Women and Money
“Women really do rule the world. They just haven’t figured it out yet. When they do, and they will, we’re all in big, big trouble.” – Doctor Leon
We live in a society built on a framework of stereotypes and traditions. This can be seen as a good thing when it comes to creating a sense of stability and order but it can be a challenge whenever we choose to step outside of the “norm” and carve a new path. There’s no doubt that, when it comes to gender equality, much has changed for the better in the past 50 years. Women are taking on roles in the workplace and at home that were inaccessible to our mothers and grandmothers and are competing and succeeding in arenas that just decades ago they were not allowed to enter. However when it comes to the arena of money, far too many women still lag behind when it comes to investing and financial planning. Studies estimate that only one third of women have a financial plan which is especially worrying when you consider that currently, almost 50% of marriages in Canada end in divorce and the average age for a woman to be widowed is 56.
Women live longer
Demographics suggest that the majority of women will be on their own by their mid-60s. Given that women live longer than men, this means that the average women will be responsible for managing their finances on their own for the last 15-20 years of their life. Relying on our parents or handing over the responsibility to someone else just won’t be an option and this is why it is critically important that we take an active role in understanding money and taking control of our financial wellbeing at an early age in order to prepare ourselves. The challenge with this for many women is simply that they feel intimidated by financial planning and would much rather leave the long term planning and investing decisions to someone else.
Often a woman in a relationship will choose to take care of managing the day to day household expenses and let her partner manage the investments. Many woman without a partner will often choose to take the “head in the sand” approach to investing and either not save at all or stay within her comfort zone by putting money into a safe, low risk, low interest savings account, missing out on much of the opportunity for long term growth. In a study by dailyworth.com, 60% of women said that they considered their investing/planning skills to be below average. The reality is that investing doesn’t have to be complicated, nor does it have to be time consuming. If you have the ability to do a little research and to ask questions about the things you don’t understand then there’s no reason why you can’t work with a financial advisor you trust to develop a plan and set up an investment portfolio that’s in line with your goals and time horizon.
The trouble is that, after centuries of deferring money management to men, the roles are still deeply ingrained enough in our society that it’s just too easy for a woman (and the people around her) to let herself off the hook. If she makes the decision to actively manage her money and invest for her future she is the exception rather than the rule and that’s a much harder place to be. Just like smart girls in school tend to play down their intelligence in order not to stand out, so money savvy women will often play down their knowledge and abilities, especially around other women.
Money and relationships
Women also worry more about the impact that wealth will have on their relationships. 79% of wealthy women surveyed by Campden and Morgan Stanley Wealth Management said they were concerned that their wealth would complicate relationships with partners, co-workers and friends. In comparison, only 22% of the men surveyed shared the same concerns.
No matter how much progress we have made when it comes to gender equality, results like this seem to suggest that both women and men are much more comfortable with men fulfilling the role of provider and wealthbuilder. If men tended to marry older women and outlive them, this would be less of an issue but the reality is that the vast majority of women will be forced to manage their own finances in their later years without the support of a partner. This puts a great responsibility on the shoulders of women in their 30s and 40s to take their own financial education seriously because our planning and investment knowledge will be needed both to empower our daughters as they grow and to support our mothers as they age.
What do you think about the relationship between women and money? I’d love to hear your opinions.