Financial Tables for One
Whether fresh out of college or after a marriage, women will some day go it alone in taking care of their financial needs.
With the combination of later marriage, divorce, widowhood and longevity, almost 90 percent of women will end up managing their finances alone at some point in their lives, according to the Department of Labor.
Regardless of upbringing, income, marital or motherhood status, women need a strong base of financial knowledge to prepare them for that responsibility. Because the large majority of women will be on their own financially at some time in their lives, financial education is never wasted. Knowledge gives women confidence that if confronted with being suddenly single, they can handle it.
For women who have little or no experience in managing money, taking small steps can prevent feeling overwhelmed. Reading websites, magazines and books about financial topics or taking a community college course can provide a great foundation. Professional financial advisors can help as well. As the saying goes, there’s no such thing as a stupid question. Women shouldn’t be intimidated. Most professionals welcome the opportunity to share their knowledge and educate clients.
For young women starting out on their own, living expenses and paying down debt like vehicle or college loans usually get priority treatment. However, it’s easier to save and invest before adding larger debt – like a house – or having children. Young singles should develop and stick to a budget that allows them to build an emergency savings account equal to at least three months’ expenses, preferably six. Employer-sponsored retirement plans provide a fairly painless method – pretax payroll deduction – to get started. Singles should strive to contribute at least as much as their employer will match. Enrolling at the time of hire means never missing the money from the paycheck.
Having a team of advisors – a financial advisor, accountant, attorney and insurance professional – can help women through difficult times when emotions may cloud financial judgment. It can also make women less susceptible to scams and opportunists who target the newly divorced or widowed. Married women don’t necessarily need a team of advisors separate from their husbands’, but they should have met those advisors and be comfortable with them. A crisis like divorce or death is not the time to be looking for a credible professional.
In addition to basic financial knowledge, married women should maintain at least a big picture view of their finances, even if their husbands handle bills and investments. Reviewing monthly statements and attending annual account review meetings can help provide a basic understanding of the couple’s overall financial situation. Even if they don’t work outside the home, pay the bills or make the investment decisions, women should know how much money comes into the household and what percentage goes toward bills, college funds, retirement accounts and savings. They should also know where key financial documents, such as wills and insurance policies, are kept.
While many financial professionals counsel widows to wait a year before making major decisions such as selling a home, a divorce typically requires quicker decisions, often in conjunction with an adversarial spouse. Most immediately, couples must decide who, if anyone, stays in the home and how its value will be split. Women often jump at the chance to keep the house because they have children or it helps them feel more grounded in a time of chaos.
Women should understand that keeping the house means keeping all the financial obligations that go with it – the mortgage payment, insurance, property taxes, utilities and upkeep. On top of that, they may have to buy out their husband’s share in the property. Suddenly a $2,000 mortgage payment becomes a $4,000 mortgage payment, which she shoulders on her own salary. That’s when the advisor becomes important in helping the client make decisions based on financial reality instead of emotional reaction. When the decree is final, a woman can’t claim ignorance.
A solid understanding of financial basics and the household’s financial picture, along with a team of trusted advisors, can give women the confidence they need to make financial decisions throughout their lives, whether single and childless, married with or without children, divorced or widowed. Women owe it to themselves to learn basic money management skills and find the professional assistance they need to make sound financial decisions. It’s a skill they will almost certainly need in their lifetime, so it’s never too early to start.
Securities offered through Securities America, Inc. Member FINRA/SIPC. Jose R. Rodriguez, Financial Consultant. Advisory Services offered through Securities America Advisors, Inc. An SEC Registered Investment Advisor, Jose R. Rodriguez, Investment Advisor Representative. Rodriguez Financial Strategies LLC and the Securities America companies are unaffiliated. Written by Securities America for distribution by Jose “Rafi” Rodriguez, Retirement Income Certified Professional®. SAI# 1204448.1
Securities America and its advisors do not provide tax or legal advice. Please consult with your tax or legal professional regarding your individual situation.