BE A SMART
MONEY MANAGER
It could be the most
important
decision you make
By MICHELLE ONODA
There was a time when the discussion
of money and its management
was considered a
male domain, and women
shied away from the discussion, but that
has changed.
GOOD NEWS
According to the Center for
Women’s Business Research, women
now control $14 trillion in assets — and
that is expected to grow to $22 trillion
within the next 10 years. Interestingly,
women also make up 43 percent of
affluent North Americans, which isn’t
surprising when you consider that
women are starting businesses at twice
the rate of men.
The Center for Women’s Business
Research further reports that there are
currently 10.6 million women-owned
businesses in the United States, employing
19.1 million people.
Women make up approximately 52
percent of the population, and information
from the National Center for
Education estimates that by 2010
women will control 60 percent of the
wealth in the United States.
WHY SO IMPORTANT
From the research, it sounds as if
women are doing quite well as money
managers. So is personal money management
really important? The financial
services industry, women’s organizations
and other interested groups say yes.
According to the Gallup Organization, in
2000 women ranked financial issues as
the most pressing personal concern in
their lives — ahead of family, health,
time and stress and equal rights.
Women face issues similar to those
of their male counterparts. They have
the same need to budget their income
wisely, carry adequate insurance, maintain
good credit, set aside sufficient
savings, plan for goals and do effective
estate planning. All of this can seem
like a daunting task.
In a 1997 study by Dreyfus and the
National Center for Women and
Retirement Research, they found that 33
percent of women investors avoided
making decisions out of fear of making a
mistake. They go on to say that as a consequence
of this fear women often defer
financial decisions and money management
to the men in their lives.
A survey conducted by Oppenheimer
in 2005 found that women are
much more informed about financial
matters than they were 10 years ago.
But they also say that only 14 percent
of women have $100,000 or more
saved for retirement and only 47 percent
who invest know that stocks have
been the best-performing asset class
over the last 30 years.
WHAT DOES THE
RESEARCH SHOW?
Why is financial literacy and money
management so important for women?
The statistics tell the story:
• Women still make an average of
$.76 for every $1 earned by men.
• The average woman spends 15 percent
of her working years outside the
work force caring for children and elderly
parents. (Source: Women’s Institute for
a Secure Retirement)
• Women retirees receive only half the
average pension benefits that men
receive.
• Fifty percent of marriages end in
divorce. (Source: Women’s Institute for a
Secure Retirement)
• Women outlive men by an average
of seven years and are often widowed by
age 56. (Source: United States
Department of Labor)
• From 80 to 90 percent of women
will be solely responsible for their
finances at some point in their lives.
(Source: National Center for Women and
Retirement Research 1996)
The statistics reveal that women need
to save more and invest more wisely for
their financial future. The good news for
women is that there are many more
resources available to aid them towards
financial independence. Whether books,
seminars, financial advisors, Web sites or
other printed materials, most resources
have as their goal to help the investor
better understand not only the terminology
but the many investment choices
that can be made.
From the research and statistics, it is
clear that women need to be effective
money managers. There are a few money
strategies that once implemented can
have a large impact on our financial
future. The earlier we start, the larger the
rewards can be.
STARTING IN YOUR 20s
Budget: Have a workable budget,
know where your money is going, and
monitor your expenses. Financial advisors
will tell you that one of the best ways to
become financially independent is to live
below your means.
Savings: Have a savings account.
Ideally, set aside a reserve of three to six
months of monthly expenses. Then if
some unforeseen financial event happens,
you can meet the need. It’s also a
good idea to save for large expenditures.
Credit: Monitor your credit and maintain
a good credit rating. Over the course
of your life this could save you thousands
of dollars.
Retirement: If your employer offers a
retirement account, start contributing. If
you are self-employed, consider establishing
your own retirement plan. Further,
consider opening your own Individual
Retirement Account, either a regular IRA
or a Roth. Consider opening a nonretirement
investment account.
Insurance: Seek out an insurance
professional who can help you protect
your assets with insurance.
Financial advisors: Consider seeking
professional financial advice. Many
advisors devise financial plans for their
clients and include projections to be
sure that you meet your financial needs
at retirement.
Estate planning: Wills and trusts are
an important part of estate planning.
WHAT TO DO AFTER 40
Money management: Continue
with a good workable budget, make savings
a habit, maintain your good credit
standing.
Investments: As you get closer to
retirement, carefully review your investments
to make sure that you will have sufficient
assets to retire. Review your portfolio.
You may want to reallocate investments
to meet your retirement timeline.
Also consider annuities as a way to supplement
monthly income in retirement.
Estate planning: Periodically have
your wills and trusts reviewed to make
sure they reflect your current situation.
You may also want to review your insurance
needs.
Every woman’s situation is different.
This list of suggestions does not include
every possible scenario. It is important
that you seek professional advice.
Your money management style and
the decisions you make about your
money will dictate your future lifestyle.
How you choose to manage your money
and your assets could be the most important
decision you ever make.
