Many of today’s women know a lot about money. Janet Yellen is the Chair of the Board of Governors of the Federal Reserve System. Christine Lagarde leads the International Monetary Fund. And countless other women have accumulated a sizable net worth simply by saving and investing – just like many men have.
Still, a gap exists between men and women when it comes to personal finance and investing. According to studies done by global money management firm, Blackrock, less than half of all women have any interest in investing.
Or so they say.
In my experience that’s not always the case. In most of the families I work with women make joint financial decisions with their spouses. Often they are the primary decision maker.
Unfortunately, too many women remain disengaged from the process. According to a study done by Fidelity Investments, 60% of women worry about having enough money for retirement, yet less than half of them feel comfortable discussing money and investing with a financial professional.
In my last post I pointed out that upwards of 90% of all women will become the sole financial decision maker for their families at some point in their lives. Whether women want to or not, they need to increase their understanding of personal finance and investing.
Below are 5 ways women can begin to close the investment gap.
Understand your benefits at work. Contact your HR department or other representative at work to find out where you can go to get more information about your employee benefits. What insurance coverage does your employer offer? Do they offer a retirement savings plan? Is there a matching contribution? What are the investment options? You don’t have to know every detail about these plans, but you need to at least be aware of the basics and know where to go for more information.
Your employer is required to provide this information. Ask for it.
Get informed. One of the great things about life in the 21st century is that information and access to it has never been greater – alternative facts and fake news notwithstanding.
Got internet access? Log in and check out your company’s retirement plan website. Odds are they have a ton of educational information on top of info specific to your retirement plan. If that’s not enough, Google your favorite investment company. Most have user-friendly websites aimed at making you a more well-informed investor.
Prefer to curl up with a good book about money and investing (I know. Who doesn’t, right)? Check out these: Money Girl’s Smart Moves to Grow Rich, The Millionaire Next Door, and The Automatic Millionaire. All available on Amazon.
Meet with your financial advisor. If you work with a financial professional, meet with them at least once per year. Call them or send them an email when you have a question. You are paying them to provide a service. Part of that includes helping you understand what your investments are, how they fit into your long-term financial plan, and answering your questions about your personal financial situation.
If you work with a good advisor, it’s likely that no one on Earth has a deeper understanding of your financial situation, your goals, and your concerns than they do. Make use of it.
Read your statements. After 2008 I think the typical investor stopped opening their investment statements. Frankly, I don’t blame them. Those were painful times and your account balances were likely going in the wrong direction. Nevertheless, your investment statements have a ton of information that will help you understand your investments.
If you are not sure how to read your statement or what to look for ask your advisor to explain them.
Have a plan. Creating and updating your financial plan on a regular basis may be the single best way to close the investment gap and improve your retirement readiness. Your financial plan defines your financial goals and outlines the steps you need to take to reach them. But more importantly, a well-developed financial plan will give you a greater awareness and understanding of your personal financial situation, what your financial future may look like, and the specific steps you need to take to get there.
Recently I met with a client to review her financial plan and discuss her shorter-term financial concerns. She stopped me midway through the presentation with a tear in her eye and told me that this was the first time she ever really understood that she wouldn’t run out of money in her lifetime and that she may even be able to pass an inheritance on to her kids.
Sometimes that’s all you need to know.
Investment gap closed.