At some point in time, you’ve probably come across the rather sobering statistic that whether single by choice, through loss of a spouse/partner or as a result of divorce, 9 out of 10 women will at some point in their life be solely responsible for their financial well being. Yet for a multitude of reasons – from the gender pay gap to fewer earning years as a result of care giving responsibilities – women tend to also have significantly smaller financial safety nets. The two conspire to make the need for careful and thoughtful financial planning all the more critical.
The time to get your financial house in order and gain a clearer understanding of your total wealth picture is today, long before you suddenly find yourself thrust into a stressful situation where you’re forced to make important financial decisions on the fly.
But where do you begin? How do you get started? The following are a few practical and actionable steps that will help you on your journey.
Step 1: Know your family’s balance sheet
Even if a spouse handles most of your financial affairs, at a minimum you need to have a solid understanding of your assets and liabilities. Make a list of all bank and brokerage accounts and approximate balances, as well as the location of any safe deposit boxes. Estimate the value of any business ownership or real estate interests and take time to review both the value as well as the beneficiary designations on any insurance policies. Itemize any liabilities including outstanding mortgages, loans and lines of credit. And finally, make sure you understand the provisions and beneficiaries for any trusts you might own.
Step 2: Keep important documents in a safe place
In the event that an unexpected event necessitates taking financial action, you don’t want to be scrambling to find important documents and papers. Gather together your Wills, insurance policies and any trust documents along with account numbers, user IDs and passwords, and keep them in a secure location.
Step 3: Don’t wait to establish credit in your name
At a minimum you should have at least one credit card solely in your name (not a joint account) that you use regularly to help establish an individual credit history. Far too many married women quickly find out how difficult a simple thing like establishing credit can be in the event of divorce or the death of a spouse when all their accounts were held jointly.
Step 4: Do your homework
No gender has a monopoly on financial competency. Everyone (male and female) learns about money and financial planning the same way – through reading, asking advice and learning by trial and error. Knowledge is power, so don’t be afraid to ask questions and seek out information and answers. You don’t need to be a financial expert to take charge of your money.
Step 5: Participate in the financial conversation
Sit down together with your spouse/partner and your advisor and have a frank conversation about your financial future. Are you both on the same page when it comes to your retirement needs, wants and wishes? Are you both comfortable with where your assets are invested and the amount of risk you’re assuming? Your advisor will help you assess what you’ll need to save to reach your goals, and find an investment allocation that will help move you from financial stress to confidence.
Whether you feel financially knowledgeable and prepared, or need to catch up…whether you’re sharing your life with another or going it alone…it’s your life, your future, and your money. Take charge of it.
This content does not constitute legal, tax, accounting, financial or investment advice. You are encouraged to consult with competent legal, tax, accounting, financial or investment professionals based on your specific circumstances. We do not make any warranties as to accuracy or completeness of this information, do not endorse any third-party companies, products, or services described here, and take no liability for your use of this information.