Never Talk About Money? For Women, That Can Spell Disaster

It’s no secret that gender roles have had a significant impact on women’s relationships with money. Before 1974, women needed a male co-signer to access bank accounts or open a line of credit. When it came to the workplace, in addition to the wage gap, women could legally be fired for being pregnant until the Pregnancy Discrimination Act took effect in 1978. Since then, women have made great strides toward financial literacy and independence, but we still have a long way to go.

According to data from the American Association of University Women, women are still being paid less than men, earning about 84 cents for every dollar a man makes. When it comes to financial literacy, a 2022 survey from the TIAA Institute found only 45% of women answered personal finance questions correctly, compared to 55% of men. When you mix a lack of financial literacy with pay inequality, it’s no surprise that retirement security is lower among women than men. This is something I’ve experienced firsthand.

Case study: Left in the dark on finances

Years ago, a client came to me in a panic after her husband died unexpectedly. He had handled all of the family finances, unintentionally leaving her completely clueless about how to move forward. She told me the family had suffered financial hardship, forcing her to get a job at a fast-food restaurant a few years prior. Not only was she concerned about being able to continue paying her bills — specifically her mortgage — but she also had no idea how to transfer her husband’s assets into her name.

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Unfortunately, her husband didn’t have a complete retirement plan in place, forcing his estate to go through probate. During that process, she discovered he had a good amount of money invested in the stock market, but owing to the length of probate and the market crash of 2008, she lost nearly half of those earnings. While this was happening, she also found out that he had actually left her with a pretty solid nest egg worth a few million dollars.

Although this story had a somewhat happy ending, the amount of stress she experienced over her finances made grieving the loss of her husband even worse. If she had been a bit more involved in her family’s finances, a lot of that stress could have been avoided.

How to get more involved

Unfortunately, my client isn’t the only woman who’s experienced this. A New York Life Wealth Watch survey found 61% of married men report they are making all or most of the financial decisions for their family, compared to just 38% of married women. Meanwhile, 43% of married women say they wish they had a larger role in making the financial decisions in their household, and 82% say they wish they knew more about at least one financial topic including building wealth, retirement planning and managing debt.

So, what steps can women take to get more involved in their finances?

1. Have a financial conversation with your spouse

If your spouse is in charge of your family’s finances, you still need to be aware of what’s going on. Ask questions about your family’s budget, outstanding debt, plans for retirement and overall estate planning. This will help you become more prepared should you experience divorce or the premature death of your spouse.

2. Get educated

Financial literacy is a key component of wealth management. Start familiarizing yourself with basic concepts such as investing, budgeting, debt management and saving. Attending local financial seminars can be especially helpful.

3. Talk with your friends and family

Talking about money is often viewed as taboo, but that mindset limits women’s ability to learn. Don’t be afraid to ask the women in your family or friend groups how they’re involved in their personal finances. You may learn about a new strategy, or even get a referral to a financial adviser.

4. Meet with a professional

No one expects you to be a pro at personal finance, especially if it isn’t your area of expertise. Make an appointment for you and your spouse to meet with a financial adviser. They can help you facilitate wealth management conversations, save for retirement and create a comprehensive estate plan.

Unfortunately, women face systemic disadvantages when it comes to financial management, but it doesn’t have to paralyze us. If you aren’t involved in your finances, make it a priority. Start talking with your spouse about your finances and seek out opportunities to increase your financial literacy. Your future self will thank you.

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The views and opinions expressed herein are those of the SIS Financial Group and do not necessarily reflect the views of CoreCap Investments, LLC or CoreCap Advisor, LLC, its affiliates, or its employees.

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