Ms. Financial Literacy

Financial Empowerment, Girlfriend to Girlfriend Money Chat, Women and Financial Literacy

Girlfriend to Girlfriend Money Chat: The Challenges and My Vision

girlfriend to girlfriend money chat

Part I of Girlfriend to Girlfriend Money Chat looks at some of the reasons women generally refrain from talking about personal finances with those they’re close with. Then, I share some of the internal struggles I’ve been experiencing, my vision for my girlfriends (and other women around the globe) as related to their financial confidence and sense of empowerment, and a plan of actions so that my behaviors align better with what matter to me.

In the same Money Fit Women Study I referenced to in a previous post, the survey also revealed that despite a substantial percentage of women having expressed the desire to become more engaged with their finances, many felt uncomfortable discussing money topics with their friends. Let’s take a look at the statics below:

girlfriend to girlfriend money talk challenges

After reading the survey results, the psychologist in me immediately got to work and started examining the dynamics within my circle of friends.

My Circle of Friends

It’s true that my friends and I rarely discuss our financial situations with each other. I’ve never thought about it this way prior to having read the survey results.

So what did my girlfriends and I typically chat about? Discussion topics usually varied from tips on styling our hair, shopping for a pair of over-the-knee boots, which dentist to go to, who to hire to remodel our kitchen, which tailor to use, how to shop for our significant others, what to wear for a first date, how to cook quinoa, which Netflix show to watch next, how to create a pivot table on Excel, what to wear with a pencil skirt, which bakery offers the best scones, and the list can go on and on. However, our conversations rarely centered around discussing personal finance topics. As most of my girlfriends are currently between the ages of 25 and 40, many of our recent discussion topics revolved around parenting, in-laws, the workplace, health and nutrition, wedding planning, baby showers, personal styles, romantic relationships, career changes, entertainments and leisure travels. We are like a team of experts on those aforementioned topics. Everyone always had something to share and we could all relate one way or another.

Were money concerns just something that didn’t come up? A 2013 Wells Fargo Financial Health Study reported that money is the biggest stress in life for 39% of Americans (survey sampled 1,004 adults, ages 25-75). In the same survey, a third of Americans said they lose sleep worrying about money and 49% expressed regrets about saving and spending in the past five years.

So why don’t we discuss our finances? During all those get-together times, I thought my friends and I didn’t hold back…or at least I thought so until I read about people’s relationships with money and started examining my own life and those around me.

It turns out that in general nearly half of Americans (44%) said the most challenging topic to discuss with others is personal finances, whereas death (38%), politics (35%), religion (32%), and personal health (20%) ranked as less difficult (source).

Sure, my girlfriends and I loved texting each other when we found double coupons or alerting each other when an item had a price reduction. Yet, we had no idea how much each of us were spending on clothes, bags and shoes each year. We’ve causally shared how much we spent on the wedding photographer, our hospital bills for labor, the amount we spend on daycare, or the price we paid for a single bag. But these numbers were readily available. Money was certainly involved, but there was nothing too personal about this kind of sharing. We recommended which CPA to use filing tax returns, but we didn’t share how much tax we owed or how much money we were getting back. We shared how much we spent going on a helicopter ride while visiting Hawaii, but we left out that we also purchased a timeshare during the trip. We shared that we own a house and a rental, but left out that we only paid 20% down payment on each and that we were still struggling to pay off over $50,000 student loans. We bragged that we didn’t have debt, and left out that we were living paycheck to paycheck. We shared that we had health insurance, but left out that we were paying over $700 to insure a family of 4 each month.

Yes, we talked about money, but we always felt hesitant and/or reluctant to fully expose our financial situations. At the same time, very few of us felt comfortable asking another person where the money was coming from or questioned motivations and reasoning behind her financial decisions. Those of us who were listening might have shared a “look” with each other by raising our eyebrows, and the topic of discussion quickly got changed.

My Internal Struggles

I, too, feel uncomfortable discussing my financial situation with my closest girlfriends. Just thinking about it gives me goosebumps. This has nothing to do with how financially savvy I am.

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Financial Empowerment, Financial Journey, Financial Planning, Girlfriend to Girlfriend Money Chat, Marriage and Money, Money Habits, Money Psychology, Personal Finance, Women and Financial Literacy

A Woman’s Financial Responsibilities in Her Household: Part II

In Part II of A Woman’s Financial Responsibilities in Her Household, I discuss some of the barriers women face on our way to become financially literate, and how the men (e.g., husbands, fathers, grandfathers, brothers, friends) in our lives can help. In part I, I discussed some gender generalizations regarding how money responsibilities are handled in a typical household and shared some intropsection I have regarding my situation during the earlier years of my marriage.

