Financial freedom for women

You don’t have to look back very far in history to realize that the financial industry was built by men, for men. In fact, as recently as 1974, single, widowed, or divorced women were required to have a man co-sign any credit application, regardless of the woman’s income.

Unfortunately, the remnants of that history can still sometimes make women feel like the financial industry doesn’t give them the same time and attention as our male counterparts. We often feel underserved, undervalued, and underestimated by the financial sector.

Luckily, most modern wealth management professionals recognize and respect that women have developed significant financial power. For example:

  • Consumer spending. Today, women have become the primary decision-makers when it comes to saving, spending, and overall family finances. In fact, women control spending in nearly every consumer category. It is estimated that women are responsible for upward of 80% of all consumer and household purchases.
  • Women in the workforce. The number of women who work outside the home continues to rise. In February 2022, the percentage of men who work compared to the percentage of women with jobs differed by just 11%. Furthermore, there are more women now than ever who are CEOs, make six-figure salaries, and are the breadwinners of their families.

At the bank where I work, we acknowledge, encourage, and celebrate women’s power and influence over financial decisions by identifying the areas where history may have created some biases or gaps and addressing women’s wealth proactively.

Financial challenges

While the tide is turning, many attitudes related to money are still ingrained in American society for both men and women. For example:

  • Putting career on hold. Women are more likely than men to take time off from work to raise children, creating a period of no income and no retirement saving.
  • Lifetime earnings. Women statistically live longer and earn less than men, which might explain why some women are more cautious about investments.
  • Conservative investing. Women who are risk-averse early in their careers could reduce or limit their portfolio’s overall growth potential, which could eventually result in underfunding nest eggs.

Retirement planning is just one reason that motivates women to meet with a financial advisor. Look for a financial partner who will be an active listener and wants to build a lifelong relationship to develop personalized plans for both your short-term and long-term goals while exploring and honoring your risk tolerance.

Regardless, if you are married or single, it’s important to revisit your financial plan when life transitions occur to determine if adjustments should be made to keep you on track for your long-term goals. In addition to retirement planning, some of the life transitions that women (and men) may need to prepare for financially could include:

  • Marriage or divorce;
  • Children;
  • Buying a home;
  • Paying for college;
  • Covering health care expenses; or
  • Caring for a parent.

Additionally, our client experience confirms that it is an important priority for most women to prepare for the eventual transfer of wealth to the next generation. Previous generations viewed speaking about family wealth as a taboo topic. However, a modern estate plan should include communicating your personal or family values to your heirs and sharing with them how you envision your financial legacy. If that is a priority, consider working with a wealth management professional who also provides post-death estate settlement. As a testament to our personalized services at SBCP, for example, we often work with beneficiaries of our estate or trust clients and develop financial plans for the next generation.

Tips for success

It’s one thing to recognize the problem. It’s another thing to actually do something about it. The most important step any woman — married or single — can take is to find a financial advisor you feel comfortable with and develop a plan that incorporates your goals and values:

  • Ask questions. You are entitled to ask about fees and the type of investments your wealth manager is using.
  • Develop a deeper knowledge. If there is anything about your plan that you don’t understand, be sure to ask until you do. There are no silly questions. A good financial partner will start where you are and build your understanding rather than talk over you.
  • Build trust. Meet early and often. Our established wealth management clients tell us that they feel more confident in making financial decisions when they meet with us regularly and understand their financial plan.
  • Balance your short-term and long-term goals. There are three factors important to achieving financial wellness: saving, spending, and investing. A good plan should not sacrifice any one of those pieces of the financial pie.

The bottom line is that there is no one-size-fits-all list of tips that will create the financial freedom you’re looking for. However, there are a few simple first steps to get you started on the path to a stronger financial position, including:

  • Seek financial advice as early as possible. Sometimes people will wait to start investing because they think they don’t have enough money. It’s never too early to make a plan.
  • Invest early. Compound interest is most effective over long periods of time. Don’t limit your financial growth by waiting for the perfect time to invest. Even a small amount can make a big difference when given enough time to grow.
  • Pay yourself first. That’s a fancy way of saying “save.”
  • Put assets in your name. Whether you are single or have a partner, be sure to put some assets in each person’s name. That means even if loans list both partners, one car loan, for example, should list you first.
  • Build credit. Pay attention to your credit score and use free tools for building credit.

One last thought: your children are watching. Some women will forego their own financial wellness to give their children those little extras. But the most important gift you can give them is a good example. Be a good money role model. Remember, however you handle money is likely how they will handle money too.

Beth Jacobsen is assistant vice president-trust officer on the Wealth Management Team at State Bank of Cross Plains. Beth is also an active community servant and volunteer for local non-profit organizations.

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