Financial Planning for Women: Empowering through Financial Literacy

Financial Planning for Women Empowering through Financial Literacy

By Susan Williams

Over the course of many years, women have made great strides towards gaining gender equality. But there is one area that women continue to experience a significant gender gap. This is their involvement in their own financial planning and investment decisions.

Both men and women believe that financial planning is a necessity for furthering gender equality. A US study completed by UBS found that 74% of men and 82% of women believe joint participation in long-term financial decisions is necessary to create gender equality. However, they also discovered that approximately 49% of women will default these major decisions to their partners. Similar trends can be seen in Canada.

Given previous gender roles, it might be expected that older women would be the primary demographic not participating in financial decisions but surprisingly, this lack of participation is even higher for millennial women. It was found that 54% of married millennial women were allowing their partners to make these financial decisions versus 39% of female baby boomers.

Why is financial planning important for women?

When women have limited involvement in their long-term financial decisions, this could impact their financial security.

It is well recognized that women live longer than men. But what may not be as well known is that there is also a very high likelihood that for married women, they will also become widows. For example, in the US, 70% of married women will become widows and 76% of these women will become widows before the age of 59. In Canada, the number of widows has also been rising steadily and in 2022, 70% of all the widowed population were female.

For women, these potential years living alone combined with a lifetime of wage gaps, career breaks and caregiving responsibilities could lead to significant financial problems. Without women participating in their own financial planning and decision making, they could impact their ability to secure a financially stable and comfortable retirement.

But what is stopping women from participating in their own financial planning?

Financial literacy seems to be a significant stumbling block for many women in both understanding and participating in their own financial planning.

Women and financial literacy: Closing the gap

Financial literacy is defined as having the knowledge, skills and confidence to make responsible financial decisions and is a crucial tool in closing the gender gap in financial planning and decision-making.

In a report entitled Gendered Financial Literacy – A Global Perspective, even though Canadians performed better than many other countries overall, there was still a significant gender gap. Approximately 78% of Canadian men were identified as being financially literate however this dropped quite substantially for Canadian women to around 60%. To close this gender gap, women need to actively seek and obtain financial education and resources. By doing this, women are better positioned to increase their knowledge, skills and confidence to participate, question and manage their own finances and financial planning.

Why Women Need to Get Comfortable with Financial Planning

Women are actively involved with their day-to-day expenses, however they are less involved when it comes to longer term financial planning.

Financial planning for women is more than just day-to-day budgeting; it also includes defining long-term goals, such as retirement planning, investments and wealth accumulation with the ultimate goal of ensuring financial independence.

In an article published in the Globe and Mail, “According to a 2022 TD Wealth for Women report on women investors, fewer than 20 per cent of women manage their own finances and make decisions on their own.”.

If women can recognize the importance of playing an active role in their own financial planning, they could potentially improve the opportunity to secure themselves a stable future. By understanding their current financial situation combined with their financial goals, risk tolerance, and investment options, women could be positioned to develop and influence personalized financial plans that align with their specific circumstances, financial goals and aspirations.

Increase Understanding of the Importance of Investing

One critical aspect of financial literacy for women is understanding the potential of investments and the long-term value this can provide in achieving their financial goals. By familiarizing themselves with various investment vehicles, such as stocks, bonds, real estate and reverse mortgages, women are likely better positioned to make informed decisions and leverage the power of investments and compound interest to help them build their wealth over time.

When armed with a solid understanding of financial concepts, women could make informed decisions about their money and may be better equipped to take control of their lives on many levels.

Increased financial literacy can help provide women with the confidence and knowledge to advocate for themselves in financial matters and break away from traditional gender roles that may have historically left them financially vulnerable.

How can Women increase their Financial Literacy:

Attend Financial Literacy Workshops and Seminars:

  • Look for workshops and seminars focused on financial literacy specifically tailored for women. These events provide valuable insights and practical knowledge on topics such as budgeting, investing, retirement planning, and managing debt. Also, often local organizations, community centers or colleges offer financial literacy programs.

Take Online Courses and Webinars:

  • Numerous online platforms offer free or affordable courses on personal finance and investing. Take advantage of these resources to enhance your understanding of financial concepts and strategies at your own pace.

Engage with Credible and Reputable Online Financial Communities:

  • Join online forums and groups dedicated to financial discussions and support. Similar to anything else shared online, ensure the source you’re reading is reputable to avoid poor financial advice.

Seek Professional Financial Advice:

  • Consider contacting a financial advisor who specializes in working with women. A financial advisor can take the time to understand your personal situation, support you in setting financial goals and develop a comprehensive financial plan aligned with your individual circumstances.

Utilize Mobile Apps and Online Tools:

  • Download trusted and reviewed mobile apps and use online tools that can assist in budgeting, tracking expenses, and monitoring investments. These tools can highlight valuable insights into your financial health to help you make better financial decisions.

Follow Financial Blogs and Podcasts:

  • Subscribe to reputable financial blogs and podcasts that provide valuable insights, tips, and strategies on various financial topics.

Growing financial literacy takes time. But it is important that women get involved, increase their financial literacy and take control of their financial futures. By empowering themselves through financial knowledge and understanding, women may be better positioned to engage in effective financial planning, make more informed investment decisions, and ensure that they are well positioned for long term financial security.

There are some very good reasons to financially empower yourselves ladies. Your future self may depend on it.

About the Author

Susan Williams is the Founder of Booming Encore – a digital media hub dedicated to providing information and inspiration to help baby boomers create and live their best later life. Susan is also the co-author of the book, Retirement Heaven or Hell: Which Will You Choose? and contributor to the book, Longevity Lifestyle by Design. Susan frequently writes and publicly speaks about the opportunities and challenges related to aging, retirement and longevity.

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