In finance, as in life, it’s never a good idea to generalize. However, in my experience as a fiduciary advisor, there are some generalizations that you have to discuss openly in order to provide your clients with the information they need.
I covered one such topic in a recent blog post: women do indeed run a higher risk of running out of money in retirement than men. Why? Because women tend to live longer than men, and because many women are not the “financial spouse” in the relationship. I’m glad to see this old-fashioned dynamic is continuing to fade away, and at Keen Wealth we ask married clients to attend meetings together so that both spouses understand the family’s financial strategy.
Unfortunately, I think this particular generalization about how couples divvied up financial responsibilities in the past is also responsible for some persistent and hurtful myths about women and money. Today, I’d like to put four of the biggest myths to bed, hopefully for good!
1. Women need more help managing their money.
Certainly, the single women we work with at Keen Wealth need no more or less help making financial plans than single men.
As for married couples, as I’ve discussed, we’re seeing fewer and fewer couples devote full financial responsibility to one spouse, especially since both are typically working these days.
It is both sad and true that many older women may have been told that math, science, and finance were “for boys” when they were growing up and never pursued those topics as much as their husbands did. But frankly, financial education is a widespread gap in the US that spans men and women, the young and the old.
Luckily, it’s never too late to start learning, especially if you’re working with a fiduciary advisor.
We don’t expect our clients to become financial experts, but we do want them to understand basics like how a Roth IRA works, why their investments are diversified, and why they should or shouldn’t take Social Security early. The important issue here isn’t outdated gender roles, it’s the need for couples to commit to an active interest in their family’s financial future, together.
2. Women are more risk averse.
It’s true that some recent studies have found that women have less invested in securities and retirement accounts than men. But how women allocate their investments doesn’t really explain why they do so.
One big reason: the wage gap. Working women continue to earn less than men, and there are still plenty of women who are primarily homemakers and caregivers to children. As a result, yes, women invest less, but the same is also true about men who are low earners. The less people have, the less they’re usually willing to entrust to the markets.
Of course, just because they’re investing less than men doesn’t mean women aren’t investing at all. And in a married household where the husband is still the primary breadwinner, both spouses’ retirement assets are probably pointed towards the same shared goal, no matter who nominally has more.
But if you or your spouse still get jittery thinking about market volatility, call up your fiduciary advisor and have a chat about how your investments are structured for the long haul.
3. Women are bad with money.
The husband works hard earning the money, the wife spends it all on shoes.
It’s incredible how many folks still buy in to this sexist myth about women … especially since current research suggests that the OPPOSITE is actually true! As attitudes about male appearance and self-care have shifted in recent years, men are the ones spending more time and money shopping for clothes. Studies also show that men are much more likely to splurge on big ticket items like cars and home entertainment, whereas women, as a whole, spend more slowly over time.
But the real reason I’m even bringing up this ridiculous myth about women is how it ties into the previous point about women being risk-adverse. Women might not be investing as much as men, but that doesn’t mean they’re spending what they earn. They’re saving it, and, as a whole, they’re doing a better job than men are. Plus, women who do work and are eligible for retirement benefits are investing more of their salaries into those precious 401(k) accounts than men are.
4. Women lack confidence about money.
It’s not uncommon for the business and finance industry to associate quick, direct decision-making skills with men. However, that doesn’t mean women, by comparison, aren’t confident or assertive. It just points to how men and women often approach problems and learning in different ways. Women tend to ask more questions so that they can make better-informed decisions. And the decisions they’re ultimately making are much bigger than the myths about women and money would have you believe. A recent study found that 52% of women in a relationship are the ones managing money for their households.
Funny, I don’t recall any headlines flipping that kind of data around and saying “Less than 50% of men are confident enough to manage their household’s money.”
So how do we get rid of these myths about women and money for good? I really believe that it starts at home. Your kids aren’t learning personal finance basics at school. And no matter how much progress we’ve made, there are still stereotypes and prejudices built into our society that steer too many girls away from these important topics.
I’ve emphasized to my own daughters that they are both responsible for and capable of ensuring their financial security. Hopefully other families are doing likewise so that the next generation of women won’t have as many obstacles standing between them and their full potential as investors.
Bill Keen is a CHARTERED RETIREMENT PLANNING COUNSELOR℠ and independent financial advisor with more than 25 years of industry experience. As the founder and CEO of Keen Wealth Advisors, a registered investment advisory firm, he specializes in providing personalized retirement planning designed to help people thrive before and during their retirement years. With a passion for educating others, Bill regularly blogs about retirement planning, hosts the podcast Keen on Retirement, and has contributed to U.S. News and World Report, Reuters, Wall Street Journal’s Market Watch, Yahoo Finance, and other publications. Based in Overland Park, Kansas, Bill and his team work with clients throughout the greater Kansas City area and across the nation. To learn more, connect with him on LinkedIn or visit www.keenwealthadvisors.com.
Keen Wealth Advisors is a Registered Investment Adviser. Nothing within this commentary constitutes investment advice, performance data or any recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Keen Wealth Advisors manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed here. Investments in securities involve the risk of loss. Past performance is no guarantee of future results.