Tuesday, December 9, 2008

Women and money, revisited

There's a stereotype that's been perpetuated through the years and it goes a little something like this: Women are fickle and tend to spend more than their male counterparts.

Not only that, but women tend to rely on men more for financial planning -- I don't necessarily mean shacking up with a sugar daddy, but statistically we lean on the men in our lives (our fathers, husbands, etc.) to help plan our financial matters. Many of whom could have been financially savvy dolls often find themselves not peddling through the Napa vineyards with their Loves, but rather sitting across from a personal accountant after being widowed or divorced, scratching their fabulously coiffed heads and wondering how they got there. Even if your future is void of divorces or deaths (fingers crossed), if you don't save now, you could still find yourself 40 and penniless, all because you failed at coming up with a pre-game strategy, and well, figured all those lunches out with friends and errant shopping trips wouldn't really matter.

Guess what? In the long run, they do:

  • At some point in our lives, 9 out of 10 women will be solely responsible for their finances.
  • The average age of widowhood in the U.S. is 56.
  • On average, women live 7 years longer than men.
  • Women live more than 19 years in retirement.
  • The median income for elderly women is $8,198.
  • Women collectively earn more than $1 trillion a year.
  • Nearly 70% of women say they have no idea how much money they'll need for
    retirement.
  • 53% of women are more likely to spend rather than save for their future.

Ladies, let's be serious -- for many of us, shopping is not only a hobby, it's a way of life ... an addiction, if you will. But $1 trillion is a lot of potential savings. There have been many times in my life when I just think "oh, it's just one shirt . . . just one pair of heels," but all those "justs" add up to what could have been a substantive amount to retire (hopefully early!) on. You can't make a pair of killer Christian Louboutins make money for you, but when invested right, you can make killer returns off your savings.

Now I'm not advising to go cold turkey and wean yourself off the bottle completely -- every stylish woman needs a cocktail once in a while and perhaps a cute handbag ... or dress ... or, well, you get the point. But you need to set limits and know that before you buy anything, you need to pay yourself first, which means setting aside a money after you get paid (and after your Roth is paid), that you can put into an investment vehicle such as a CD.

The stats I mentioned prove that while us women are bringing home the bacon, we have no ... er, bacon ... to divy up at the end of the day. Here's why:
  • We often don't set a monetary goal for where we need to be at retirement.
  • We start saving and investing later in our lives and don't have as many working years as men. The average woman spends 15% of her career out of the paid workforce, aka the "sandwich generation" -- caring for children, then elderly parents.
  • 76% of women are too conservative when it comes to investing, where only 64%
    of men consider themselves conservative investors. Women often pass up excellent investment opportunities because we are too afraid to take the leap.
  • Just 53% of women, versus 82% of men feel confident in their investment know-how. That often stops us from making necesarry decisions, also limiting our returns.

For all us money honeys out there, this is a wake-up call to begin planning our financial futures. Don't know the first thing about investing? For a fabulous "how to" on all things investing, visit http://www.fool.com/school/basics/basics01.htm and educate yourself.

And here's a good start for now: Make a list of what you own (bank accounts, stocks and investment, real estate, retirement plans). Then figure out how much you owe (include all bills, i.e., car payments, credit cards, school loans, house payments, etc.).

Now how much money goes toward your List of Woes, I mean, Owes? It's not as easy as simply counting the big, reoccuring payments every month. What makes or breaks many woman's 10- or 20-year plan is that they don't budget for the basics. Can't live without getting your nails done? (This frugal saver would tell you do your nails yourself, but that's a different matter). Need your Starbuck's fix every morning? How much do you drive on average per month and what is that costing you in gas money? What's your monthly budget for clothes? It's these kind of dollars that hold many back from achieving their financial dreams because they aren't budgeted for in the present, therefore they quickly add up. I don't know about you, but I really want those routine trips to Italy, and I want to be able to retire early enough to enjoy them!

7 comments:

Budget Save Buy said...

Great post! I completely agree that women definitely need to be in charge of their finances. I think it's interesting that while my dad was the one to teach me about the stock market, it was my mom who taught me, at a very young age, about the importance of balancing my checkbook, paying myself first, and never living above my means. We can still have that something extra but always after our finances are in order first.

Budget Mama said...

Like Budget Save Buy said, my mom was extremely and still is excellent with money and passed down a lot of money lessons to me. My dad was also great. Not sure how I turned out so bad.

If you can believe it, my ex- husband is worse than me and would leave all the financial planning to me.

So far I cleared almost 20% of our debt since August to now. So not too shabby. My debt has nothing to do with shopping and mostly to do with DS.

I'm one of those rare women that don't really shop. I may buy a shirt from Ross every year, but that's about it-lol.

I'm trying to learn from some mistakes and getting a late start on the financial freedom wagon.

I think this was a great post, lots of points hit home.

Julie said...

Love this post, Brunette! I agree that too many women do not take an interest in their own finances. I understand most families have one person that does the bills and finances (that is me) but both parties should understand what is going on with the money! I have a son and a daughter and I definitely want them to know independence and understand finances.

Money Minder said...

Great minds think alike. I posted about this very same subject on Monday.

The pf blogosphere is full of financially-minded women, but we are not the norm (yet!)In my real life, I am afraid for many of the women I love. They are unprepared, and most of them don't seem bothered by it.

Abigail said...

Good piece! Women tend to spend too much time taking care of others and not enough planning for their own future.

Although in my generation, I see a lot more women serious about money than men. The men of our generation always seem to be into buying the latest gadgets and doodads, cost be damned

Fabulously Broke said...

Actual stats really help drive the point home. Great post. AM linking to this.

Crystal said...

Thank you all for reading! Enjoyed hearing your personal experiences/thoughts. :)

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