Financial planning saves a lot of stress and anxiety over money. Both men and women – single or married – should take part in planning for their future. But women face a different set of challenges.
This article is not intended to express how difficult it is to be a woman. Women have tremendous opportunities and have already come a long way in the working world.
That being said, their financial planning needs can be altered in many ways by factors that may be out of their control.
The 5 reasons women need to plan differently are outlined below. They may not be applicable in every case, but women are more likely to experience these factors than men. With clarity, a well thought out and evolving financial plan, women can achieve financial confidence, independence and peace of mind.
Women are estimated to live 5 to 6 years longer than men. This increased longevity means that their retirement savings needs to last longer. During those extra years, they may incur even more expenses. Health concerns may surface or the need for skilled care may arise. All of this amounts to increased expenditures during your later years of life.
Longevity that isn’t planned for can put a strain on retirement savings. Women should not plan on receiving or inheriting money from their spouse. With the declining availability of defined benefit pensions, people remaining unmarried or marriages ending in divorce, a monthly check from a spouse’s pension, may not be an option. Women need to plan for personal longevity because of this.
Break In Employment
It is not uncommon for a female to take a break from employment when children are being born and raised. Some women decide to quit their corporate gig and become a stay at home mom. Or… they trade in their higher paying job for one that offers more flexibility and better hours. This puts them in a position where less personal income is coming in. This has a significant impact on their ability to save for retirement.
Also, getting back into the labor market right where they left off can be difficult. After years away, technology, younger workers, more experienced workers, and industry changes can make this harder to do. Women taking a break in employment to raise a family may face these obstacles when trying to re-enter the workforce.
Life as a Woman Costs More
It doesn’t come as a surprise that females generally spend more in certain areas than men. The entire beauty and cosmetic industries are largely focused on women. Generally, women spend more on makeup, hair and skin care products. They generally spend more on clothing, shoes and accessories as well. The above expenses tend to occur on a much more frequent and recurring basis. Men don’t spend nearly as much on these.
Additional financial planning and budgeting can help reign in any excessive spending in this category. In most cases, even tightening the belt on some of these items may not solve the problem. Life as a woman… still costs more.
Women Are More Likely To Experience Independence
Whether it is due to outliving their spouse, being single, widowed or divorced, women are more likely to be the sole financial decision maker at some point in their life. This is another reason why it is important to have a financial plan that prepares for the future. In previous generations, women were accustomed to taking a back seat with finances. This is no longer the case. Today a proactive approach to future financial needs is always advisable.
Women May Earn Less Than Men
This is a long standing concern. Women statistically earn less than men. Women may take a break in employment which may hinder their salary growth, or they are less likely to ask for a raise which causes them to be treated differently compared to their male counterparts.
This may have a significant effect on their future financial situation. The good news is that both men and women have the same opportunity to prepare for retirement. The sooner you are able to start investing and planning for your retirement, the better prepared you will be. The longer you allow your money to grow and compound, the more stable your financial future will be.
All of these reasons need to be factored in when determining your financial plan. Woman tend to be challenged by these 5 concerns more often than men. Regardless of salary or marital status, the sooner and more focused women are to take control of their finances… the better off they will be.
If you have a mother, sister, daughter or friend that is struggling to find financial independence, feel free to give us a call. We specialize in helping women find clarity and solutions to reduce financial stress and simplify life. We can be reached at 716-662-4470.
Chelsea Maderer is a Financial, Investment and Tax Advisor in the Buffalo-WNY region. She helps individuals and families to Clarify their needs and goals, Solve their problems, and Simplify their life to avoid the common mistakes that get in the way of enjoying life and retirement.