Women and Financial Responsibilities

Women are eager for information about financial planning and investing. In the 2014-2015 Prudential Study, Financial Experience & Behaviors Among Women, 18% of the women surveyed (survey polled 1,407 American women between ages of 25 and 68) said they would like to be more involved in financial decisions that affect them and their households. As another example, Fidelity Investments (Money Fit Women Study, 2015) found 92% of surveyed women (total respondents = 1,542 women ages 18+) wanted to learn more about financial planning, 75% wanted to learn more about money and investing and 83% wanted to get more involved in their finances within the next year. Yet, despite these statistics demonstrating women wanting to get more engaged with our finances, many of us exhibit a great amount of discomfort with our abilities to make wise financial decisions. We’re more confident in the ability of our spouses/partners to assume full financial responsibilities of long-term financial planning than our own.

Barriers to Women’s Financial Competence

Let’s take a look at some of the reasons women in general feel unprepared or not confident making financial decisions.

Fidelity Investments 2015 Money Fit study:

women financial confidence

2014-2015 Prudential study on Financial Experience & Behaviors Among Women:

women lack financial confidence

In sum, the barriers to women’s financial competence tend to fall under the six following categories: (1) lack time, (2) lack financial knowledge, (3) lack trust of the financial industry, (4) lack confidence, (5) lack hands on experience managing money and (6) lack support from spouse. Not surprisingly, few of these barriers are related.

If we can break two or more of these barriers the success rate to increase financial literacy among women is likely to go up. For instance, a woman with a spouse who fully supports her to pursue financial literacy is likely to have more time learning about personal finance and financial planning. The husband would be more likely to take over more household chores so that the wife can pursue her interest. As the woman begins to learn financial literacy, she will learn to read and speak the financial language. In the process doing so, she will learn about the different financial services and products.

As she’s learning she will likely discuss her newly acquired knowledge with her family members and friends. When it’s time to hire a finance professional, this woman will have been well equipped with the knowledge and skills to articulate what she wants and needs, and able to distinguish for herself good and bad professionals. This scenario is my ideal. The steps don’t have to go in this particular order. The information presented here is for you to play around with, and find out what’s best for your situation.

You may ask, where does one begin to seek out information to improve one’s financial literacy? I suggest you follow my blog and my social media, and also check out my Resources page. The Resource page is a work in progress and I update relevant materials.

Men Promoting Women’s Financial Literacy

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Financial Empowerment, Financial Journey, Financial Planning, Girlfriend to Girlfriend Money Chat, Lifestyle, Marriage and Money, Money Habits, Money Psychology, Personal Finance, Women and Financial Literacy

A Woman’s Financial Responsibilities in Her Household: Part I

In Part I of A Woman’s Financial Responsibilities in Her Household, I discuss some gender generalizations regarding how money responsibilities are handled in a typical household and share with you some introspection regarding my situation during the earlier years of my marriage.

There are many aspects to personal finance and financial planning, ranging from budgeting, paying for a vacation, purchasing a home, purchasing insurances, retirement planning and estate planning. This is important to keep in mind as we discuss household financial responsibilities.

Women and Financial Responsibilities

Gender Generalizations

In most households, the typical stereotype type is that the wife is responsible for balancing the checkbook (e.g., managing the day-to-day budget) while the husband attends to bigger picture financial planning (e.g., purchasing insurances, tax planning and investing retirement funds).

Certainly, there are households where the wife doesn’t participate much in or any part of the family’s financial responsibilities. This was illustrated in a 2013 Fidelity Investments Couples Retirement Study, where two in ten women admitted to having only some or no input into the day-to-day financial decisions in their households. Then, there are households where the wife is the CFO. And in between, there are households where both the wife and husband participate equally in every aspect of the family’s financial situations.

In general, though, women still view managing and balancing the family’s checkbook and budget as a woman’s role. These women believe such responsibilities are traditionally deemed more feminine. Husbands, on the other hand, are more suited to attending to the bigger picture household financial planning, as they are being seen more technical savvy and/or have a higher risk tolerance personality.

This gender generalization around household money management is evident in the 2014-2015 Prudential study on Financial Experience & Behaviors Among Women. The study reported that women respondents ranked themselves highest on their knowledge of managing debt and managing money (about 30% gave themselves an “A”) and lowest on their knowledge about generating an income stream in retirement and investing (less than 10% gave themselves an “A” and many gave themselves “F”). Such findings certainly give some insights into what women in general value and do well at when it comes to financial responsibilities in the household.

Many of my married girlfriends recalled their mothers taking care of the family’s basic day-to-day budget. Once married, my girlfriends just automatically followed their mothers’ footstep when it came to managing finances in their own households. Yet, when it came to their household’s bigger picture financial planning, many of my girlfriends didn’t have much of a clue.

