Thinking About Money: Financial Tips For Women

By Sharon Secor,
LendersMark.org Staff Writer
Whether it is a result of nurture, nature, or some combination of both, the fact remains that women and men do think and behave differently in many aspects of life, including those related to money and finance. When it comes to money matters, women have financial circumstances and needs that differ from those of men. For women, then, skilled money management includes taking such factors into account when making choices for today and when making plans for the future.

Fundamental Differences

While there can be many subtle differences in the ways that women and men approach financial matters, there are a couple fundamental differences that seem to affect all others. Awareness of these potential differences and how they may affect financial decisions and practices can help improve money choices.
Jay MacDonald of Bankrate.com points out that women and men are socialized differently from birth, and that that socialization carries over to the way each views and uses money. In his interesting article, he discusses how those different patterns of socialization affect spending and saving practices. In the past, women were brought up with a vision of their future that was more focused on being a wife and mother. Thus, their financial skill sets tended to place more emphasis on developing domestic economy skills rather than the types of financial planning skills necessary to live independently over the long-term and provide themselves with a fiscally secure future.
While those differences are not as severe today as they were then, MacDonald correctly states that “our socialization, a trained behavior, is primarily modeled after our same-sex parent.” That means that the residual effects of the socialization of our parents lingers on and can affect how we view and use our money today.
Another fundamental difference is that women tend to make less money than men. This is due to a variety of factors, including workplace inequities that have yet to be resolved by the equal rights movement. The course of a woman’s life is also an important factor in why women tend to make less money. Women are more likely to take time out of the workforce to bear and rear children. This not only affects the immediate salary, but career advancement and retirement benefits.

Different Financial Needs

Women, as a statistical group, have different financial needs than men do. Women, on average, live longer than men do. Therefore, it is essential that women plan financially for their elder years, as the odds are that they will outlive their spouse or partner. The number of widows living in poverty is astounding, but smart, forward-looking financial planning can help to avoid this.
Another significant difference in financial needs has to do with the rearing of children. With the rate of divorce being what it is, many mothers find themselves raising their children on their own. After divorce, it is still the woman that typically experiences a decline in lifestyle and a decrease in financial stability.
Women raising children alone make up a huge percentage of the nation’s poor. Even with child support payments from fathers – something a large number of women do not have the benefit of – the real life, day-to-day expenses involved in rearing children can be overwhelming. For women, particularly mothers, financial planning should take into account this potential. It’s better to be safe than sorry, and if the marriage survives and single parenthood doesn’t happen, then there’s a tidy little nest egg for college, retirement, or a celebration of making it through the good times and the bad times successfully and together.

Financial Tips For Women

• Those are just a few of the issues that can make women’s financial planning needs differ from those of men. Here are some tips that take those differences into account:
• Take the steps to become educated about money and finance in both the broad sense and within your personal life. Be an informed and active part of your family’s finances and fiscal decisions.
• Invest in yourself. Too often, women don’t make real investments – buy a house, start retirement accounts, engage in serious financial planning and investing – during their 20’s and 30’s or while they are single.
• Question your spending motives. Don’t fall prey to emotional spending, to using shopping as a means of feeling better when experiencing a period of stress or of feeling down, or something more serious, such as depression. If there is an underlying issue, address it. You and your bank account will be better off.
• Budget like you really mean it.
• Recognize that the odds are that, as a woman, your overall earnings are likely to be less. Increase the percentage of your income that you save to offset that difference.
• Prepare for potentials that are unpleasant to consider, such as marital breakup and single parenthood. Do your best to have separate, private just in case savings.
• As a woman, you are likely to live longer than your spouse or partner. Be sure that your retirement planning reflects that likelihood.