Want To Be a Truly Independent Woman? Start Taking Charge of Your Finances
Topics that circle around differences between genders are usually pretty touchy.
Whenever we talk about things specifically about females or males, it feels like we must tread carefully with our words in order not to sound like we are perpetuating any gender stereotypes.
While it might seem safer to write on matters addressing the crowd as a whole, there is indeed a disparity between both genders in certain areas.
I strongly feel that there is a need to address this topic, knowing that there is so much more we can do for ourselves.
Today, we’re going to talk about our finances.
It’s Time To Talk About Money
Ever since I graduated and started my first full-time job, I went down the rabbit hole of finding ways to manage my own money.
I love talking about money.
Be it saving money, stretching money, or growing money.
I was fiercely devouring personal finance articles, and would always sign up webinars of such topics enthusiastically.
I even started a personal blog to document personal finance thoughts that I had.
After a while, I realised that not everyone shared this newfound love towards personal finance as I did.
It wasn’t something that was commonly discussed between me and my female peers, especially for topics like investments and long-term financial planning.
And the statistics proved that to be true as well.
In a survey done by investment management company Merrill Lynch, 61% of the women mentioned they’d rather discuss details about their own death than talk about their money.
In addition, women cite lack of knowledge and confidence as their two biggest challenges to achieving financial stability.
According to UBS Global Wealth Management’s report, 8 in 10 Singaporean women leave major financial decisions to spouses.
Does This Mean That Women Are Not Good With Their Money?
Instead, we are possibly more financially literate than we think.
According to the 2019 GoBear study, Singaporean men and women are almost equally financially savvy.
However, Singaporean women would underestimate their financial literacy more, with a gap of 22 points between the actual (81%) and perceived (59%) financial literacy.
Singaporean men showed a smaller gap of 13 points between their actual (83%) and perceived (70%) financial literacy score.
In the same UBS report mentioned earlier, women are also not fully sitting out on financial decisions.
They are usually the ones actively involved in day-to-day money matters, with 80% paying bills and 85% regularly managing expenses.
Unfortunately, this level of engagement does not extend to long-term financial planning.
Why Are We Not Taking Charge of Our Money (Yet)?
It’s not that women are not aware of the need to work on financial planning.
In a survey by BlackRock, it showed that both men and women think saving and investing are important.
However, women tend to cast more doubt on their own investing abilities, despite having similar financial goals.
It is also common for most women to downplay their own knowledge and achievements, including financially educated female professionals.
According to a 2018 Financial Industry Regulatory Authority (Finra) report, women tend to answer ‘don’t know’ more often when surveyed.
This reflects the level of confidence women have, which might lead to them being more open to seeking assistance.
This confidence level is also reflected in how women commonly defer long-term financial decisions to their spouses.
In Singapore, a startling 90% of women leave long-term finances to their spouses, because they feel that their spouse knows more about this topic than they do, despite having similar levels of financial literacy.
Also, we would think that older women would stereotypically be mainly the ones leaving such decisions to their partners.
Interestingly, it is the younger women (gasp!) that are perpetuating this behaviour.
In addition, some might be overwhelmed by the technicalities of financial instruments.
As a field known to be filled with lots of jargon, financial products might seem complicated.
It might seem as if we are not working in the finance industry, investing might be something that is a little more difficult to understand.
Why Is Personal Finance Especially Important for a Woman?
Long gone were the days where it was common to have men to be the sole breadwinners of the family.
In today’s society, dual-income families are commonly seen, where women are empowered to seek a career of their own as well.
With higher educational qualifications and increasing work opportunities, there is a higher probability of women earning more as compared to the past, and therefore a need to look into long-term approaches to manage this money.
Next, in Singapore, there is still a gender pay gap (6.0% in 2018), albeit slowly improving.
This was largely due to occupational differences, where the salaries of male-dominated occupations increased much more than those dominated by females.
The Ministry of Manpower (MOM) cited a few possible reasons for this gap, with one being women’s propensity to play the role of the primary caregiver at home.
Hence, there is a higher probability of taking time off from work to tend to familial needs.
There is also 90% of men aged between 25 and 54 in the workforce, as compared to less than 80% among women in the same age group with at least one child.
The cost of parenthood weighs heavily on women, which signifies a greater need to plan our finances ahead.
Also, being a primary caregiver for children also reemphasises the importance of being financially educated.
This knowledge can be passed down to children, where children can be taught to start building money habits early and be financially savvy from a young age.
In addition, female life expectancy is approximately longer than males (age 85.7 for females as compared to 81.4 for males).
Which meant a greater need to have sufficient planning for legacy and retirement.
How Can We Get Started?
We wouldn’t want to reach the stage of being unprepared to take control of our finances when circumstances and events in life force us to do so.
Fortunately, we can all start as long as we are willing to do something about it.
Besides adopting these habits to be financially savvy, here are some ways you can look into planning for your financial future.
Take the First Step
Finance itself might seem like a huge topic.
When we think about it, some of us might visualise huge numbers, scary statistics and technical jargons.
Which makes this topic pretty intimidating.
It is important to know that financial planning does not have to be difficult.
We do not need to be an expert in complicated graphs and candlesticks to get started on this journey.
There are various websites nowadays that break down personal finance knowledge into digestible bits for us!
If you’re someone who prefers videos, there are also YouTube channels for you to follow as well.
Or if you’re someone who prefers comics… there’s also something for you too.
As compared to our parents’ generation, we have so many resources out there to help us get started.
Once you start gaining knowledge in these areas, it’ll make you feel empowered with more control of your life.
Plan According To Your Goals
Planning might be easier when you jot down what goals you wish to achieve.
This could include planning for your child’s education or planning for your retirement.
Take time to sit down to run through and work on the estimated amounts that are required for these life events.
Having a clear idea of the amount that is required can provide a headstart for your planning towards these goals.
It is common to set vague targets like ‘I want to retire earlier’, which might seem far-fetched with no proper planning.
Know your objective so that you’ve got something concrete to work towards!
Keep It Simple
When it comes to investing, more doesn’t necessarily mean better.
There are so many terms and jargon out there, along with investment advice and whatnot, which might make this whole investment deal very overwhelming.
But that doesn’t mean we shouldn’t get started at all.
In fact, women have personality traits that make us good investors.
Contrary to popular belief, women are risk-aware instead of risk-averse.
This means that we are willing to take risks, but would prefer doing some homework before making an investment decision.
As a result, trading historically performed by women generated long-term higher returns (according to a Vanguard survey).
Women generally take a longer-term approach for investing and trade less frequently too.
These are traits that work well for an investor.
According to British financial services company Hargreaves Lansdown, the investment returns of women were 0.81% better over a 3-year period.
This is equivalent to a portfolio worth 25% more than a man’s if it continues for 25 years!
Keeping a simple portfolio is good enough to get started in the world of investing.
If you’re looking to keep it simple – just stick to investing basics, develop a plan, diversify and rebalance.
One of the uncomplicated ways of investing that I personally like is the Boglehead 3-fund portfolio.
Ladies, It’s Time To Manage Our Money and Be in Charge of Our Finances
I personally enjoy managing my own finances, learn how to grow my money and work out long-term plans.
It gives me a sense of security and accomplishment, knowing that I can be completely independent and be clear of my goals and how to go about achieving them.
I would wish for this level of security for all my fellow ladies, where we could all take charge of our finances and thereby taking charge of our lives.
Also, to echo one of the biggest hits of all time:
Ladies, it’s time to take charge and be our own Chief Financial Officers. 💁♀️