For instance, some didn’t know all the various liabilities they have, some didn’t know all the different retirement accounts their husbands have, some didn’t know if their husbands received stock options as part of the compensation package, some didn’t know how much their husbands were putting into their deferred tax accounts, some didn’t know what their car and/or home insurances covered (or would not cover), some didn’t know if their husbands had disability insurance, some didn’t know how many brokerage accounts they had, many didn’t know what universal liability insurance is, and the list went on and on. Their husbands were taking care of those responsibilities and didn’t always involve their wives in the process, either consciously or subconsciously.

Throughout those conversations and discoveries many of my girlfriends expressed a lack of time to spend on long-term financial planning. I could relate in many ways. Like my girlfriends, I was happy filling my day with work, childcare, household chores and exercises. I enjoyed spending time planning social events for myself and my family. I took pride in doing interior decorating, planning for holiday gatherings and shopping for the lowest bargains (extremely time consuming).

When would I have had the time to learn about investing in the stock market, keep track of my family’s investment portfolio performance, peruse through the IRS website to reduce family income tax, learn to calculate how much life and/or disability insurance my family needs, or work on estate planning with my husband?

I’m sure if my life situation forced me to I would have done all that and perhaps more, however, my husband was taking care of all those financial responsibilities so that I didn’t have to. We were each great and efficient at what we “owned”. That was the whole idea behind the concept, division of labor, right? At least I thought so.

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Financial Empowerment, Financial Freedom, Financial Independence, Financial Independence Thinking, Financial Journey, Girlfriend to Girlfriend Money Chat, Marriage and Money, Money Habits, Retirement Planning, Women and Financial Literacy, Work and Career

Transformative Moment: Pursuing Financial Clarity, Financial Wisdom and Financial Confidence

My Transformative Moment

When was the last time you watched/read/heard something that instantaneously motivated you to radically change the way you live your life? This happened to me about three moments ago (June 2016) while doing some background research on the Internet for a project. I came upon statistics after statistics that basically summed up to the following:

“…two out of every three women say that they feel they have little knowledge of financial products and services. These women are less able to plan for retirement, less able to save for their children’s education, and are more likely to fall victim to deceptive, abusive, or predatory financial practices.”

“…As many as 8 in 10 [of women], according to Fidelity’s 2015 Money Fit Women study—hold back when it’s time to discuss money with friends and family. Many also feel uneasy or lack confidence when it comes to making big financial decisions, with about 50% admitting they are often nervous about the financial choices they make.”

“Even though many women can understand the headlines of financial news and talk stocks at a dinner party, they’re really not fluent on these topics, and they feel uneducated, disempowered and in a complete fog when it comes to their own relationship with money,” Ms. Birgbauer said. Many women simply don’t know what questions to ask or where to begin.”

“…less than half of respondents [both men and women study participants] correctly answered the question about interest rates and inflation and only one-third were able to correctly answer all three questions…while 55% of men correctly answered the two questions about interest rates and inflation, only 38% of women did so. Moreover, while 38% of men correctly answered all three questions, only 22% of women did so…Women are much more likely than men to indicate that they do not know the answer to the questions. The proportion of “do not know” responses was particularly high on the risk diversification question; as many as 41% of women indicated that they did not know whether a single company stock is riskier than a stock mutual fund. Moreover, half of women gave at least one “do not know” response to the three financial literacy questions. Very similar differences in financial literacy between men and women have been found in the Netherlands, Germany, Sweden, New Zealand, Italy, Japan, Australia, France, and Switzerland”. Read more about the research here.

Ms. Financial Literacy transformative moment

The statistics were so novel, yet shockingly alarming to me and stirred up unsettling emotions from within. I felt this strong need to literally rewrite those numbers and statements that appeared in the articles. Prior to that moment I was simply oblivious about research on women and financial literacy and women’s financial well-being. I had read that women get less pay than men, but I didn’t feel the urge to bring about social change; yet, for some reason, at that particular moment I took matter to a much more personal level as I was staring at those articles. Those numbers and statements touched something deep inside me, and I felt uncomfortable and vulnerable. I also sensed this urgency to take action and not have myself fit into any of those statistics and statements aforementioned (At the time my husband was managing most of the family’s finances. What happens if my family’s situation changes?). From that moment on I became personally invested fighting those stereotypes, hoping to steer the statistics and statements about women toward a much more positive light in the near future.

For the first time in my life I have a cause to fight for. I’m not a certified financial planner/advisor nor a certified financial analyst nor an economist nor a CPA nor an accountant. I’m not a finance professional through formal education. I’m a woman who believes and takes pride in a sense of freedom, satisfaction, fulfillment and empowerment that I get from being financially competent and being conscious managing my family’s money. Continue Reading

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