It was a sobering finding.
Despite women’s emphasis on equality, more than half deferred long-term financial decisions to their spouses, a 2020
Eye-openingly, the study showed that 54% of millennial women let their spouses take the lead on finances, compared to 39% of baby boomers — suggesting that younger married women were falling back into
Riding the narrative, The New York Times accused wealthy millennial women of
While the survey should give women pause, concluding that it proves a lack of gender equality in a marriage may be a bit of a reach. The primary reasons women give for leaving financial planning decisions to their spouses are the “spouse knows more,” they “have other things to take care of” and that the women “like not having to deal with these decisions.”
In many cases, it seems that the split in responsibilities are based on the spouses’ respective strengths and interests, which may or may not conform to traditional gender roles. The spouse who is better at crunching numbers, analyzing financial data and enjoys making investment decisions is the one who will take the lead in financial planning. The spouse who is more efficient at day-to-day finances, such as budgeting and bill payments (a majority of women, according to the survey), will take the lead there. The division of labor in a family is likely to depend on maximizing efficiency rather than on assigned gender roles.
But, that said, conferring financial decision-making on the basis of aptitude should not be an excuse for married women to forgo financial involvement altogether. The UBS study points out that there are inherent risks for married women who are financially illiterate, since women may end up alone as their life expectancy and divorce rates increase. Married women who prefer leaving long-term financial decisions to their spouses should consider involving themselves to the extent necessary to be able to take over the financial reins should they need to.
Stepping up
Financial advisors can help by encouraging women to participate meaningfully in their finances. Widows and divorcees quoted
First, consult with the spouse — the earlier in the marriage the better, but it is never too late to catch up. Major financial decisions that impact a client’s future should be discussed together. A woman does not have to be an expert to be involved.
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Some of the major decisions include determining how much and what kind of life insurance each spouse should purchase, how much income to allocate to retirement accounts, what overall investment strategies each spouse envisions for retirement and non-retirement assets, setting up 529 plans for children and discussing the terms of wills, powers of attorney and healthcare documents.
A client should feel comfortable asking you or her lawyer for financial or legal advice. Being part of the decision-making process and actively inquiring about one’s long-term financial planning situation will improve financial literacy and competence.
Second, it is imperative for your client to know where her assets and legal documents are located. Imagine the unfortunate scenario where a spouse dies suddenly or is incapacitated and the widow or wife is instantly charged with taking over the family’s finances. The client will need immediate access to her assets in order to pay for usual expenses and to fund her lifestyle. She may be in a situation where she needs to file an original will with the court to start the probate process before anything can be distributed to beneficiaries.
For this reason, advise her to store records of assets, estate planning documents — including any trust agreements — and any other information necessary to be on top of her financial situation in a place that she can easily access. Advise her to include information on her bank, investment and retirement accounts, insurance policies, any real property deeds, car title, paperwork on outstanding debts, automated payments, credit card account information, codes to security systems and passwords to digital content and accounts.
This last item bears repeating. In the modern age, not knowing the passwords to your accounts could create weeks of delay in accessing your assets. Clients should make a list and keep it somewhere safe. Knowing where assets are located will empower a client to act and take charge should she find herself in an adverse personal situation.
