Many women seem stuck in the 1950s when it comes to money, content to let their husbands make the big financial decisions because they as wives know less about money.
That’s the gist of a recent report from UBS Wealth Management USA, titled “Own Your Worth.”
About 1,500 married folks — the majority of them women — and an additional 600 women who had been divorced or widowed were polled for the study.
The problem for women
The UBS findings paint a picture reminiscent of a bygone era in which a husband’s role was typically breadwinner — if not sole income earner — and a wife’s role typically was homemaker. The report shows that:
- While women often handle day-to-day finances, 56 percent of women leave investment and financial planning decisions to their husbands.
- Among women who leave long-term financial decisions to their husbands, 85 percent believe their husbands know more about those decisions.
- Among women who leave long-term financial decisions to their husbands, 85 percent prefer that their husbands make those decisions.
The problem with such arrangements is that a woman who takes a hands-off approach to finances would have a harder time managing finances on her own if she ends up divorced or widowed. And the hard reality is that one or both of those circumstances are more likely than not.
UBS points out that more than half of marriages end in divorce and women have longer life expectancies. Specifically, according to the U.S. Social Security Administration, the average woman turning 65 today is expected to live more than two years longer than the average man turning 65 today.
The problem for everyone
The take-away from UBS’ research isn’t just for married women, though. It’s for anyone who isn’t paying enough attention to their finances. UBS may be encouraging wives to become involved in their household finances, but it’s really something we should all be doing — male or female, married or not.
If you’re asleep at the financial wheel, your wealth is bound to suffer — even if you manage to avoid divorce and widowhood. You likely have no idea whether you’re spending more than you’re earning, or whether you’re on track for a comfortable retirement, among other cornerstones of financial stability.
In the past, I’ve been the wife who handles every financial detail, from paying the bills to picking the retirement investments. That doesn’t work, either. My husband and I weren’t mutually happy with how we handled the finances until we:
- Got a handle on our financial situation by tracking income and expenses, budgeting where necessary and monitoring our progress toward our financial goals. We use software called YNAB (short for "You Need A Budget") to do this.
- Got on the same financial page by regularly discussing our current financial status and future financial desires. We currently have monthly sit-downs with reports generated by YNAB.
Managing finances well is not about the sex of the household financial controller. Instead, it’s about every member of the household being involved enough with the finances to be aware of the household’s financial situation.
As the UBS report puts it:
“In reality, taking an active role in household finances does not mean becoming an expert — it simply means becoming more involved and aware.”
The report makes that statement in the context of encouraging women to be more involved, but it should serve as a reminder for anyone who is not fully engaged in their finances.
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