May 19, 2017

Why Men Matter To The Women of Her Wealth®

We want men to encourage their wives, mothers and daughters to get engaged in their own finances. Here's why...
Dawn Doebler, MBA, CPA, CFP®, CDFA®, Senior Wealth Advisor

Projections indicate that women will inherit 70 percent of future wealth over the course of the next two generations.  This staggering figure does not include the wealth that will be earned by women themselves. That means women—who already control more than half of all investable wealth—are expected to take on an even greater amount of financial power in the coming years. 

This reality is why we launched Her Wealth® and why we educate women about managing their money.  Despite the name of our initiative, we want to set the record straight—our efforts do not exclude men. Instead, they more fully include women.

Her Wealth is Your Wealth

The fact is that we want and need men to participate in this process by encouraging their wives, mothers and daughters to become more engaged in their finances. We believe that doing so will secure the long-term financial health of the entire family, including the financial security of men in old age.   

As women make and inherit more money, many are taking greater interest in managing the family finances.  Also, seventy-five percent of women will be single by the time they are seventy-five years old, and most women will solely manage their finances at some point in their lifetime. The fact is that women need to become more prepared to manage their finances. If they don’t, they could be forced into taking control while in a crisis—which is the worst kind of “on-the-job training.”

It’s a common misconception that many women simply aren’t interested in taking an active role in money management.  Our observation is that women want to be more involved and will begin to engage when given the right opportunity. 

Boosting women’s confidence is key

Lack of engagement in money matters is not necessarily due to a lack of interest, but rather may be about discomfort around the topic itself.  A Fidelity Money Fit Women study found women are more comfortable talking to their partners about health or work issues than about money with 65% of surveyed women saying they are less likely to discuss investment ideas. But women also said more support from their spouses would encourage them to become more engaged in their finances.  

The study also found that 92% of women said they want to learn more about financial planning and 83% want to get more involved in their finances within the next year.  Boosting confidence and encouraging participation are areas where men can help the most as less than half of the women surveyed said they’d be comfortable talking about money on their own with a financial professional. 

Collaboration creates both harmony and better financial results

Marriage counselors and relationship therapists say the best relationships are ones where partners regularly talk about money.  Even without statistical proof, we all know of at least one couple whose marriage failed as a result of money issues.  It’s normal to disagree about money, but having worked with hundreds of couples over the years, I have found that when a couple learns to positively discuss their money, their overall relationship improves. 

In addition to benefiting from greater relationship harmony, discussing money makes it easier to work together toward common financial goals by uncovering areas of disagreement and setting expectations of what each person needs to do to contribute to meeting those goals.

What may not be fully appreciated is that women and men often have different financial skills. LIMRA, a worldwide research, learning and development organization’s Secure Retirement Institute study suggests that men focus more on the “revenue side” of retirement planning while women focus more on “expenses.” This is a good reason for the two to team up as they have different, but complimentary skill sets, especially when it comes to retirement preparation.

Putting your strengths together may actually result in a better approach than simply having one partner manage all of the family money.  We recommend that men consider their own money strengths, play to their partners’ strengths and make managing finances a joint responsibility.  

Mutual engagement contributes to family security

Sometimes couples waste time and energy butting heads about money. We suggest refocusing that energy by taking positive actions towards creating a financial plan. For example, if you and your spouse work together on your financial future, then you’re more likely to have put in place the necessary insurance, like disability insurance and an estate plan, like having wills and trusts.  Spelling out what should happen in case of unexpected events means you’ll both be equally prepared if someone has to take on the task of managing the finances on their own.

This positive behavior will go a long way in securing your children’s financial futures too. When both parents are on top of their financial situation and equally engaged, it’s less likely that the younger generation will be caught off guard or have to step in should one parent become disabled or die.

Treat your daughters like your sons

Another way your children’s financial future is protected is by fathers setting the same expectations for their sons and daughters when it comes to money. Parents can help their children create more life choices by instilling financial independence, no matter their gender.

If you have daughters, consider that millennials, if they marry at all, marry much later in life. One study showed that women who were born in the 1980s and 1990s are on track to stay unmarried at rates much higher than previous generations.  In fact, the marriage rate for women currently in their early 30s is close to zero.

Since young women are likely to remain single well into their 30s, they will need to effectively manage money alone far longer than their own mothers. When you also consider that many carry college debt in the tens-of-thousand-of-dollars, they enter their earning years less financially secure than any generation before them.

The positive influence that fathers have on the financial futures of their daughters is immeasurable. If fathers (or other male role models) encourage their daughters to take responsibility for their own finances, they will be more likely to have financial security throughout their lives, more likely to be prepared for their own retirement, less likely to live in poverty in old age, and less likely to stay in unhealthy relationships.

