Women have more money than ever, new studies show. So why doesn’t it feel that way to so many of us?
According to a Boston Consulting Group study, private wealth held by women increased from $34 trillion to $51 trillion between 2010 and 2015. Women hold about 30 percent of the world’s private wealth, the study shows, and are expected to receive most of the private wealth exchanged in the decades to come.
And yet, women lag behind men overall in financial assets. A new report by Merrill Lynch shows that women can fall as much as $1 million behind their male counterparts. The study also found that women feel less confident in managing investments (52%) than do men (68%).
Time for change
Money matters, though, especially for women—even for those who are married. We tend to outlive our husbands: in 2010, some 40 percent of women 65 and older were widows, compared to just 13 percent of men, according to the U.S. Census Bureau. So instead of leaving the decisions shaping your financial future to your husband, it’s a good idea to educate yourself now about money management, including investments.
Starting younger is better—the money you invest now will have more time to grow. But it’s never too late to get fiscally savvy. The actions you take now can change your financial future and your life.
Ready, set, plan!
Getting started on the road to financial success is as simple as making a commitment to do so, then making changes one at a time:
- Set your goals. Where do you want to be, financially speaking, in one year? In three years? Five? Write them down and post them in a place where you will see them regularly. I keep my vision board in my bedroom! I really do!
- Live within your means. Respect yourself by paying off your debts and staying out of debt.
- Pay yourself first. Begin contributing to your retirement fund now. Women lag far behind men in this area. In the UK, one study shows, women age 60-64 have, on average, only £35,700 in their pension funds—one-quarter of the amount held by the average man. Start making regular contributions to yours now, right this minute. Set up automatic, regularly-occurring deposits into a well-diversified mutual fund. Do it now.
- I know, I know—this is a dirty word for so many, implying constraints. In fact, though, a budget is the key to financial freedom! Budgets—if you prefer, use another term such as “Cash Flow” or invent your own (“Joy Juice,” anyone?)—really help you to see your finances and to prioritize your spending so you can make sure your money is working for you instead of the other way around. Sit yourself down and write down your income and expenses, and decide where you want any discretionary money to go, then relax! If you need help with budgeting, talk to a professional.
- Review your situation. Annual reviews of your accounts and your goals are a must; quarterly or even monthly is better.
- Educate yourself. Read books, take a class, watch videos online about money management and investing. Take some time every month to learn something new about your money life.
Last but certainly not least, make sure to keep the financial conversation going. Whether with an experienced investor or a professional financial advisor, having someone to brainstorm ideas with, learn from, and gain encouragement from can provide you with the guidance and support you need to reach your goals.
To find the right advisor for you, ask your women friends. Read reviews online. Think about what’s important to you. In one poll, women said they want from fiscal advisors a well-managed relationship, a safe space, and to be educated.
A Certified Financial Planner can provide not only planning expertise, but can also serve as a financial counselor, and be a connector and advocate for you. Your task will to be engaged and present with this person so you are fully aware of the plan and how you can fulfill it. And remember to hold your advisor accountable! They should be acting on your behalf, and proactively involving you in any conversations about your money.
Your financial planner needs to be working on YOUR behalf, and should have your best interests at heart.
To tell you the truth, it’s sad, in a way, that we need to have this conversation. More women are working, and are earning more, than ever before, and should already be in control of our finances. In many ways, though, it’s still a man’s world: Men learn at a young, often from their fathers and other (male) role models, about the power money confers and how to increase that power by saving and investing.
Women are behind the curve, but we can catch up. All it takes is for each of us, individually, to just do it. Try following the six steps I’ve outlined above, with a financial advisor’s help, and see for yourself what a difference it will make in your daily life and your state of mind. Chances are, you’ll feel more empowered and more secure—in short, you’ll feel happier. Who said money can’t buy happiness?
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Fulcrum Financial Group and LPL Financial do not provide tax or legal advice.