To make informed financial decisions, financial literacy, and education are essential for everyone, but financial planning is of even greater importance to women.
Some reasons why women have traditionally been left behind
A longer lifespan
Generally, women have always had a longer life expectancy than men. This means they will require more capital to provide for their needs in their retirement years. Financial planning is essential to reduce the risk of women outliving their retirement capital while still allowing them to have a comfortable standard of living.
Career interruptions
An event such as maternity leave can cause a career interruption for women, especially if there are a few instances thereof. In addition to this, caregiving responsibilities to not only children, but also elderly parents, and other family-related factors could cause interruptions. These can have an impact on career and income progression, leaving a gap for women by the time they reach retirement. Effective financial planning can help women prepare for this and also assist in maximising their saving potential during active working years.
The gender gap in both income and the workforce
It is no secret that the higher up the corporate ladder you go, the fewer women you will find, and even when women are employed in senior or executive roles, women generally earn less than men for the same position. This means lower earnings over their lifetime, resulting in less capital being available for retirement. Financial planning throughout a woman’s working career can help bridge this gap.
Divorce
Many statistics show that men are often left in a better financial position than women after a divorce. This is especially the case when children are involved as most times, the children end up living with their mother. While divorce agreements make provisions for maintenance, the amount agreed upon doesn’t truly cover all of the costs relating to raising a child, leaving the mother with the responsibility of ad-hoc costs.
The parent with whom the children do not stay also has greater earning potential as they are able to work anywhere without needing to consider childcare or the daily school commute, etc. Financial planning can help to prepare for and soften the hardships following a divorce and assist to plan for a quicker recovery.
Investment confidence and decision-making style
In general, women do not have the same confidence in investing as their male counterparts do. This is because women are more conservative than men and the fear of loss is greater for a woman. Women also tend to make goal-orientated decisions while men base their decisions on data such as performance figures and fees.
Working with a financial planner eliminates the need for investment confidence as a financial planner will provide the necessary guidance and financial education to construct an appropriate financial plan. As this also appeals to a woman’s financial decision-making process, it will give her the confidence to make well-informed financial decisions that are in her best interest and the best interest of her family.
Financial independence and Empowerment
Financial planning can help empower women by giving them the confidence to make financial decisions for themselves, take control of their own financial matters, and secure their future. This not only has a positive effect on their financial well-being, but also their mental and emotional well-being as it improves women’s sense of self-worth, reassures them of their position in society and the workforce, and gives them a greater sense of independence.
Financial planning helps to provide women with the skills and knowledge to overcome the challenges that they may face over their lifetime. By working with a financial planner to develop an appropriate and tailor-made financial plan, women can not only address these challenges but also help prepare for them to reduce the impact that various life events may have on them.
For more information, please visit Fiscal Private Client Services
