Can you name all the bank accounts and credit card accounts you and your husband/partner own jointly and individually?
Do you know how much you owe on your mortgage?
Can you say with certainty how much your partner earns, including base salary, bonuses, pension contributions, benefits? Or what your monthly expenses are?
In other words, can you list all of your income, expenses, assets and liabilities?
Unfortunately, far too many women can’t make that kind of list. Many women are less confident than men about their ability to manage their cash flow and debt, their investments and prepare for their retirement. Many simply are not familiar with even the basics of their family finances.
I struggle to understand this, but then I am single, my affairs are relatively simple and as I get older the more resolutely independent I get…. I’ve never understood friends who have to ask their partner for cash for a night out or the pin number for their joint account.
Why do women struggle? Is it because women have been socialised to think they are bad with money, that it’s unfeminine or not our “job”?
I think the issues probably start long before any mutually financially dependent relationships you may get into – and it’s really all to do with learning to be financially literate.
In 2008, President George W. Bush created the first ever President’s Advisory Council on Financial Literacy. That Council defined financial literacy as “the ability to use knowledge and skills to manage financial resources effectively for a lifetime of financial well-being.”
“Financial Literacy” – It’s not about luck or about being in the right place at the right time. Instead, it’s about educating yourself and learning how to manage your financial resources.
But how can we do this? It’s not taught in school and it’s not something any teenager is probably that interested in – I certainly didn’t!
I don’t mind admitting its taken some time for me to obtain this ‘financial literacy’ and understanding. Clearly, my training and job has helped… but for the early years of work I still had very little real awareness about money and its impact on my financial well-being.
A lot of this is about your relationship with money. It’s about asking questions and coming up with your own ‘financial plan’ – no matter how simple or complex.
My experience with friends and clients has also shown me that your own financial education must start by being open and honest with your partner and addressing heavy topics, like family history of money and imbalances such as debt, emotional spending, and under-earning.
We need to change the attitude of “my partner sorts all that” or “I’m not interested as long as I have enough to buy my shoes and go on holiday”. Or worst still “I earn less so I can’t ask for that”.
Why? Because it’s just too dangerous to ignore it. We all need our own pension / savings and a level of independence – even of you are in a wonderful loving and ‘equal’ relationship.
As a financial planner I see two scenarios regularly that prove why this is vitally important for women.
- A very happy relationship – The relationship is wonderful and you spend many happy years together until the husband/male partner dies (or becomes incapacitated). Then the woman realises she is completely uninformed about any details of her family’s financial affairs. As a result, she feels overwhelmed and emotional and can become an easy mark for unscrupulous con artists/scams – or it’s quite likely she will simply make devastating financial mistakes on her own.
- A very unhappy relationship – The marriage / relationship ends and leads to divorce / break up. This is when a woman who has not been involved the family finances finds she is forced into constant catch-up mode, she likely has no idea where to begin, what to look for, what to do. Meanwhile, her husband/partner knows everything and could be hiding assets and setting things up to his advantage. (And who knows? He could have been doing just that for years!)
So, it may be daunting, but it’s really important to have the often daunting “money talk”…. Be this with just yourself so you know where you are and where you want to be; at the start of a relationship or define your mutual goals and ambitions; or even into a well-established marriage, so that you both know you are financially aware of your mutual situation and family finances.
After all, matters of the wallet can be just as important as matters of the heart.