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Letting your man manage your finances? Watch out

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Must-knows about money for womenIn many relationships, financial decisions are delegated to one partner, and overwhelmingly, that person is male.

A recent study from Fidelity found that just 24 percent of women say they take responsibility for day-to-day financial decisions. And that actually  represents an increase since 2011, when just 15 percent of women said so.

That gender gap presents a danger for women, in part because the life expectancy for women is longer than it is for men, and because women traditionally give up some of their earning power to be caregivers for at least part of their careers. Divorce can also hit women harder than men; according to a 2011 Census report, 23.3 percent of divorced women had taken public assistance in the last 12 months, versus 14.7 percent of divorced men and 15.2 percent of married women.

Those numbers suggest that instead of leaving all the big money decisions to their partners, women should take a more active role in financial planning. That way, they can take charge if necessary, or make moves now to protect their finances later on in life.

Younger women defer financial decisions at a higher rate

What’s even more surprising about the results of this study is the fact that younger women are actually deferring more when it comes to financial decision-making. Only 12 percent of Generation Y women see themselves as primary decision-makers when it comes to the day-to-day. Additionally, only 45 percent of Gen Y women see themselves as joint decision-makers, while 58 percent of Gen X and Boomer women view themselves as joint decision-makers, and Baby Boomer women are more likely to describe themselves as primary decision-makers.

So, why are younger women more likely to defer decisions?

“The deference demonstrated by younger generations could be attributed to the simple fact that their experience with money has been limited by their young age,” says Lauren Brouhard, senior vice president of retirement at Fidelity Investments. “It’s possible that their deference is driven by uncertainty. Boomers, for example, are more engaged in money matters because they’ve had more experience handling money.”

Part of the cure for this issue is to become more educated about money, and insist on inclusion in discussions about family finances. “Women should be as proactive as they can to make financial matters a more regular part of the conversations they’re already having their their spouses,” Brouhard says.

Another issue is that, according to the study, men are still less likely to view their partners as capable of taking over the household finances if necessary. This only exacerbates the situation. “I often come across male clients that do not want to involve their spouses in meetings or discussions (about money),” says Tracy Burke, a Certified Financial Planner. “I always encourage the spouse’s involvement.”

Leaving all of the money decisions up to a significant other can leave women in the dark about long-term financial planning, as well as reduce their ability to effectively manage day-to-day expenses. Involvement in financial decisions and long-term planning is important for women who want to be confident in their own abilities moving forward. You never know what’s going to happen in the future, and being prepared to take care of your own financial needs is important for anyone — no matter his or her gender.

Need-to-know things about money for women

In order to learn to feel more comfortable about participating in financial decisions, it makes sense for women to make an effort to learn at least the basics related to money and investing. “More often than not, the husband will pass away first and the wife will have to deal with the finances,” says Burke. “This can be a huge burden to a widow if they haven’t dealt with or have much knowledge of their financial affairs.”

The same difficulty can arise in cases of divorce or in situations in which a life partner becomes incapacitated. Being able to step in and take over is important — especially if a woman suddenly finds herself on her own with the household finances.

Burke suggests five basic items women should know about the household financial picture:

  1. Income: An understanding of how much money is coming in, and where it is from.
  2. Approximate outflows: How the money is spent.
  3. Assets: This includes a basic understanding of investing, and what’s held in the investment portfolio, as well as knowing what hard assets, such as real estate, are owned.
  4. Investment strategy: An understanding of the fundamentals of investing, and the philosophy being applied to the family’s portfolio.
  5. How to pay the bills: This includes knowing what bills there are, how much they are usually for, where they should be paid, and when they are due.

In addition to these household basics, Certified Financial Planner Karen Lee thinks that women should also have an understanding of estate planning.

“Sadly, the old stereotype generally persists that the man tends to handle more of the family’s financial issues,” Lee says.

Women should understand how much life insurance coverage partner has, where the financial records can be found, and an understanding of the will and durable powers of attorney. Lee also points out that a woman should have a relationship with the family’s financial adviser.

“There are so many reasons that women need to be involved,” Lee says. “If both parties are in the know, it’s less likely that the one handling the finances will keep secrets.”

In the end, it’s about knowledge. Women should make an effort to learn about the way money works, and then bring that knowledge to financial discussions in the household. They should be financial partners in fact, not just in name.

(Photo: Jenine Bressner)

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14 Responses to “Letting your man manage your finances? Watch out”

  1. dojo says:

    In our household I’m the one to manage the money, make budgets, save etc. We both bring in income, but the planning/budgeting and organizing everything is still mine.

