finances

Prudential’s Financial Experience & Behaviors Among Women study found that:

• 27% of married women surveyed say they “take control” of financial and retirement planning.
• Among married women who are their family’s primary breadwinner, 65% say they take the lead role in financial and retirement planning.
• Among married women who contribute half or less of their household income, nearly 50% share equally in the responsibilities of financial and retirement planning.

If your spouse has always been the primary money manager in the family, you should make an effort to be involved in and aware of the basics of your household finances. You never know when an unexpected event will require you to step into the day-to-day money management.

Sit down with your spouse every month or every quarter and review the following:

• Your monthly household income
• How your monthly expenses are broken down (home & living expenses, food, transportation, entertainment, etc.)
• The amount of outstanding debt you owe on your credit cards, your mortgage or other loans
• The amount in your savings account, retirement accounts or other investment accounts, and your children’s college savings plans
• How your bills are paid (automatically deducted from your accounts, automatically charged to your credit card, or with a paper check)

Move Beyond Saving and Start Investing

The Prudential study further shows that the majority of women (over 90%) feel they understand savings accounts somewhat well or very well. However, when it came to understanding tools of investments, only 38% said they understand mutual funds and 31% said they understand annuities somewhat well or very well.

Although women realize the necessity of long-term financial planning, outside of an employee sponsored 401K, many don’t have much background with investing. They also tend to choose safe, low-risk options. However, investing needs to play a role in anyone’s personal finances to increase the value of their money over time.

If you don’t feel comfortable preparing a long-term financial strategy on your own, a financial advisor can help you devise a plan and walk you through your options. Talk with your family, friends, or co-workers for recommendations on financial planners they feel are trust-worthy, easy to work with, and who they’ve worked with successfully.

Plan For A Longer Life

Statistics from the CDC tell that women outlive men by nearly five years. For this reason a woman’s retirement funds need to last longer. The reality though is that women have saved nearly $42,000 less for retirement than men in the same age range.

Start making smart financial choices now to ensure that you’ll be able to live comfortably in your retirement.

Make the Most of Your 401K

A big mistake that women and men alike make with their 401K is not taking full advantage of a company match. One of the big selling points of a 401K is that, in most cases, your company will match your contribution. (A typical company match can be around 3% – 6% of your salary.) If a company match is available, be sure that you are contributing at least that amount into your 401K. Otherwise, you’re passing up on free money.

Save More with an IRA

To take the place of a company 401K, or to take retirement planning a step further, look into the option of an Individual Retirement Account (IRA). These investment accounts can be opened at your credit union to build funds for your retired years. There are many IRA options and benefits associated with each, so we recommend reading through our Essential Information on IRAs slideshare to explore the options available to you.