Financial Life Planning for Women - Part 1

We can feel a buzz in the air- Women are on the rise in Trinidad and Tobago – our latest achievement is the choice of our 1st female President of the Republic of Trinidad and Tobago. Women are on the rise too, financially speaking. The potential for future growth in terms of investable assets is growing. In 2016, women represented 54.9% of the labour force. Girls are out performing the boys at high school, 65% of the individuals enrolled in the University of the West Indies are women. With women increasingly taking the helm, we should see a new kind of business and work culture that speaks to our needs and lifestyle. Despite these indicators and winds of change in 2016, Trinidad and Tobago ranked 91 in the world (out of 114 countries) in wage equality between men and women for similar work. At times these dynamic shifts can make it feel like the economy is becoming a place where women hold the cards, but we know that there is more work to be done. Our challenge is to protect, grow and spread the wealth that we have created.

Despite all the advances women have made in the realm of personal finance, when it comes to saving for retirement they lag behind men. The gender retirement gap is further compounded by the fact that women tend to live 5-6 years longer than men. While some women reason that they will be able to depend on their husband’s pension – realistically many will not have this choice what with the number of divorces, the number of single parent households and also the number of single women.

What can we do?

The Gender Pay Gap

There is no reason for the continued wage inequality between men and women for similar work. The continued lack of parity translates into less funds to invest over your lifetime. While we need to do something about this a societal level, we can do something about it on an individual level – Ask for a raise! This is one of the best personal investments you can make for yourself and a way to begin the fight for a more secure financial future.

Family Responsibility

Women typically take more time off work than their male counterparts to for example:

  • Raise children
  • Care for elderly parents

Without fully considering the long term financial consequences. Not working means more than just a lower pay cheque – it also means less disposable income to invest in the long term and could also translate into lower retirement benefits.

Divorce

Divorce quite often end up being inequitable as women traditionally bear a heavier burden of taking care of children post-divorce. This could potentially mean less time to devote to career advancement. This only emphasizes the importance of a strong support network be it family, friends and /or paid assistance. Being aware of these consequences could assist in preparing and planning how this will be dealt with.

Cost of Living

Discretionary expenses are just that- discretionary – we can control them. Always “pay yourself first.” Do the necessary research and negotiate the rates on your mortgage, car loan etc. This can reduce excessive costs over a lifetime. freeing more of your accumulated funds to “work for you”.

Gender Investment Gap

Although women actually save more of their disposable income than men, they tend to invest less of it, leaving a lot of their funds in in cash or low yield savings accounts (we don’t need to reiterate how low the rates are on savings accounts at the various Banks!). The good news is though, when women put together personal plans to bridge the gender investment gap, it has dramatic, positive consequences for their financial lives. We as women need to put aside incorrect stereotypes attached to women such as:

  • Men are better investors than women. Research has shown that internationally, when women invest, they tend to be highly successful and at times out perform men.
  • Women are too risk averse to invest successfully. True, some women may be risk averse - but caution in investing can be a virtue that helps you to better weigh your options and avoid making rash decisions. At the end of the day, once you ensure that the connection between your values, goals, financial plans and investments are clear and in alignment, this doesn’t present a problem.
  • Women don’t have enough financial education to make a financial plan.This is an unfair generalization as women are often responsible for the running of the household and budget and do so quite successfully(haven’t we all at some time witnessed our mothers stretch a dollar further than we could have ever imagined). Not to mention that not having a financial education has never stopped men form investing so equally it should not stop women. What I would suggest is that you make sure that you speak with a financial adviser whom you can trust.
  • Women are too emotional about money. Good! The reality is that you need to be emotionally connected to delve into your values and priorities to make a solid financial plan.At the end of the day you don’t want to focus on the wrong things and end up working hard to achieve objectives that you don’t even believe in.

Let us help you develop your Financial Life Plan, call Guardian Asset Management today at 226-2799!


Orginal Article: Financial Life Planning for Women - Part 1