The facts are frightening: Women earn approximately 80 percent of what men earn. They live an average of five years longer than men, so they need more for their retirement. And yet, because they earn less and often work less because they take time off to care for children and elderly parents, they save less for retirement and receive lower Social Security benefits.
There are women who have conquered the historic wage gap, most struggle with unique challenges generated by the multitude of roles they play, including wage earner, wife, mother, homemaker, and caregiver. And in that struggle, the principles of sound money management often get left behind.
In an article for Forbes.com, author Warren Farrell notes, "Men make decisions that result in their making more money. On the other hand, women make decisions that earn them better lives (e.g., more family and friend time)."
This statement raises two questions: One, is it possible to strike an effective balance between financial security and quality of life issues? The answer is yes-but it takes education and action. And two, while family and friend time are indeed important, what is the value of peace of mind in being able to provide for yourself and your family?
Women have a complicated and often dysfunctional relationship with personal finance. The issue is not capability-women have the ability to manage money, save, invest, and build wealth as well as men. But all too often, they simply don't do it. Even women with successful business track records, who outwardly appear confident, competent, and accomplished, have been to known to have disastrous private financial lives.
Even one woman in poverty is too many
Let's take a look at poverty statistics. According to the U.S. Census Bureau, the 2004 poverty level for a family unit of one person under 65 is an annual income of ,827. In 2004, the official poverty rate was 12.7 percent, with 37 million people in the U.S. living in poverty. The U.S. Department of Health and Human Services reports that the poverty rate for all women 18 years and older in 2003 was 12.4 percent (13.8 million women). Poverty rates vary by age group among women, with the youngest women aged 18-24 years reporting a poverty rate of 19.7 percent. The lowest poverty rate (8.9 percent) was found among women aged 45-64. The poverty rate increases to 10.6 percent for women aged 65-74 and to 14.3 percent for women aged 75 years and older. Women in female-headed households with no spouse experienced higher rates of poverty (24.4 percent) than women in married-couple families (5.2 percent) and men in male-headed households (8.8 percent).
It doesn't have to be that way. Women of all ages and income levels can take control of their lives and enjoy the exhilaration of financial self-determination.
Putting it in perspective
The most powerful thing to know about money is that it is a tool that can help make your dreams come true. Money is what pays for homes, furnishings, cars, food, healthcare, clothes, entertainment-all of the material things we enjoy. It also pays for non-material things, such as allowing us to support churches, charities, and other causes. Yet money can only work for you if you understand how to manage it. And knowledge isn't enough, because there is so much emotional baggage attached to how we deal with money. According to a Fannie Mae study on personal finance: "Money usage is value laden. Budgeting decisions, daily money choices, savings behavior, and attitudes toward money are at least partly informed by values that stem from one's ethnic group, educational level, class background, income status, and gender." In addition to learning sound financial strategies, you may need a major financial attitude adjustment.
It's also important to recognize that financial education is a lifelong process. A single book, seminar, or class is not enough. Needs change over time-a young woman just finishing college, a Gen-Xer climbing the corporate ladder, a Baby Boomer preparing for retirement, or a retired senior all have distinctly different financial needs. And certainly circumstances and motivations change as one's life evolves. Along with changes in personal situations, women must also cope with a changing economy and totally unpredictable events that can impact their financial security.
When it comes to financial information, technology is a double-edged sword. Affordable computers and the internet have given us access to a tremendous amount of data that wasn't widely available before, but not all of it is sound. It takes a fundamental education in financial basics to discern what advice is good and what isn't.
Ideally, financial education should begin before children start school. But it's never too late. Regardless of your age or stage in life, now is the time to take control of your financial future by learning what to do then making the commitment to do it.Women & Money - The Case For Financial Literacy