When it comes to household finances, many women rely on their partners to take care of their future financial needs. But a new book wants to change women’s attitudes when it comes to saving for the future.
Called “Bank on Yourself: Why Every Woman Should Plan Financially to be Single, Even If She Is Not”, authors Ardelle Harrison and Leslie McCormick detail studies showing that 90% of women will need to manage their finances on their own at some point in life. This is due to divorce, widowhood or having never married at all.
Co- author McCormick says, “While general financial planning principals can apply to both men and women, what is different are the circumstances that are more likely to impact women financially. Women have longer life expectancies, and the expense those extra years bring, and the earnings gap, make it harder to build wealth. Women need to plan accordingly.”
How can women plan for this likely situation? Especially those who have never managed money for themselves and have perhaps relied on their partner to pay bills and save for the future. Here are some tips to help get you started.
Boost your financial literacy
According to the book, just 31% of women say they have confidence in their finances. Compare that to men, who have 80% confidence. If you happen to be one of those who lack the self-assurance to take control of your finances, seek out courses that can help you build your financial literacy.
The Financial Consumer Agency of Canada is a great place to start. Also, ABC Life Literacy Canada has a Money Matters section, with articles, video posts and other free financial literacy resources.
Find financial confidence
A report by the Swiss investment bank UBS, called “Own your Worth”, researched women and their approach to financial decision making. It found 56% of married women leave key financial decisions to their husband and noted that 74% of these women did not consider themselves to be very knowledgeable about investing.
The majority of women who were divorced or widowed said they wished they had paid more attention to family money matters. 98% of them encouraged other women, especially those in relationships, to take a more active role in finances.
Women also live longer than men. On average, women live to 84 years, while men in Canada typically live to 79. This means many women may have to plan for a longer retirement with less money.
It's clear that women need to be saving more in their working years. One study by the U.S based company TIAA, a leading retirement services provider, suggests that for every 10% a man saves, women should save 18% of their before-tax income to achieve enough money to have the same lifestyle as their male counterparts.
Home economics 101
Every adult should know what it costs to run the household, how often bills need to be paid and if any costs are going up. This will atomically set women up to be able to manage the household bills on their own if there was ever a need for them to do so. The authors of “Bank on Yourself” have this advice: “Take your financial inventory, assess your income and expenses. Identify your vision for your future, put a plan in place to make your vision your reality, set your budget, track your progress, review and repeat.”
The reality is women need to save for themselves first. Before they save for their kids’ education, or before they spend money on a big family trip, women must make sure they are setting aside the funds they’ll need for retirement. Statistics suggest that many women will find themselves single later in life, and with little experience in managing their money.