By LouAnn Schulfer, AWMA®, AIF® Accredited Wealth Management Advisor® Accredited Investment Fiduciary®
In the years before I was a financial advisor, I had heard that the consensus about women and investing was that was that wives were often left out of making decisions regarding their family’s investment portfolio and retirement planning. I have read countless articles and books and have attended seminars and webinars that talk about how and why women differ from men when it comes to working with the big money. Most of those articles, etc., are basically the same…. blah, blah, blah, yadda, yadda yadda.
So, I am not going to tell you about the blah blah blah psychological hypotheses or yada yada yada hormonal differences between men and women and how these are believed to contribute to generalized differences in money management. Instead, I am going to tell you about my personal experiences in focusing on building our own net worth and managing our money as well as my experience as an advisor in working with men, women and couples, and offer some advice along the way. Let’s start with a few basics that I have learned personally before I chose to become an advisor.
1) Money means nothing. But money IS the means to so many important things. Retirement. Education. Personal security in knowing you can feed your family tomorrow and have a roof to house them under. Buying that hunting land. Starting your own business. What are your most important goals? 20 years ago, my husband Gene and I began our quest to go beyond our paychecks and begin building our future and our net worth. What are your goals? What are your fears? How is money the means to that end? That’s the first motivator…. Not focusing on the dollars themselves, but how they are the means to your end goals.
2) If money is the means to an end goal, then you have to place as much importance on accumulating that money as the goal is important to you. If on a scale of 1 to 10, retirement is a 10, then so should the priority of saving and growing your money to reach that goal.
3) The thought of retirement may be very exciting, but tending to your money may not be so interesting to you, it might even be downright boring! That’s just a fact of life, that the discipline is not the fun part…. reaching the finish line is! My interest in learning how money works always had been fueled by what it represents and tracking progress along the way. It is definitely a sacrifice to stash cash away for tomorrow and forego spending it today; it’s a discipline to review your progress regularly, but what has always driven me is looking at what that money represents and making progress.
So, how is money management different for men versus women? Well, there are no pink or blue investments. The portfolio that I would put together for you has nothing to do with whether you have XX or XY chromosomes, so in that way, investing is no different for women than it is for men. There are a few big differences in planning though. Namely, women tend to live longer than men. We often marry men who are older than us, widening the gap for lifespan planning. Savings may be diminished by medical expenses of the first spouse to die. So, financial planning, not investments chosen can differ based upon gender.
In the years that I have been an advisor it has been interesting for me to observe that generally among a couple, one or the other usually makes the investment decisions, and predominately it is the man. My observation is not that he disallows her from chiming in, rather, she often times does not take an interest in participating. (sometimes it is the other way around) Usually for good reasons they say…. Too busy with day to day activities, we divide out the responsibilities, and/or it’s just too boring. While all of these may be true, my advice is for both spouses to take an active role. Whether the husband or wife is the decision maker in family finances, the spouse who chose to be dormant may suddenly and unexpectedly find that they are forced to manage all of money, often in times of crisis like death, a serious accident, or even divorce. If this is not motivating enough to inspire you to be involved, then circle back up to the basics above and let the importance of your goals guide your participation.
Securities and advisory services offered through LPL Financial. Member FINRA/SIPC.