Women and Money

Learning about money – how to manage it, talk about it with loved ones and use it – is as important today for women as voting was to our grandmothers.

The sad fact is that most women will live their lives alone in their later years – later marriages, more divorces, longer life spans and widowhood are the key reasons. Sooner or later, most women are forced to come to grips with financial matters. The Securities Industry Association states that nine out of ten women will be solely responsible for managing their own finances at some point in their lives. Sadly, by the time they must do so, it may be too late to make a difference. Lack of financial knowledge makes older women easy targets for the unscrupulous.

Consider Gwen, age 67 and recently widowed. Gwen was married at 20, raised three children, worked but never accumulated a corporate pension and left financial matters to her husband, including paying the bills, doing the taxes, buying insurance and planning for retirement. When her husband died, Gwen sought the assistance of her local broker, a person she had never met.

The broker recommended that Gwen make some equity investments and Gwen did so. With insurance proceeds, Gwen looked like she was in a good financial position. Her house was paid off, her expenses were relatively small and she had about $400,000 in insurance proceeds. Within two years, as a result of the investments suggested by the broker and agreed to by Gwen, Gwen’s nest egg had dwindled to less than half of the original amount, an amount that will not yield the income necessary to cover Gwen’s expenses with the small amount she receives in social security income. Gwen will have to invade her principal to live, decrease her living expenses by selling her home or go back to work to earn the money to cover her expenses.

Could this scenario have been avoided? Yes. Gwen needed a basic education about finance. If she had learned some investment basics, she could have evaluated the recommendations of the broker and determined for herself what course to take. Gwen regrets leaving all financial decisions to her husband, not only because she neglected to learn and protect herself, but because for years she placed all the burden of her financial future on her husband. Had she shared this burden, she could have assisted him and learned as well. By not sharing the burden, Gwen unfortunately became a burden to her children who had to undertake to help her. The good news is that Gwen has remedied this situation and is now able to discuss her financial situation and make her plans.
Learning about money is not just for self-protection, but for family protection.

Gwen had the advantage of a long-term marriage. But, consider that more than 50% of all marriages end in divorce. Leaving money matters to your husband, with divorce a probability for half of all marriages, means leaving yourself unprotected-at an emotional time. Probably not a good idea. Beth learned about money the hard way. Like Gwen, Beth left all financial matters to her husband. She learned about her separation and impending divorce when her checks began to bounce because the bank accounts had been depleted.

While she did recover some monies in the ensuing divorce litigation, by the time she did so, her credit was ruined. Fortunately, not all husbands are like Beth’s ex.

I can understand that you might not want to think about the death of a husband or a divorce. In happy times, such possibilities seem unreal and remote.

Let’s look at self-protection from another perspective. Data show that men are more likely to become disabled than women. This means that many married women will face situations where they must not only care for a disabled partner; they must also become the family’s primary breadwinner at an emotionally devastating time. Without an education in finance, such a situation can quickly become overwhelming.

Take Carolyn, whose husband suffered brain damage in a car accident when she was 47.

Carolyn was luckier than most when the insurance company paid the majority of the medical bills. But, Carolyn’s financial problem was not with medical bills, but with the business her husband owned and managed. In an instant, Carolyn was forced to step into the role of business owner and manager. Her lack of knowledge of financial matters, coupled with the personal crisis she faced caring for her husband, eventually triggered the bankruptcy of the business and her own personal bankruptcy. The devastating truth is that Carolyn’s situation is not unique.

If you still aren’t convinced by divorce, loss of spouse, or disability arguments, let me get to the hard bottom line: Poverty is a women’s issue. Female headed families are more likely to be poor. In 2010, 34.2% of families with a female householder where no husband is present were poor. And, elderly women are more likely to end up in poverty than elderly men. In 2010, more than 4 million more women than men lived in poverty. This may be true because women outlive men, but it is just as likely that elderly women have not protected themselves financially.

OK! Let’s move forward into the good news.

The examples I used do not have to be your reality. It’s pretty simple to figure out your finances, decide what you want to have, learn how to invest and manage your money and check your progress. What does it take? Commitment to make a change, understanding where you are and where you want to be, making a plan and monitoring the plan.

Lyn & TeddyAbout the Author: Lyn Striegel is an attorney in private practice in Chesapeake Beach and Annapolis. Lyn has over thirty years experience in the fields of estate and financial planning and is the author of “Live Secure: Estate and Financial Planning for Women and the Men Who Love Them (2011 ed.).” Nothing in this article constitutes specific legal or financial advice and readers are advised to consult their own counsel.