By Michelle C. Herting
Although the title of our weekly column is Women, Money and Mindset, many of our readers and most vocal and passionate commenters are men. So, guys, while we welcome your participation, our column’s goal is to increase women’s engagement in the process of financial and estate planning.
Some remarks, however, do make me wonder. In this era of social justice movements and gender neutrality, is it still appropriate to write specifically about how women relate to money?
Women today assume a greater role in driving our economy in both the public and private sectors, but there is still a high level of disparity between the sexes. As a result, women may need more support to overcome this inequality. Data also suggests women continue to be less comfortable and interested in participating in the financial planning process.
The era of gender equality
More and more, we see women take on leadership positions once held by men in the areas of finance, business and government. They head tech companies, defense contractors, sports teams, and auto manufacturers. U.S. and European governments trust women to oversee the cash. The secretary of the treasury and the president of the European Central Bank are both women.
There seems to be more equality closer to home, as well. According to the 2020 Portrait of U.S. Household Wealth report of data from 50,000 households, nearly nine in ten women with a spouse or partner report involvement in spending and investing decisions. This figure is up from 42% only nine years ago.
A Forbes article published last month shows that the gender pay gap is now only 2% with several adjustments. And research from New York Life claims that women now control 51% of the personal wealth in this country, estimated at $22 trillion.
Financial Concerns of Women We Know
Setting reports and statistics aside, I set out to examine women’s lesser reported financial concerns. I conducted an informal, anecdotal study by texting about 20 of my female friends, family members and colleagues to ask about their financial concerns right now.
My unscientific “sample” included women of all ages, races and marital status. Employment and wealth levels varied. Many of the respondents are mothers and some are grandmothers. And while my little survey excluded men, the responses had less to do with gender and more to do with age and socioeconomic status.
* Most respondents worried about meeting their current financial obligations.
* Some agonized over the adequate care of their children should something happen to them. Only lower-income earners dwelled on the cost of childcare.
* Disability and illness were top of mind among the older respondents.
* Some older women fretted over how long they would have to work before they could afford to retire.
* Chief among lower-wage earners were more immediate concerns like can they afford to “fix the car” and less focused on long-term goals like retirement.
* Not surprisingly, younger respondents tended to lose sleep over student debt and whether they could afford to buy a house.
Based on our “findings,” these responses, at least on the surface, are not gender-specific.
But women have been disproportionately hit hard economically by the pandemic. Most news reports point to a lack of affordable childcare as the primary reason women are not returning to the job market. I also suspect that because women are more likely to pay the bills in most married households, according to 2020 Gallup poll numbers, they are more sensitive to the pinch of inflation this year.
Women face other underlying economic problems. A Brookings Institute report on why working women have been hit especially hard by Covid-19 shows almost half of the women in this country work in jobs that are typically low-paying and more subject to layoffs.
The report also points out women still make up the majority of single-parent households. Women also have less savings and are much more likely than men to fall into extreme poverty. So much for gender equality.
Attitudes Towards Money
With our current economic uncertainty, it is more important than ever to budget, plan for the future, set some funds aside for emergencies, pay off debts, and have sufficient insurance.
So, are women adequately prepared to follow basic financial planning principles to get back on track and thrive? If we return to the statistics and generalizations, a 2020 U.S. Bank study says not really.
Fewer women than men engage a financial advisor before age 35. Even more alarming is the study finds half of the women surveyed associate negative words with planning. They are also far less likely to watch financial shows or podcasts or talk to their friends about their finances.
Until the financial condition of the sexes balances out and pending a time when women feel as comfortable managing money, there is a need for articles that address their unique financial concerns, and even more important, engage them confidently in the financial planning process.
Michelle C. Herting, CPA, ABV, AEP, specializes in estate, trust and gift taxes, and business valuations. She has three offices in Southern California.