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:
- Income: An understanding of how much money is coming in, and where it is from.
- Approximate outflows: How the money is spent.
- 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.
- Investment strategy: An understanding of the fundamentals of investing, and the philosophy being applied to the family’s portfolio.
- 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)