A recent Fidelity study on women and finances shows that roughly 1 in 4 women are not taking part in household financial decision making. The researchers note that this is a big concern because many women will become the sole financial decision maker at some point in their lives. Kristen Robinson, senior vice president, Women and Young Investors for Personal Investing at Fidelity Investments, spoke with BlackEnterprise.com to shed some light on the issue.
BlackEnterprise.com: Why are women not taking charge of household finances?
Kristen Robinson: Women historically have not been involved when it comes to decision-making around investment strategies and long-term finances. According to a recent Fidelity survey, 53% of men say they still take the lead in making the decisions around long-term financial goals compared to only 41% of women. Moreover, Fidelity’s 2013 Couples Retirement Study of 800 couples found that 52% of women believe their husbands or male partners would do a better job overseeing the family finances than they would. Among Gen Y women, only 1 in 8 women consider themselves the primary decision-maker.
Oftentimes, confidence is the major barrier holding women back from becoming actively involved in their finances, which can have a ripple effect on the entire family. What many women don’t realize is that they will need to be solely responsible for their finances at some point in their lives, and relying on a loved one is not always possible. It’s imperative that women have a plan in place before facing a life altering situation, such as death, divorce or a health event of a spouse. Preparation will help women become better equipped to make informed financial decisions, even during an unexpected and difficult time.
Overall, women are capable of making critical financial decisions and statistically do a very good job when they do. They shouldn’t let confidence stand in the way of living to their full potential, particularly when it comes to being financially ready for life’s next turn.
BlackEnterprise.com: What advice would you give to a woman who is afraid to take charge of her finances?
Robinson: Women may lack confidence when it comes to finances, but you wouldn’t know it by looking at the current financial landscape. Women own 8.3 million businesses and generate nearly $1.3 trillion in revenue, according to the 2012 State of Women-Owned Business report. Despite this progress, many women are still falling short when it comes to taking control of their finances. The good news is that women already have what it takes to become successful investors. Fidelity research found that women already possess a number of financial strengths, such as saving diligently for the future, staying the course during market turbulence, and seeking financial advice when needed. With the stakes so high for women today, it’s critical that they get more engaged and ensure that the money they work so hard for is working just as hard for them. Transitioning from a saver to an investor may seem daunting, but it typically takes into account three basic principles:
- Don’t put all of your eggs in one basket. The market is made up of many types of investments. Spreading your money across a variety of asset classes can help minimize volatility.
- Invest early and often. It’s never too early to start saving for retirement, particularly because of the power of compounding.
- Keep it simple. With so many investment options available to you, choosing the right one can be overwhelming. One consideration is to choose a fund that automatically diversifies your investments.
No matter where you are on your personal financial journey, you can take the steps to gain greater control of your finances and be successful at it, too. Consider taking the time to create and tackle a financial to-do list. We all have busy lives, but even an hour dedicated to taking inventory of your finances can make a huge difference. If you don’t know where to start, taking this short quiz can help.
Stay tuned for part two of this interview.