Financial Empowerment: Should Women Go it Alone or Keep it Together?

PHOTO: A woman uses a calculator at her desk while looking over a stack of bills in this stock photoChemistry/Photographer's Choice/Getty Images
A woman uses a calculator at her desk while looking over a stack of bills in this stock photo.

At some point in their lives, most women will be financially responsible for themselves.

Many married women who didn't play a strong role in family financial matters ultimately end up facing this responsibility, brought by divorce or widowhood. Because women live longer than men, the chances are that even happily married women who leave finances completely or largely up to their husbands eventually will face a difficult adjustment. This can be frightening, especially when you’re older and there’s less margin for error as retirement approaches.

No adjustment is necessary for women who have become financially empowered by claiming their financial power. If they’d done this, they’d already be in charge of their own financial destinies and would be playing a larger role in their marital finances. Financial empowerment is about using money as a tool to enhance your life. That includes your marriage; one goal of financial empowerment is not only to strengthen yourself but also your marriage.

Many married women simply choose not to get involved in major financial issues. Many get involved in day-to-day matters such as managing the checkbook and paying bills or short-term budgeting. But studies show that the larger the amount and the more long-term the goal, the less the average married woman is involved. Women tend to be less involved in critical issues such as long-term investing and assuring retirement income streams.

To work toward financial empowerment and strengthen your marriage concerning financial matters, consider these points:

* Communication over a mutual financial plan is critical. Effective financial planning begins with a close examination of your values. These values, reflecting your goals and what you generally want out of life are the drivers of how much money you’ll need and how you plan to acquire it. Strong marriages revolve around common values that are mutually articulated, understood and acted upon. Both spouses must operate within the framework of these shared values and goals. Marital and financial success is achieved by couples who adapt their strategies to reflect changing situations.

* Being financially empowered doesn’t mean that you need to separate your money from your spouse’s. Regardless of who generates most of the income, the key is that money is going towards agreed-upon goals based on shared values. Any other approach fails to support a truly healthy marriage. When spouses don’t agree on financial issues, they often split the bills down the middle or allocate them in some set manner. This scenario reflects that problem that both partners want different things for their life together. This can create resentment and alienation.

* Debt can become a problem, particularly if one partner brings substantially more of it to a marriage. Inequality of debt--or of income or spending, for that matter--can become a problem if the couple does not communicate their combined values. If one partner perceives himself or herself as vulnerable in the marriage, this can create inequality that may ultimately cause marital problems. Marriages where one partner feels overly vulnerable or dependent either end up in divorce or, worse, in an unhappy partnership.

This vulnerability isn’t just a potential issue down the road, when women may become widows. Many women are vulnerable throughout their marriages because they lack the knowledge to provide financial stewardship in the couple’s best interest.

Feeling financially vulnerable is a big problem for many women. A client of mine was in a bad place psychologically, and felt she needed to learn more about financial matters so she could make a greater contribution to the marriage. So she worked hard to learn. As a result, her marriage improved. Becoming less vulnerable benefited her marital dynamic.

Tension over money is a major stressor on marriages, and there can be more tension when one partner is vulnerable. A recent study examined the relationship between financial issues and divorce. It showed that arguments about money were longer and usually more intense than other types of marital disagreements. Another study showed that 22 percent of those who get divorced identify financial issues as a major cause.

To claim their financial power and make a contribution to family financial management, many women must first change their long-held beliefs and attitudes about gender roles. They must start by doubting the legitimacy of their existing views.

The sad thing is that some women don’t have a clue about this. I once gave a speech at a women’s leadership group, and I was astonished that even among such a group, the concept of women taking on equal roles with their husbands in managing money was foreign. In some ways, it’s as though the 1970s--and the era’s emphasis on gender equality--never happened.

Even among those who know they need to make a change, change is difficult. But if you don’t change, everything will remain the same. As Einstein said, the definition of insanity is to keep trying the same thing over and over while expecting a different result.

Regardless of how well your marriage is going, there are some things you should do now to protect yourself in the event of divorce:

* Make a list of the assets you and your husband own together and separately.

* On this list, make distinctions between assets you brought into the marriage or acquired separately during the marriage and those you and your husband acquired together. Separate assets might include various pre-marital savings or investment accounts, and inheritances.

* If you inherit money during your marriage, keep this in a separate account in your name instead of mixing it with marital assets (accountants call this “comingling”). As inheritances are considered your birthright, they tend to not be regarded by courts as marital property subject to division.

If you get divorced, you’ll be glad you took these steps. If you stay married, doing so can help you get a better grip on your family financial situation – a step toward financial empowerment. By improving your grasp of financial matters, you can lessen your vulnerability, engendering greater trust, communication and increasing the potential to reach shared goals.

Any opinions expressed here are solely those of the author.

Laura Mattia is a partner with Baron Financial Group, and a fee-only financial advisor. She's a Certified Financial Planner professional (CFP®), a Chartered Retirement Plan Specialist (CRPS®) and a Certified Divorce Financial Analyst (CDFA™) and holds an M.B.A. in accounting/finance. Her Internet radio show is Financially Empowering Women™ with Laura Mattia. A former professor at the Rutgers University Business School, Mattia is completing a Ph.D. in financial planning from Texas Tech University; her dissertation is on how to help women plan for retirement.