Women and money: From first-time on your own to end-of-life decisions
For much of history, women lacked control of their money.
Women handed over property and wealth to their husbands upon marriage, and while usually granted a household stipend and spending money for themselves, law and custom frequently prevented them making major decisions about their own funds. Women could be widowed or divorced and left with no means of support. They could leave little of consequence to their daughters, thus perpetuating financial poverty and ignorance.
Times have changed, but when it comes to managing money, many women have yet to change their mindset. They still consider their parents or the arrival of a life partner to help manage their assets more important than learning to do it themselves.
A practical approach to changing women’s outlook on their assets is looking at life’s stages, and what they mean in terms of money management:
Savoring the single life while saving money:
- Put together a realistic budget: Use paper and pen, spreadsheet or a service such as Mint, Quicken or You Need A Budget. Use enough categories to account for spending and have one for mad money – to do whatever you want.
- Pay your savings first: Decide on a set percentage of your paycheck that goes into retirement fund and an emergency fund. The end of your working life isn’t far away and life’s “Oh $!#*” moments happen.
- Use coupons, think off-season, find free: Not every activity has to cost money. Supplement your singles budget with free or inexpensive outings, find off-season bargains and use apps and coupons to save money.
- If your job offers a 401(K) or other investment program, use it: Many companies match the money you invest up to a certain percentage. The company is giving you free money; take it and do not borrow from that fund. Roll it over to another retirement fund when you move on.
That special someone: marriage and money
- Conducting THAT conversation: When you know it’s serious and the romance will advance, be bold and speak your money mind. It helps if you establish early on that you are a willing and equal financial partner in the dating game (going halves on dining out, cooking a special meal).
- Same page, same chapter, same book? You and your partner-to-be don’t have to agree exactly when it comes to managing money. It does not hurt to agree on the major points, such as combined versus separate accounts and who pays for what expenses.
- Think on a timeline: You are together until death do you part. You don’t need to buy a house a month after the wedding. Take time, save money and research what you want and where you want to live before making that investment.
- Wills and power of attorney: Marriage means updating your wills so each of you knows the other’s decisions. At the same time, consider preparing power of attorney paperwork so you can act for the other if a medical crisis occurs.
Isn’t (s)he precious – and expensive!
- That bundle of joy is a joy – and it’s going to cost you: about $234,000 from birth to age 17. And that’s without the costs of giving birth or sending the child to college. Once having children is an agreed-upon part of your lives, start saving.
- Research state-funded college tuition programs and prepaid college tuition plans and invest money early.
- Babies need food, clothing, shelter, love and attention. The latest gadgets cost money you could invest in their future. Skip the fancy toys or find them secondhand.
- Raising children is a blur of expectations, hopes and dreams, and all the bills that come with it. Encourage your kids to follow their desires, rather than live out your expensive failures.
When there’s no happily ever after
- Divorce and widowhood happen; financial poverty is preventable. Have funds of your own at all times. Keep that money separate and in your sole control.
- Know the basics of your household budget, even if you are neither spending nor earning most of the income. This knowledge will help when suspicious bills arrive in the mail, or collection calls start.
- Know your rights: You can receive Social Security benefits if widowed or divorced, but certain circumstances apply.
- Divorce is painful and expensive, and investing in an attorney to protect your interests and assets is the least expensive part of the process.
The time to talk about life’s final journey
- Will you have enough? It is a worry that women face because they tend to earn less over a shorter and less-stable working life. Can you make the money you have last a lifetime by working longer, living in a group home, downsizing or moving to a lower cost of living location?
- Consider your loved ones and the pain and confusion they face if you don’t face the issue of death and money. Keep your will updated and make sure copies are available. Complete a living will and advanced directive so your end-of-life decisions are known.
- Keep copies of your credit cards, Social Security card, passport, banking information, insurance policies and computer passwords in a “death file.” Survivors will need this information after you die to make important phone calls, pay final bills and close down accounts.
- Plan your funeral ahead of time. The average cost of a funeral is just over $7,000. While death is a certainty, the exorbitant expense isn’t when you chose and pay for the arrangements in advance.
Contact me today by clicking here to schedule a life line session to help you transition into financial independence.
Getting Serious? Be Sure to Discuss These 5 Topics Before Taking the Leap
Dating in a “swipe right” world is much different than how your parents dated. Courtship has evolved into speed dating, dating apps, and inflated profiles. The good news is one aspect of dating hasn’t changed. Discussing life-changing deal breakers before making ultimate commitments is still a best practice. If you find yourself in a semi-serious relationship and are contemplating a commitment, be sure to address these common social topics, and their financial implications before moving forward.
Wanting or not wanting children can make or break a relationship instantly. Know your preferences and don’t be afraid to engage in this conversation. Whether or not to have children can be a dynamic, life-changing decision. It also comes with a financial commitment of child-rearing costs, daycare, and tuitions. Make sure your partner shares your views.
Where to Live
If you’ve dreamt of country living and imagine yourself raising a family in a rural setting, you need to share this with your partner to make sure you’re not committing to someone who feels just as strongly about living in the city. Where you plan to establish your family will also have financial implications. Be sure to discuss your expectations so you can prepare together how best to manage the cost of living in your dream location.
We often avoid discussing religion when we’re starting off a new relationship. However, if you’re considering a long-term commitment, it’s probably best to have these discussions. Aligning your moral compass with someone may be simple but adhering to a series of spiritual requirements or adopting a new faith altogether might be a deal breaker. Be candid and honest about what you expect. Religion can play a part in every aspect of life together including ceremonies, child-rearing, and obligations.
Division of Finances
Be clear about your spending decisions, setting up finances and investments. If you’re adamant about maintaining your own accounts, discuss it with your partner. Maybe you both agree to make all of these financial decisions together and jointly. Don’t be afraid to discuss credit scores, outstanding debts and plans for long-term savings. The more you’re able to address up front, the easier the transition will be into a committed partnership.
Maybe your dream is to be an entrepreneur. Maybe you want to climb the corporate ladder with your firm. Maybe you don’t want to work at all. Talking about your career goals and understanding your partner’s career goals can uncover potential deal breakers. Career choices will also directly affect your income as a household.
Disagreeing on any of these topics doesn’t necessarily constitute a breakup. It will, however, be a good indicator of shared beliefs and relationship compromise. Stick to your guns on those most important to you, but don’t be afraid to negotiate others. Compromising and settling are very different. Be willing to compromise, but don’t settle for someone who challenges your core beliefs. Discussing these before walking down the aisle can help eliminate a lifetime of resentment or costly separation later.