How Women Can Boost Their Financial Confidence
When it comes to earning, investing and saving, women tend to lag behind their male peers. This gender difference is often blamed on women's caregiving roles, which often leads them to scale back their workforce participation when they become mothers or preemptively select more flexible jobs that come with lower pay.
According to a Fidelity survey released in February of 1,542 women over age 18, another overarching factor might be at play: a lack of confidence. While 92 percent of respondents said they want to learn more about financial planning and 83 percent said they want to be more involved in their finances, the majority also reported feeling uncomfortable talking about money, even with friends, spouses and financial professionals. In fact, 4 in 5 women said they have avoided talking about finances with someone they're close to because the topic is too personal, or it feels uncomfortable to discuss.
In a video of women talking about money that Fidelity released with the study last month, many women cite earlier habits, sometimes dating back to childhood, of watching men handle the finances in families. The survey also found that just 28 percent of respondents said they felt confident when it comes to picking investments without help, and 37 percent felt confident about handling retirement planning on their own.
"The confidence gap they have is, in my view, completely unwarranted," says Kathleen Murphy, president of personal investing at Fidelity. "I think the secret here is that investing is not that hard, and we need to do more to engage and empower women in investing."
To help engage female clients, Fidelity offers free seminars to women based on age groups. "We encourage them to bring a friend, and most women do. The focus is on investing, but they also appreciate talking to each other and sharing their experiences," Murphy says. "They feel intimidated, so we're trying to get them to take that first step."
It's particularly important that women embrace financial management, Murphy adds, because at some point in their lives, 9 in 10 women will be the "sole financial decision maker" because of divorce or death.
David Bach, author of the best-seller "Smart Women Finish Rich" and vice chairman of the financial planning firm Edelman Financial Services, says one of the most important steps women can take is to manage their own finances and not delegate that task to their husbands or partners. "You should be the one who is in charge of the money," he says. That way, women will be prepared to handle finances in the event of divorce or death.
Another challenge for women, particular those in middle age, Bach adds, is the stress that comes from caring for aging parents. "As Mom and Dad get older and get sick, women who have big careers often have to make a decision to stop working to take care of parents, and it's typically the daughter who takes on the elder care role," he says.
Many women end up trying to do it all -- care for parents and children, earn money, be a great wife -- and get stressed out doing so, Bach says. "It creates an amount of pressure that women didn't face 40 or 50 years ago," he says.
A 2014 American Psychological Association survey of 3,068 adults found that while 72 percent of respondents said they felt stressed about money at some point in the last month, about half of women were so stressed that they couldn't sleep, compared to 32 percent of men.
If you think your financial confidence might be lagging, here are some ways to give it a boost:
1. Read a book. Two newly released books aimed at women spend a chunk of their pages offering confidence pep talks. Chapter one of "Rich Bitch: A Simple 12-Step Plan for Getting Your Financial Life Together...Finally" by financial journalist Nicole Lapin, advises readers to "embrace the 'Rich Bitch' attitude," which includes pursuing goals with abandon. "A Rich Bitch has the self-awareness to know exactly what she wants from her life ... and she is fluent in the language of money that is the key to achieving those goals," Lapin writes.
In "Ladies with Loot," financial advisor Erica McCain defines her titular "ladies with loot" as "secure, confident women who budget appropriately and reap the benefits." Her client meetings often focus on attitude adjustments before exploring budget and investment choices, she writes. "There are so many destructive financial habits that women are trained to think are 'normal' and even 'thrifty' that counseling my clients is sometimes more like deprogramming them!"
2. Join a seminar. Bach, Fidelity and dozens of other financial institutions offer workshops and seminars aimed at women and their financial challenges. Bach says at his seminars, which are based on the "Smart Women Finish Rich" book, issues include planning for women's longer life spans and caregiving roles. "Women are putting less money into Social Security and 401(k) plans and crippling their career track because of those years they take off, which reduces their income level," Bach says. He adds that his seminars teach women to start saving early, save automatically and invest their money wisely.
3. Get guidance at work. Despite availability, the Fidelity survey found that 65 percent of women don't take advantage of their workplace programs that offer retirement and financial guidance. "Many employers now offer free workshops and educational materials, so take the step and get help at the workplace. It's free," Murphy says.
4. Take a do-it-yourself approach. If you prefer to learn on your own in the comfort of your home, you have plenty of options. Fidelity, Citigroup, Bank of America, SunTrust and other financial institutions offer free articles, retirement readiness calculators and information on their websites.
5. Work with a financial advisor. Turning to a professional is also an option for those who prefer not to manage their money on their own. Be sure to ask about fees, and make sure you share a similar communication style so you're on the same page.
6. Get over the awkwardness and talk with friends. Chatting about money with friends, even though it can feel uncomfortable at first, can often lead to insights and encouragement. Fidelity suggests finding a financial "buddy" to talk with regularly about money and specific challenges and goals.
Despite the findings, Bach says he's not too concerned about the confidence gap between men and women. "The only reason there's a confidence gap is that women are more honest about it when they take surveys," he says. "Men don't like to admit they're lost and women are like, 'Yeah, I'm lost.'"
