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Why is financial literacy a woman's issue?
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Finances are a critical life issue for everyone but especially for women who still earn less than men on average. Not only do they earn less, but they often spend fewer years in the workforce if they raise children so their career path is often less straight forward and profitable than a man’s.
A report by the U.S. Bureau of Labor Statistics last year stated that women earn about 80 percent as much as a man. In addition, women live an average of six years longer than men. The challenge for women is to accumulate enough savings for retirement even though they earn less over the course of their working lives than men do.
But women have husbands who earn more don’t they? About a third of first marriages fail and about half of second marriages end in divorce with women often getting meager settlements. A contributing factor to women exiting a marriage with few assets is their lack of participation in the family finances. Many women view finance as a man’s domain and so they don’t stay informed when it comes to their money. This lack of knowledge can place them at a distinct disadvantage in a divorce, especially if the husband plans ahead, moves assets and then springs the divorce on the stunned wife.
Here are some steps that women can take to improve their financial knowledge and protect themselves.
Always participate in family finances. Know what you own and where it’s located. That goes for real estate, stocks, bonds, saving and checking accounts, safe deposit boxes, loans, charge accounts, jewelry, antiques, and art works of value. Also be aware of all loans and accounts that you owe.
Have separate credit card accounts in your own name. If you are only listed as an authorized user on an account with your husband, then you aren’t generating your own credit history. If you suddenly find yourself single again, you will have a hard time establishing credit and getting good interest rates.
Stay involved in your career. Even if you leave your job to raise your children, try to keep up your skills and your contacts. Consider taking on part-time contract work whenever you’re able to. When doing charity work, find projects that tie in with your skills so that you can include them on your resume.
Continue to save for your own retirement. Women often use their wages to pay bills, pay the mortgage, and even to put their husbands through school. These worthy causes deserve your investment but financial planners will always tell you to “pay yourself first” meaning, to put money away for yourself. Many an ex-wife has found that after paying for her husband’s degree, and for the mortgage, she can’t claim any of his retirement savings. Even if you aren’t employed you can still put up to $5,000 a year into your own spousal IRA.
Get a financial advisor if you’re going through a divorce. You’ll need someone to help you focus on the financial issues so that you have a better chance of ending up with enough money to live on. After all, it does you no good to get the house if you don’t have the income to pay the mortgage, taxes, and upkeep.
For more information:
Women’s Institute for a Secure Retirement
The Women’s Institute for Financial Education
MoneyWise Women
I now pronounce you husband and cosigner
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