April 8, 2014

Personal Finance for the Modern Woman

In this modern day and age I believe it’s simply irresponsible for women to take a backseat when it comes to dealing with their own finances. Although the stereotypical, dated model of men bringing home the bacon and women taking care of the home may (or may not have) worked for the cast of Mad Men, it simply isn’t practical anymore. In fact, approximately one third of women in the United States now identify themselves as a breadwinner, and that trend will only increase in years to come as gender stereotypes continue to crumble. So rather than tuning out when long term planning is brought up, or even worse, avoiding the situation altogether, here’s my advice to women looking to get on the path to financial security.

1) Stop losing money, and look into your company’s retirement plans already!

I’ve seen far too many cases of working women simply not taking advantage of money on the table that their company is offering them for their own good. With more women working until retirement it’s crucial that you take any and all steps offered to you to ensure your financial stability in old age. This is something that you should start as soon as you find yourself in a career where you can really see yourself growing old. When you start small the process won’t seem nearly as daunting, just ask about any 401(k) plans or similar retirement plans your company may offer. Or better yet, partner up with a financial planner who can best lay out a plan for your future income.

2) Women are naturally good investors

For years now the go-to adage for female advisors was that they were naturally more risk-averse than their male counterparts, because of long ingrained notions of what motherhood and family planning means to women. Now, whether or not that is in fact true remains up for debate, but what is undeniable is that women are far more capable investors than they give themselves credit for. Studies by the German Comdirect Bank found that 58% of men ranked their financial understanding as good or very good compared to 47% of women, but during the banking crisis of 2008 privately held women’s portfolios outperformed men’s by an average of 4-6%. In addition, a study by the Centre for Financial Research at The University of Cologne found that female fund managers moved their portfolios around less than their male counterparts, and those women’s subsequent strategies and performance also proved more stable (so maybe a woman’s natural risk aversion isn’t all bad).

3) Hope for the best, plan for the worst

As difficult as it may be, it’s important to remember that women tend to live longer lives than their male partners, and the last thing you want to be is alone and without a plan. As clinical as it may seem this means going over everything; household budgets, investments, insurance plans, real estate, back accounts, safe deposit boxes, and any plans you have for a legacy or inheritances. The single most important thing any women can do is to be open and honest with their spouse about finances should either one of you ever find yourself alone; it’s crucial that you know your retirement plan as women’s median Social Security income is 70% of men’s, fewer women than men have pensions, and among those 65 and over who continue working earn just over half of what men do. Making a plan for your retirement is only half the battle; you have to keep a watchful eye on your assets as well as your health, but having a plan in place will help eliminate any unneeded stress as you move closer to your golden years.


Securities offered through Triad Advisors, LLC, Member FINRA / SIPC 

Investment advisory services offered through AMJ Financial Wealth Management LLC

AMJ Financial Wealth Management LLC is not affiliated with Triad Advisors, LLC