Four reasons a woman’s financial needs are different

The Federal budget that was just released, I thought it would be interesting to talk about one thing it omits – the difference between a woman’s and a man’s financial needs.

It is a given most financial planners are men, so it doesn’t come as a surprise that financial plans are built around them. A woman’s needs are a little different.

Firstly, women live longer than men and it’s wonderful! Unfortunately, longevity comes at a cost – housing, insurance, care and medical costs all add up. Research shows women typically tend to underestimate these costs and I suppose no one has ever heard of ‘women flu’ (haha).

So, at some stage a woman is likely to have sole responsibility for financial decisions. This is typically at a time of loss, not an ideal time to have the added anxiety of financial insecurity.

To help with this, it is a good idea to start by participating in long term financial decisions and gaining experience early on. You will and can feel much more confident and capable of caring for yourself when the time comes.

Secondly, women earn less than men and that’s the reality we live in. Although we are making progress, a woman is still likely to be paid less than a man to do the same role (grrr). Many women also take time off work to be mothers and/or carers which is emotionally rewarding but rates poorly on the financial scale.

This can often mean a career change or accepting less responsibility at work. It clearly causes havoc to short term cash flow and a dent in superannuation contributions. Having a clear strategy in place and ensuring that your money is working for you is critical.

Thirdly, women invest differently. As women, we have different motivations and have a broader perspective. We are more careful and we do more research. We prefer a more disciplined approach. Women also do not see asking for direction as a point of failure – we are more open to financial advice.

However, and sadly, financial planning is a very male dominated industry. Again we are making small gains yet women are still often ignored in the conversation or spoken to in a condescending manner.

Fourthly, relationship breakdowns. We all know women who have financially suffered after a relationship breakdown and so it comes as no surprise that women are much more vulnerable to financial insecurity. Just look at the divorce statistics.

Research indicates a woman (in a long-term relationship) is much more likely to take responsibility for the day to day budget, leaving the management of long-term finances up to their partner.  If the relationship results in a breakdown, the woman will face not only the added pressure of managing her own finances with very little experience but also face the risk of exposure through their financial naivety or lack of knowledge.

What is the most important thing to take away from this? Women are and can be vulnerable when it comes to money – we need more of it but earn less. The security can only come through understanding our own needs and gaining the knowledge and confidence to address them.

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