The Financial Planning Balancing Act for Women

A recent study done by Financial Finesse reveals that women lag men in many vital areas of financial planning, most notably falling behind when it comes to managing money and investing.¹ Despite improvements in employment, there is still a prominent and expanding gender disparity when it comes to financial literacy and well-being.

Facing greater financial challenges than men in several ways, you have a longer life expectancy and generally accrue less income over time from being out of the workforce longer to care for children (and subsequently lower average monthly Social Security payments).²

As women, how can you properly devise your money matters to address your unique financial issues and personalized concerns? Refer to and apply the following tips to enhance financial security: 

• Whether single or married, you should establish and maintain credit in your name. Be cognizant that your need to borrow money and purchase assets will grow as your responsibilities evolve. Recognizing that credit reports and histories are not combined when you marry, you should be careful about opening a joint credit card account if your husband has a negative credit history.
• Foremost, pay your credit card balance in full each month and ensure you set aside money to defray expenses in the event of a financial emergency or unforeseen job loss. Opt for long-term planning over crisis management while implementing specific savings and investing goals. Train yourself to handle most daily financial tasks and stay proactive in your family’s monetary decisions. Be confident in your financial knowledge and prepare for unfortunate predicaments, such as a divorce or death of your partner.
• Ascertain that your retirement planning reflects the likelihood that you will live longer than your husband. To offset potential differences, increase the percentage of wages that you save and participate in your company’s 401(k), 403(b), or 457 plan by contributing up to the employer’s matching percentage. If you do not have a job, you can still have a separate retirement account. Speak to your husband about the possibility of funding a spousal IRA in your name.
• Do you tend to be averse to losing money? Think about taking a risk tolerance assessment and familiarize yourself with different strategies (i.e. conservative, moderate, or aggressive). In accordance with your risk tolerance, objectives, and time horizon, substantiate that your investments are allocated appropriately between cash, bonds, and stocks. Periodically review and rebalance your combined investments to keep your asset allocation aligned with your strategy.
• How can you plan for financial wellness when consistently juggling the responsibilities of raising kids, caring for elderly parents, and working to advance your career? Check your planning first to make sure your retirement savings are on track before sacrificing to pay for your children’s college costs or aging parents’ long-term care.

Do not go through the planning process alone and seek counseling to focus on financial priorities and to alleviate fears. With the support and expertise of a CERTIFIED FINANCIAL PLANNER^TM professional from the Financial Planning Association, you can navigate through financial complexities and cultivate sustainable life skills to succeed.

FPA member Elaine King, CFP®, CDFA^TM, is Chairman of FPA of Miami-Dade and Author of Family & Money Matters, La Familia y El Dinero Hecho Facil. FPA member Philip Herzberg, CFP®, AEP®, MSF, is President-Elect of FPA of Miami-Dade and Director of Media Relations & Public Awareness for FPA of Florida/Miami-Dade. They serve on the Estate Planning Council of Greater Miami Board of Directors.

¹Financial Finesse Reports: Gender Gap in Financial Literacy, June 2012.

²Malcolm, Hadley, USA Today, “Women’s Financial Confidence Falters,” June 21, 2012.