October 27, 2017
When you gather women investors, advisors and financial experts together, it's a great chance to talk about women owning their financial lives. And we did. Together with Redbook Magazine, we recently held the first event in our series, Your Time Is an Asset. We called this one "The Time Is Now," because women shouldn't wait to take charge of their finances. There is just too much at stake, from missing out on choices to facing financial crises. It really comes down to women building their financial knowledge and getting expert support so they can manage their money effectively.
To get women started, we focused on two things at the event. One was to help women see that because they are potentially living longer and facing higher expenses, they need to save more for the future. The other was to help them make the most of the choices they have today, by understanding the related financial consequences and making their own best decisions. Our panel of experts — Meredith Rollins, editor-in-chief at Redbook, Maureen Kerrigan, a financial advisor with RBC Wealth Management, and Nicole Lapin, a financial journalist — offered three key takeaways.
Don’t be afraid to ask questions
While everyone wants to feel financially secure, according to Redbook, many of its readers have been afraid to ask the questions and get the education needed to make that happen. Whether they feel embarrassed about what they don't know or confused about what they've heard, women need to reframe that thinking. Lack of financial knowledge isn't a comment on intelligence; it's a function of what we haven't had a chance to learn. There's very little attention paid to financial literacy in our education system, and many families these days simply don't talk about how to handle money. As Nicole pointed out, "Money is a language, but we don't learn it in school."
The trouble is, without that knowledge and without asking questions, women lose their confidence with respect to money matters. Many end up stepping back to let their spouses take over the finances. Meredith did that when she got married. But a visit to a financial advisor that left her feeling like she didn't have a seat at the table actually drove her to add more financially related content to Redbook in order to help other women avoid feeling the same way. That experience aside, engaging with a financial advisor, especially one who recognizes many of the unique challenges women face in planning their financial lives, is a worthwhile exercise.
For those suddenly left without a spouse, whether through death or divorce, lack of knowledge can lead to financial crisis. Maureen told us how, after her father died of a heart attack while walking back from mailing her brother's last tuition payment, her mother said she didn't know where the checkbook was and wondered if she would be OK. Sometimes an experience like that drives women to learn. In Maureen's case, she said it made her vow never to let someone else take control of her finances. But, there's so much more women can do now to make managing their financial lives less reactive and more proactive.
Act, don't react
And that brings us to the second takeaway from our session: Women need to build their financial knowledge and plan ahead, rather than only dealing with finances when a life event or crisis forces the issue. In other words, don't just let your financial life happen. Make it happen.
It's impossible to avoid every financial curveball. But if women understand their choices and the financial consequences that come with them, they can actually make better decisions and get more out of those choices. It's all about planning finances in line with personal goals. For example, a woman who plans to have children and take time out from work has to recognize the financial impact of that decision — potentially giving up salary increases and not saving for retirement through a 401(k) while she's out of work. Now that's a very personal decision, but women can plan ahead, by saving more when they are working to make up for those years of missed saving. Or, women who look ahead and recognize that at some point they will be "sandwiched" between caring for children and caring for elderly parents might take proactive financial steps to keep from derailing their own security.
As we stressed during our session, while it's never too soon to start saving, it's also never too late. In fact, Maureen said every time she got a pay raise, she saved half, figuring that she didn't make that much money the day before, so keeping half was still something extra. And, definitely work on a budget, which doesn't have to be complicated. Nicole talked about the three Es of budgeting:
- Essentials – 70% of the budget (transportation, housing, food)
- Extras – 15% of the budget (lattes, entertainment)
- End game – 15% of the budget (vacation, retirement)
She described good budgeting as more of a sustainable spending plan — much like long-term healthy eating rather than crash dieting.
Partner in planning
One way to pull these suggestions together — asking questions, educating yourself and planning ahead — is to work with a financial advisor. Women don't need to make or have a lot of money to work with an advisor. At MFS®, we work with financial advisors all over the country, and there really is someone for everyone. The expertise of a financial advisor can be invaluable. Just as we all go to a doctor, rather than trying to diagnose our own illness, a financial professional can offer solutions we might not get to on our own.
Another way is to take full advantage of financial education resources tailored to women. And that's where MFS can help. We've created a full suite of resources — for women and advisors — here at yourtimeisanasset.com, because, for women, we believe that knowledge empowers.
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