More than a third of women in the U.S. are the breadwinners in their house. That’s pretty exciting! Even if women are not the breadwinners, more than 50% of women in a two adult household manage the day-to-day finances of their home according to the October 2016 study from Allianz Life Insurance Company of North America, Allianz Women, Money, and Power Study. These women are basically the CFO of their homes; paying bills, paying for groceries, kids’ expenses, and essentially running the finances of the home.
However, running the household finances and knowing how your money is invested are two entirely different concepts. Often during conversations with friends or during financial seminars we conduct we are frequently disappointed to hear women say they have no idea how their money is invested making comments such as “Oh my husband takes care of that” or “I don’t know because that is not my responsibility, I just pay all the bills for the household”.
Women don’t need to be experts in investments but what we do recommend is that at a minimum, women know the allocation of their investments and the difference between investment vehicles. How much do have invested in the various stock markets, how much do you have invested in bonds? Do you know the difference between a stock and a bond? Do you understand the difference between a stock mutual fund and a stock Exchange Traded Fund (ETF). Do you understand all your investments?
Why is it so important to understand what you are invested in? Well, what if the unimaginable happens and as a woman, who has let your partner manage the money, you find yourself in a situation where your partner is suddenly unable manage the investments due to incapacity, death, or divorce? Understanding how your allocated among investment vehicles is a necessity when it comes to making sure you meet your financial goals. We are not advocating that you read the investment section of the newspaper daily or watch financial television daily (we actually don’t want you watching the “talking heads” daily) but learning the difference between owning a stock, a bond, or a fund or ETF of stocks and bonds is crucial.
As in all areas of gaining knowledge, it takes time so start slowly and maybe pick up a book about investing 101. When you run across an investment article peruse it, maybe turn to a financial channel occasionally when you are in the car and start to familiarize yourself with the terminology. Knowledge is power and if you ever find yourself in a situation where suddenly you are responsible for your wealth you will be better poised to make smart decisions about how your money is invested to meet your goals. Always remember, if an investment sounds too good to be true then chances are, it is too good to be true!