I have long advocated that women take an active role with their spouses in the management of household finances.
Even if you’re not interested in the subject and would rather cede that role to your spouse, you should force yourself to get involved because you will likely outlive your husband or partner and will have to manage the finances on your own.
Insurance company Allianz found that women in modern families still report “surprisingly” traditional concerns and behaviors when it comes to finances.
“The things that concern women the most are often the risks of the unknown, and women just worry more about money,” said Aimee Johnson, Allianz Life Advanced Markets manager. “By taking a little bit more of a passive approach to their finances, they don’t feel as burdened with making the decision.”
In its study, Allianz found that 55 percent of women said they have joint responsibility for household financial management and planning.
However, more men than women said they have full responsibility and final say of the household financial management.
Not all women are passive when it comes to family finances. I know many women who are equal partners with their spouses when it comes to making major financial and investment decisions.
But women do have additional concerns when it comes to money for several reasons:
They most likely will outlive their husbands and partners, which means that their money will have to last them longer.
“If they happen to outlive their male spouse or partner, that’s a huge problem because it could be that they’re really diving into the financials for the first time in their life or very late in life,” Johnson said. “They’re trying to become educated, engaged and informed often at a very emotional point in their lives.”
They often make less than men, although women’s earnings vs. men’s have improved over the years.
In 2013, women made 78.3 cents for every dollar men earned, up from 60.2 cents in 1980, according to the nonprofit Institute for Women’s Policy Research.
During the past three decades, inflation-adjusted median earnings for women’s full-time, year-round work spiked nationally, from $30,138 to $39,157. Men’s earnings decreased slightly, from $50,096 to $50,033.
Women also often leave the workforce to care for family members. That not only affects their current income, but also their retirement income. For instance, Social Security benefits are calculated on the highest 35 years of earnings.
Also, traditional pension plans use a formula that usually involves salary and years of service to figure the benefit amount earned. The longer someone works under the same traditional pension plan, the larger the retirement benefit.
“As women, we face unique and sometimes overwhelming challenges when preparing for the retirement that we envision,” said Eleanor Blayney, consumer advocate at the Certified Financial Planner Board of Standards in Washington, D.C. “Men are typically well ahead of women in terms of financial security and the resources they bring into retirement.
“Given this reality, women must plan with equal parts strategy and tenacity in order to reach our retirement goals.”
That means getting educated.
“I encourage women to really get involved now, understand now, get educated now and become more engaged now,” Johnson said, “because regardless of what life throws in your direction, you’re prepared at least from an educational and financial standpoint to deal with those things.”
Pamela Yip is a personal finance columnist for The Dallas Morning News.