Data shows that a burgeoning number of U.S. women are either the primary, or co-primary, household breadwinner these days – albeit reluctantly so.
A closer look at the numbers shows women have high degree of angst over taking financial responsibility. They are also unprepared to inherit wealth or pass their own wealth on to loved ones.
According to a Center for American Progress report, 42 percent of U.S. mothers were either sole or primary breadwinners in their homes (meaning they earn 50 percent or more of household income) in 2015.
Another 22 percent were co-breadwinners, defined as earning between 25 percent to 49 percent of earnings for their families.
Another report, this one from RBC Wealth Management, found that the majority of women, even as they take on more family responsibilities, are “unprepared” to adequately “give or receive” a family inheritance.
That’s a pretty big deal, as receiving an inheritance could provide a bonanza of financial opportunities for U.S households in paying down debt, covering college tuition, or saving for retirement, among other big-ticket financial obligations.
It’s also why financial professionals should advise women, especially those household breadwinners, to get help in maximizing their inheritance experience.
“Find an advisor you trust as soon as you suspect a money transition is coming, and interview as many as you need to until you find your match,” said Julie Wielehowski, a financial planner with Financial Compass in Haddonfield, N.J.
No Need to Rush
When you have lost a loved one, take your time making life decisions. There is no need to rush, Wielehowski added.
“Work out what you need to do for the immediate future (think one year), such as setting aside living expenses, but don’t make any big changes for up to a year,” she said. “Get familiar with your new reality, then make a life plan, and put the financial framework in place to support that life plan.”
Another good idea – start creating a checklist that will direct recipients through the inheritance receiving process.
“Women who are anxious about money will find comfort in a structured setting with a list of things they need to do,” said April Masini, a New York City based author and frequent media commentator on women’s issues.
“To do” lists are the “currency” of women who run households and small businesses, Masini explained. “They make them, they use them, they complete them, and they look to them for comfort.”
Consequently, any estate attorney, business manager or accountant who is dealing with women anxious about wealth, would be wise to hand out lists of what these potential clients need to do to achieve results, Masini said.
“The more concrete, specific and small-task oriented, the better,” she said.
Women often get overwhelmed when they don’t understand what’s being discussed, coupled with an authority figure who speaks as if they should, Masini said. Financial advisors should know that, she added.
“So it’s not just a lack of knowledge about certain arenas, it’s the combined sense that they’re behind in their money education that creates stress,” Masini said. “When women dealing with wealth are approached with a calm and steady tenor, it’s a lot easier for them to keep calm and put their heads down to get to the work at hand.”
When alarm bells go off because they should have done things and didn’t, that’s when the ‘overwhelm’ factor sets in, she added.
‘Keep Them Safe’
Advisors who work with women unfamiliar to the inheritance process need to slow their roll, as well.
“Advisors need to take their time, too,” Wielehowski said. “Allow for, and expect, the client to reflect and take breaks from implementing plans. Sometimes what the client really needs is for you to set basic guidelines to keep them safe while they catch up with their new reality.”
Another takeaway: the data shows that women and men both really need professional help with financial windfalls.
“It’s clear that women tend to have less experience handling family finances, so concerns like this may be a bigger issue for them, but an inheritance should be handled the same regardless of gender,” said Rob Drury, who runs the Association of Christian Financial Advisors, the nation’s largest nonprofit network of financial professionals.
Citing figures from the National Endowment for Financial Education, Drury noted that 70 percent of people who come into sudden money are broke within a few years. Additionally, lottery winners are twice as likely to file for bankruptcy as the general population.
“It’s quite simple – those who don’t know how to handle money urgently need help when in receipt of sudden wealth,” Drury said. “Also, those who manage their finances responsibly should recognize the need for proper counsel in handling levels of wealth beyond that to which they’re unaccustomed.”
Brian O’Connell is a former Wall Street bond trader, and author of the best-selling books, The 401k Millionaire and CNBC’s Guide to Creating Wealth. He’s a regular contributor to major media business platforms, including CBS News, The Street.com, and Bloomberg. Brian may be contacted at email@example.com.
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