Of Love and Money: 5 Financial Tips for Women

Rob Kron honors Women’s History Month with advice on navigating your finances whether with a partner or going it alone.

When John Gray famously wrote Men Are From Mars, Women Are From Venus, he was focused more on love than money, yet somehow the analogy also works fairly well in the world of finance.

At least that’s the general sentiment revealed in BlackRock’s Investor Pulse Survey. Among other things, we learned that women are more cautious with their money, hold more cash than men and are less likely to invest it in the markets, and generally have accumulated less for retirement.

And in my 20 years talking and working with financial advisors, I’ve learned there’s usually a typical “division of labor” when the two come together at the table to discuss family finances.

The survey corroborates this: Whereas men were generally shown to be more focused on investing and growing wealth for the long term, women tended to emphasize the day-to-day health of the household’s finances, assigning more importance than men to saving money.

Granted, the hats may well be reversed in your home. I’ve seen it to be so. But the key point is that this mixing of financial mindsets is a happy marriage. It brings balance to the conversation and ensures that those long-term investing plans are pragmatic from a budgetary perspective and purposeful in meeting the family’s financial needs.

While both mindsets are important, the statistics tell us that at some point — either via divorce or widowhood — women may be going it alone. (Even I was surprised to learn that 59 is the median age that a woman loses her spouse, and the average widow outlives her husband by 14 years.) What does this tell me, or more importantly, what does this signal for women and their finances? I’d offer five actionable observations:

1. Acknowledge what you do, and don’t, know. Understand the division of labor in your relationship when it comes to financial matters. Accept your strengths and those of your partner. You don’t need to shift your emphasis, but know that you may need to take on a second hat at some point. Make it your business to understand the full picture. These two resources can help you get your financial house in order, so to speak: Your Essential Information and Keep Financial Records Organized.

2. Engage early and often. Be sure you and your spouse have each established a rapport with your financial professionals (your accountant, financial advisor, estate planning attorney). Make it a point to identify topics you are interested in discussing with each of them. If meetings with your financial advisor are heavily focused on investment performance, and that’s not your cup of tea, schedule time to discuss something that is — be it saving for college or some other goal that’s on your mind. Doing this regularly will ensure you are fully engaged in the present … and will feel empowered to tackle other topics should you need to wear both hats at some point down the road.

3. Know (and address) your weaknesses. Our research revealed some common investing mistakes that didn’t discriminate by gender. The top four: emotional investing, which can lead to hasty and unfruitful investing decisions; short-sightedness, which can keep you from seeing the big picture; lack of diversification, aka stacking your risk by holding too few positions; and the fear factor, in which hoarding cash or indiscriminate risk avoidance hampers your potential for investment reward. What to do? Be honest and inventory your challenges, then discuss possible solutions with your financial advisor. Do this as a couple. Do it again as an individual if your situation changes.

4. Be prepared for the unexpected. A life transition such as divorce or widowhood is difficult enough. Having your financial papers and key partners in order ahead of the unexpected can help ease one stress when (or if) change comes. The worksheets offered in #1 above are a good first step. In addition, be prepared should something happen to you or your spouse. It is advisable to make important decisions when everyone is unencumbered and in good health: Establish a will, assign beneficiaries and succession plans, plan for incapacity, etc. Having an estate plan is the only way to ensure your wishes are fulfilled. If confronted with divorce, you’re considerations will be many and might include childcare, insurance and beneficiary changes, taxes, relocation. This checklist can help you frame your thoughts.

5. Make retirement a priority. Simply put: Women earn 77 cents for each $1 earned by men, they are less likely to be covered by company retirement and pension plans, they have longer life expectancies than men and, as our survey showed, they have set aside less for their retired years. The upshot: Women need to be particularly conscientious about saving for retirement. Creating a personal retirement profile can help you establish a vision and make decisions about your retirement. I’d also recommend my colleague Heather Pelant’s recent blog on closing the retirement savings gap.

After all is said and done, men and women may differ in their approach to finances, but their commitment to financial matters is unanimous: 68% of men and 62% of women in our survey agree with the statement “I take financial planning seriously.” And that bodes well, whether going it together or alone.

Resources for Keeping Your Financial House in Order

Your Essential Information

Keep Financial Records Organized

Cash Flow Worksheet

Net Worth Worksheet

Estate Planning Mistakes to Avoid

Divorce Preparation Checklist

Sources: BlackRock, U.S. Census Bureau.

Rob Kron, Managing Director, is the head of Investment and Retirement Education for BlackRock’s U.S. Wealth Advisory group. He provides practical information on topics that are important to every saver and investor of every age. You can find more from Rob here.

This material is provided for educational purposes only and does not constitute investment advice. The information contained herein is based on current tax laws, which may change in the future. BlackRock cannot be held responsible for any direct or incidental loss resulting from applying any of the information provided in this publication or from any other source mentioned. The information provided in these materials does not constitute any legal, tax or accounting advice. Please consult with a qualified professional for this type of advice.

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