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 The important issue here isn’t outdated gender roles, it’s the need for couples to commit to an active interest in their family’s financial future, together.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.
KWMG, LLC’s dba Keen Wealth Advisors (“company”) is an SEC Registered Investment Advisor located in Overland Park, KS. The company and its representatives may only conduct business in those states where registered or where excluded/exempt or from licensure. For registration information please contact the SEC or the state securities regulators for the states where the company is notice filed. A copy of the company ADV is available upon request. Advisory services are only offered to clients or prospective clients where the company and its representatives are properly licensed or exempt from licensure. No advice may be rendered by the company unless a client service agreement is in place. This information is not intended to be investment advice or construed as a recommendation or endorsement of any particular investment or investment strategy and is for illustrative purposes only. Clients and prospective clients must consider all relevant risk factors involved with each strategy, including costs or fees, and their own personal financial situations before trading.
The views outlined in the book, Keen on Retirement Engineering the Second Half of Your Life, are those of the author and should not be construed as individualized or personalized investment advice. Any economic and/or performance information cited is historical and not indicative of future results. Economic forecasts set forth may not develop as predicted.
The Amazon Best Seller ranking listed on marketing materials is specifically referring to Best Seller rankings for the Kindle Top 100 Paid Lists under the subcategories of: Budgeting and Financial Risk Management, based on data as of September 5, 2019. Amazon rankings although relevant on how a product is selling overall doesn’t necessarily indicate how well an item is selling among other similar items or similar item categories. Amazon may choose the most popular categories or subcategories within which an item has a high ranking to determine its best seller rankings. These rankings are updated hourly and as a result, should be expected to fluctuate as such. Keen Wealth Advisors and Amazon are not affiliated entities.
The Steve Sanduski Advisor Network, Belay Advisor, LLC and other third-party contributors to our blogs and podcasts are not affiliated with Keen Wealth Advisors.
For additional details on Keen Wealth Advisors, please visit https://www.keenwealthadvisors.com/important-disclosures.