  2. CS says:

    This reminds me to make sure my husband knows how the bills are paid and from which accounts and how they are paid.

    • Miranda says:

      Great point! Even though the post looks at it from the perspective that women need to get involved (since the numbers indicate they aren’t as involved as they should be), really both partners need to be involved in household finances. Like you, I am a statistical anomaly, taking the lead in finances while my husband doesn’t do much with them. I’ve been trying to get him more involved as well.

  3. jim says:

    I would be very happy if the lady of the house managed all the money. All I have to do is to find one with as much common sense as me.

  4. J. says:

    Funny you mention this. I’m writing a blog right now about our attempts to get out of debt, and one of the major topics I’ve covered is the way that my family and my wife’s family handled money when we were kids. In other words, what lessons did we learn from our parents? In my wife’s house, the women were discouraged from talking about or asking about money. Father was the breadwinner, and mom and daughter didn’t dare ask about the subject. Needless to say, it’s been quite an effort to get my wife to feel comfortable discussing money, much less talking about how to get more of it.

  5. The Warrior says:

    For Mrs. Warrior and I, we discuss everything financially regarding decisions and budgetary practice, but i handle the “day to day” aspects of our finances.

    The biggest thing for us isn’t who handles it all but that we make the vast majority of decisions together. Communication for the win ;)

    The Warrior
    NetWorthWarrior.com

  6. You make an excellent point. In our household, my wife and I are very different sorts of people, and we’ve learned to split chores according to each person’s talents and tendencies. I’m a numbers person, so I do most of the money stuff. She’s a people person, so she makes sure I don’t become a hermit. :)

  7. Huskervball says:

    Jim–as much common sense as me? What century do you live in?

  8. Huskervball says:

    I am better at investing, which I handle with input from my husband. He handles the day to day bills.

  9. Sadie says:

    The where’s and how’s of organization is “key information” both need to be aware of instead of relying upon one single person to manage.

  10. Michael says:

    Now that Jim’s not running this site anymore, sexist stuff like this creeps in. Watch out if your man handles your finances? What about marriages where only the woman does such? Not worth watching out?

    It’s so common for man-bashing to be acceptable, but if there is any criticism on women’s performance on finances, the century of the comment comes into question.

    FYI, personally I think both parties need to be involved, I actually agree with the article. I just didn’t like the headline and main premise.

  11. Claes Bell says:

    Hey Michael, I think you have the honor of being the first to accuse me of misandry. Yes, the article is aimed at women, a distressing number of whom don’t know much about what’s going on with their finances. As you point out, I’m sure it also happens that men delegate all the money tasks to their female partner and get burned as a result, but that’s not what this article is about. If that ever becomes a big problem, we’ll definitely write a big article about it. Just not clear on how we’re being sexist.

  12. wife says:

    I used to do it all, before I was married. now I will be excluded, uninformed or not informed at all, really overall I’m just not considered as an equal. this has been evidenced to me with several conversations that we’ve had. When We do talk and have agreed to handle things a certain way. I come to find out he choose to do it a different way. Which is typically what he really wanted to do in the first place! He no longer feels the need to update me, include me in on the budget or current status on most things. If I ask to be a part thats great until we get down to the nitty gritty and he becomes very defensive and unable to communicate with me. hmmm I wonder if this is a hide/control thing! LOL I have to say Im so disappointed in myself for allowing this for so many reasons on so many different levels! Thank you for the eye opener!(fyi: the noted email address is his, he canceled mine)

  13. Michael says:

    I let my wife manage the household finances for over 25 years of our marriage. I believed that if there were money problems, she would tell me. Several years ago we declared bankruptcy after a prolonged period of unemployment. A couple of months ago she disclosed that our bank account was severely overdrawn. Our house was in danger of foreclosure. She had taken out more than 15 payday loans. I finally took over the responsibility of managing our finances. I have found that if we took out the amounts paid for the payday loans and the penalties for bounced checks and overdraft fees, we are actually covering our core bills. I am negotiating with the payday lenders and collection agencies (I closed our bank account so they couldn’t keep drawing down on our funds. Also, for some of these lenders, a 100%+ profit isn’t enough. I have told them that they are one of many loans and if they want money now they will negotiate a fair settlement.) The bottom line is that women can be irresponsible with money management as well and you shouldn’t generalize about males managing the finances.


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