How women can stay financially savvy when they make more money than their partner
While women are earning and contributing more to their family’s household incomes than ever before, there are still disparities in the financial decision-making dynamics between couples. According to UBS's latest Own Your Worth report, “Tradition, Trust and Time,” women primary breadwinners face societal pressures, relationship tensions and time constraints that often prevent them from taking a more active role in important financial decisions about the money they're earning.
Among the findings:
- Thirty percent of high-earning, heterosexual women in the U.S. surveyed by UBS are now the primary household earners, yet less than half prefer that role.
- Traditional gender role expectations, trust issues with partners, and time constraints can lead to women taking a much less active role in financial decisions compared to men.
- Of the 800-plus people surveyed, only half of the primary earning women in heterosexual couples actively engage in financial decisions.
Their reasons for lack of financial engagement include generational differences related to traditional roles of women; insecurity about financial knowledge and acumen; trust between spouses regarding money management, including saving and spending habits; and education and time dedicated to wealth planning.
Regardless of how much each partner earns in a household, both spouses should be aware and responsible for their financial well-being. As a certified divorce financial analyst, I have had some divorced and widowed women see me because they are unaware of what investments and resources they have, how to budget or even how to pay bills.
Education is key
Financial literacy is not something that happens overnight. It’s a generational shift, an evolution of beliefs and practices about money that begins with educating children at a young age. While finance has been a male-dominated domain, women now have greater exposure and resources to take a proactive role in financial independence. Society’s traditional roles of women as mothers and homemakers have shifted. Every person needs to be included and responsible for their financial well-being, career pursuits, and family success.
Teaching children about the value of a dollar and making smart money choices starts at home. I have three children, and they are being taught basic life skills — shopping for groceries, managing car maintenance, and balancing a budget. They are learning how to make smart decisions, whether buying store-brand products at half the price instead of name brands, living within a budget based on means to avoid debt, and reading the fine print in service contracts to avoid costly surprises. They are learning how to be aware and responsible for their financial decisions.
When my children are older, I want them to choose to be active participants in their marital and family finances with confidence because of the lessons they have learned related to being aware and responsible for the choices they make, personally, professionally, and financially. That philosophy is gender-neutral.
Priorities and responsibilities
For many couples, talking about money is difficult, but it’s imperative to help avoid tension in the future. At the outset, couples should discuss how they will budget and share in household expenses, maintain separate and joint accounts for long-term savings and investments, and set parameters for discretionary spending. Some couples divide living expenses proportionately by their incomes while others pool it all together.
For women who may not have participated in their family’s wealth management, we encourage them to attend financial meetings. Even if they don't want to be the primary decision-maker, they should want to be financially educated to understand the implications of decisions being made.
Financial issues can be extremely overwhelming when a major life-changing event disrupts a family’s circumstances and lifestyle. A previous Own Your Worth report cited that 80% of women at some point in their life are going to be solely responsible for their financial well-being. That’s why women need to be able to rely on themselves. Often, single women who are divorced or widowed are learning for the first time about how to pay bills, get a mortgage, buy a car, or invest in financial assets.
Overcoming insecurity or lack of knowledge of money matters can be addressed by having open, frank family conversations. I ask for both spouses to be present, and often include their adult children, to minimize surprises or confusion later. Some of my male clients have said, “I'm really worried about my wife and family because if something happens to me, I run everything financially for them.”
Working as a family unit
Dual-career partners each contribute to the well-being of a household regardless of varying income levels. Couples should be working together as a family unit, no matter who is the primary earner. Pre-marriage counseling can help couples talk about their feelings and values about money and establish money management guidelines. Most importantly, both spouses should be contributing to their retirement plans during their careers, taking advantage of any employer match. It’s money that compounds annually.
View your family’s household finances as a corporation, where each spouse is a board member responsible for the family’s fiscal health. Ultimately, look for someone knowledgeable who practices what they preach, and who treats your family’s finances as they would treat their own.
Jennifer Holden is a financial advisor and senior vice president for wealth management for UBS in Jacksonville. UBS’s latest Own Your Worth report is at “Tradition, Trust and Time”.