Taking the reins

While women are more likely than ever to be managing their own financial lives, they face a unique set of challenges. But by getting engaged and educated, they can build confidence and competence—and ultimately create stronger, more secure futures.

Until quite recently, personal investing and financial planning were largely the domain of men. Today, women are increasingly college-educated, make up a larger part of the workforce, and are in control of more money and assets than ever before. At some point in their lives—if not throughout—they are likely to be managing their own financial futures.

But with this growing responsibility comes a unique set of challenges. Compared to men, women have both fewer resources and greater expenses in retirement. They feel less confident and knowledgeable about investing, and are often more focused on day-to-day finances than on long-term goals and security.

Taken together, these factors can make it harder for women to successfully plan ahead. But by getting educated, setting goals, finding trusted guides, and taking charge of their financial lives, women can become effective planners and investors—and even outperform men on their bottom lines.

“When you're in control of and pay attention to where your money's going, that gives you a sense of awareness, confidence and competence in your daily life that cannot be undervalued,” says Billy Hensley, president and CEO of the National Endowment for Financial Education (NEFE), a nonprofit that works to improve and maximize the impact of financial education. “You are the chief financial officer of your life. Why not be the best one you can be?”

“Where’s the you in this?”

Before Tammy Butts became a financial professional, she worked at a bank. It was a good job, with solid health and retirement benefits and an income that made Butts her family’s primary breadwinner. When Butts gave birth to twins prematurely, she took time off to care for them, which was the right decision for her family. But it also created unanticipated financial stress. 

“I wasn't earning a paycheck,” says Butts, a Chicago-based Executive Vice President and Branch Manager for Equitable Advisors. “We lost my benefits. I wasn’t able to contribute to my 401(k) or get the match on it. We were living off savings. We had a pre-twins plan where we were on track and we needed to adjust to a post-twins reality.”

Putting others first, women are more likely to forget to consider both themselves and their futures. While men consider growing their retirement savings to be their top financial priority, women rank supporting their families, building an emergency fund, and sticking to a here-and-now household budget above saving for retirement. Women also spend more time than men as primary caregivers for children and aging parents.

Yet women can’t afford to not engage with the future—while they earn less than their male peers, are less likely to invest than men, and put less into those investments, they usually live longer, with greater expected care expenses as they age. As a result, they are more likely to see their standard of living decline or even end up impoverished in retirement. 

“Most people are not positioned where they need to be for retirement,” Butts says. “But women are dramatically behind men. We live longer, so we’re more likely to have physical and activity limitations due to disability, and more likely to need long-term care. I tell people all the time, you go to any nursing home and you’ll see more women than men.”

To help her clients prepare for tomorrow, Erica Sylvia, a California-based financial professional at Equitable Advisors, asks them to think about upcoming milestones: five, 10, 20 years in the future. How do they see their lives? What do they see themselves doing? What do they want to be doing?

“There’s this thing that is very, I think, unique to women, where they peg milestones to everything but themselves,” Sylvia says. “It’s ‘when my kids graduate, when my husband retires.” And I’m like, ‘these are all good, these are all important, but where’s the you in this?’ We are talking about your goals, your dreams, your expected timelines.”

“Women Need to be Engaged”

Financial planning can seem challenging and mystifying. But as I’ve learned from experience, women can empower themselves to create security and fulfillment.

“It’s about being able to sleep at night”

Everyday decision fatigue can make it easy for women to delegate financial planning. One of financial advisor Michelle Curry Felendes’ clients is a successful attorney who earns more than her husband. She manages the couple’s bills, but not their long-term saving and investing. 

“When we first connected, she still deferred all of the investment conversations to him,” says Felendes, who works with Equitable Advisors in California. “I was concerned by her disinterest, since this is her future livelihood, and especially coming from someone who was otherwise in the control seat.”

Another challenge unique to women? They are significantly more likely than men to have experienced bias, discrimination, or exclusion within the world of financial services. Women are also more likely to feel blocked or discouraged from engaging with financial services and products.

“Historically, women haven't been encouraged,” Sylvia says. “I grew up being taught to save, save, save. No one told me to check out the stock market or look into investing. So when you’re a woman in your 40s, 50s, 60s and you start having those conversations, that's a pretty big gap you've got to cover in order to feel comfortable.”

Equitable has found that women tend to be frustrated by the jargon surrounding financial products, which in turn leaves them unsure about how much they need to save for retirement and concerned about outliving their savings. In fact, nearly 60 percent of women worry about their finances multiple times a month, and just one in 10 feel as though they have their financial stress completely under control.

“So often, people think [financial planning] is about the numbers,” Butts says. “It’s not. It’s about being able to sleep at night. We’re staying up at night [saying], ‘what would happen to my family if something happens to me? Am I going to have enough? The rising cost of college, how am I going to pay for it? If I get divorced or something happens to my partner, who’s going to take care of me?”

Add this stress to a lack of confidence, Butts says, and the result can be paralysis—a reluctance to even think about preparing for tomorrow. 

“When we get into finances, a lot of people have a hesitancy,” she says. “They think they should know more, so they’re embarrassed to ask questions. We’ve got to break the ice.”

“This is something I can do”

Felendes always excelled at math and loves helping others. While her father taught her about investing and encouraged her to put money into a retirement account, she didn’t grow up thinking she would become a financial advisor.

“There was a social norm of, ‘that’s a guy’s thing,’” she says. “It wasn’t until I started looking for a career that I realized, ‘oh, this is something I can do.’”

The first step toward taking charge of your financial future is realizing that you can and should be engaged. But what comes next? Here are three tips to get started:

“It’s a beautiful evolution”

When women engage with financial planning, the payoff can be profound. In fact, a 2018 study by Warwick University in the United Kingdom found that women investors actually outperformed men by 1.8 percent.

How did they do it? They saved more of their paychecks. They added more to their savings. They traded less frequently, chose less speculative investments, and took a longer-term perspective with those investments.

Felendes isn’t surprised. She says her female clients are often excellent listeners, eager to learn, and natural problem-solvers. Over time, they’re capable of dramatic transformations—going from nervous and unsure to engaged and confident, setting goals and creating plans that meet their needs today and tomorrow.

“It’s a beautiful evolution,” she says. “There’s less of that nervousness, and they can go on living their lives, not worrying about their finances. When you're confident in your personal finances, you're just more confident in life. You’re going to show up better to your work and for your family because you have that knowledge that, ‘I’m doing the right things, I'm taking care of my present and my future.”

Reprinted from The Atlantic Re:Think

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