Financial Planning

“With longer lifespans than their male counterparts, many women are likely to end up managing the family estate."

Key Takeaways:

• Studies show women are often less financially literate then men, yet have growing financial responsibilities
• Basic education on financial planning and investing have long-term benefits as saving concepts turn into actionable items for achieving goals
• Investing is in your control – from what you invest in, to who helps you manage it all. Women also have been studied to show they are stronger investors than men

When you know the basics of personal investing, building wealth for life’s big goals feels much easier than it seems. Add time on your side and a solid background in financial literacy, a healthy dose of patience can go a long way. These investing fundamentals should be true for both men and women, but it simply isn’t the case.

With a disadvantage, women are less likely to describe themselves as financially literate, and according to a study by FINRA, the gap between financial literacy for men and women in baby boomers is particularly wide. This, of course, has massive and well-known implications. Women are less likely to have rainy day funds or non-retirement investment funds, and more likely to be in medical debt. And with longer lifespans than their male counterparts, many women are likely to end up managing estates that they previously had little involvement with.

Fortunately, the available resources are nearly endless. It’s never too late to get involved with investing, even if you have a partner or manager dealing with your finances. Now is the perfect time.

Empowered & Educated

The financial role of women continues to evolve. Empowered by changing attitudes and new opportunities, this generation’s appetite for equality is drastically changing their relationship with finances. In addition to controlling household discretionary budgets, women are increasingly likely to be family breadwinners, as well as to be the ones making serious investment decisions.

Prepare accordingly with healthy habits today, even if that’s educating yourself on the basics of financial planning and investing. For example, it’s important to remember that as you earn more wealth, hoarding cash isn’t the answer. Yes, maintaining an emergency cash fund is important, but cash loses value quickly. Currently, everyone is feeling the rising prices in energy and food by having to pay more on a range of necessities. Therefore, while leaving large lump sums in low-yield savings accounts is tempting, it won’t help you grow or even maintain your financial worth. In order to plan for retirement or other financial goals, it’s vital to invest your money and create a diversified portfolio, which can be done at your own pace.

Once started, women are proven to be stronger investors than men – numerous studies throughout the 20th century cite better performance and less volatility in female-led investment portfolios as compared to their male peers. Women are less likely to pick stocks in a gambling-like style and are more risk-averse in their choices, all great attributes to have for long-term investment success.

As wealth managers, we often talk about the ‘Great Wealth Transfer’. Over the next few decades, women stand to inherit a significant amount from their boomer family members, creating additional opportunities for women to diversify portfolios. Again, understanding financial principles will be vital for this – or even before, as you may become a power of attorney, co-trustee, or executor of a will for a parent or family member.

The Best Way to Get Involved

Once you decide to take control of your future through investments, there’s still the lingering question: how exactly do I accomplish that? The simple answer is however you want, and with the right team. With more financial knowledge comes more financial freedom. Investing on your own terms means taking ownership of where exactly your dollars go to work, but you don’t have to do it alone.