Replace ‘money fears’ with financial facts

In our article, How To Overcome Your Money Fears and Move Ahead we identified fear as a common emotion women experience when dealing with money.  It’s natural for women to have some level of fear about their financial security, especially as they tend to live longer.  Fear can paralyze both men and women by getting in the way of important decision-making.  It can also be a powerful factor that motivates women to become more financially engaged and prepared for their future. 

A huge benefit that comes from a thorough review of your finances as a couple is that many of your fears are replaced with facts. Without a detailed review of your numbers, too often women assume their situation is worse than reality.  By working through the details, they gain clarity and have a more realistic understanding of the actions they need to take to create a solid financial future.  This is where engaging women in the process can go a long way in improving your relationship around money and create a positive experience when managing your collective hard-earned wealth.

Here are a few tips to help you engage the women in your life in their finances:

  • Start with an overview:  Many women are just not as involved in the investment decisions, but it’s these decisions that are a primary driver of accumulating wealth. If that’s the case, consider starting with a regular review of your accounts and statements. Talk about what you are invested in and why, including the returns and expenses.  Even if you are handling the tasks of managing the money, that doesn’t mean you should solely make the investment decisions. 
  • Increase visibility of details: Itcan be helpful to have trade confirmations and all other correspondence about your accounts sent to both email addresses so that she will be notified and more aware to changes in your accounts.  We find this simple step opens the door to questions with the information being more informative when put in the context of real actions in your accounts.
  • Establish a regular schedule:  Life happens and finances change over time.  Having ongoing conversations is critical to maintaining financial success as a couple.  When couples fail to check in regularly regarding their money, they can lose track of their mutual longer-term goals.  Lack of communication may also open the possibility of one partner establishing a concealed financial account or spending outside of agreed to limits.
  • Encourage ongoing education: Whether you steer them to our Her Wealth website or recommend one of the many books on personal finance, financial literacy is the foundation of establishing good life-long financial habits.
  • Show appreciation: One final tip to encourage greater interest in your finances is to show appreciation for even small steps towards engagement. Make positive comments when she takes steps to empower herself financially.  Particularly in more traditional families, women become more motivated towards positive financial actions when encouragement is offered. 

We’d like men to consider that, if you’re not talking to your spouse about your finances, both of you are making individual money decisions that affect your entire family every day.  Absent discussion, you’ll each act according to your own desires which may not fit with the expectations you have for your future.

So, talk about money with the women in your life in a way that encourages and empowers them to want to participate more.  You have a stake in Her Wealth®—the financial security of the women you love.

Tweet

Shawn: Now you hear all kinds of deals about leasing cars, how can you negotiate a better deal if you want to lease?

Nina: Okay, well many people don't realize that they can actually negotiate the sticker price on a leased car in the same way that you would do that if you're buying a car. And since when you lease -- when you're, you know, your lease payments basically cover the depreciation, the difference between the sales price and the residual value. So it's definitely in your best interest to try to reduce that sales price as much as possible because then you'll pay you know, smaller dollars over the life of the lease. Make sure you pay attention to the down payment at the lease signing. And so here's an example, you might see an ad that says you know, lease payment is only 1.99 a month and that sounds like a great deal for thirty six months. The catch is, is that it might require a $3,600 down payment. So, if you amortize the down payment, then actually that 1.99 special, becomes 2.99. So, you really have to kind of look at total costs. 

And then lastly, dealerships use the term, money or lease factor, when they're calculating your financing costs and a lease factor is not the same as an interest rate. So, you have to make sure the dealer converts that lease factor into a comparable interest rate so you know what your financing charges are. 

Shawn: At the end of the day, does one method wind up being more expensive more often than the other, or can we tell that?

Nina: You know what, it really depends on how long, if you're going to hold the car for a long time, you're better off buying. But if you know, and if you're not, if you just really enjoy driving and you want to have a new car, then go ahead and lease. I mean, there's pros and cons to both, to be honest with you, it's not one size fits all.

Shawn: Alright Nina, great. Happy Thanksgiving to you. Alright, Nina Mitchell is with The Colony Group, for more go to wtop.com and search Her Wealth.

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Dawn Doebler, MBA, CPA, CFP®, CDFA®, Senior Wealth Advisor

Dawn’s experience spans more that 25 years providing wealth management, financial planning and corporate finance solutions for clients. As an MBA, CPA, Certified Financial Planner (CFP®), and a Certified Divorce Financial Analyst (CDFA®), she is uniquely qualified to understand the challenges and financial needs of clients from executives to entrepreneurs, as well as single breadwinner parents. Dawn is a weekly contributor to WTOP radio.