Study Reveals More and More Women Are Taking Control of Their Finances
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I feel right at home in my age bracket when I hear numbers like, “Just one in 10 people 25-34 years old has a financial plan in place.” Much as I wish I were that one in 10, I’m not.
In partnership with the Women’s Media Center, Prudential Financial released a report this past Tuesday titled, “Financial Experience and Behaviors Among Women.” The report surveyed 1,250 women between the ages 25 and 64, with an average household income of $50,000 described as "highly educated, typically employed, and three-fourths have savings and assets of $100k or more.” Twenty-one percent of respondents were between the ages of 25 and 34. Overall, the findings indicate that women are taking more control of their finances, with 84 percent of women either solely or jointly responsible for household financial decisions.
However, it also shows that many women are not properly saving for their future and retirement. Released on the heels of the Great Recession, the report notes that the financial crisis served as a wake-up call to women about the importance of developing financial plans to secure their futures. In theory, I love the idea of saving for my future. In reality, the topic of saving and financial planning makes me nervous.
According to the report, the main reasons women don’t plan for retirement are lack of knowledge, lack of time, and too many basic living expenses or short-term expenses. I can certainly relate to all three challenges, mostly the last. In college, I assumed that upon graduating and starting full-time work, I’d immediately start saving for retirement. Once I actually started collecting paychecks and paying bills, saving even a little month to month seemed daunting. Basic expenses -- rent, food, utilities, phone, etc. -- during my first year as a graduate ate up around 70 - 80 percent of my take-home pay.
In addition to basic living expenses, many women my age are either paying off or just finishing paying off student debt from undergrad. And with the shrinking job market and the high level of competition in the workplace many are forced to go back to school and incur even more student debt. All of these factors play a role in the challenges young women face when trying to plan for their futures.
Although the Prudential report painted an optimistic picture of women’s financial positions, some key areas for growth were clear. The most striking finding for me was that women lack confidence in financial decision making. I thought it was just me. Only 18 percent of women surveyed feel “very prepared” to make “wise financial decisions.” Not surprisingly, the survey also found that more than half the women would be willing to have decisions about their finances made by others. For six out of 10 women those “others” are friends and family and only 19 percent of women feel comfortable trusting a financial adviser.
While I could endlessly analyze my own lack of financial confidence, the fact that my feelings are common begs the question of where these feelings originate. While not wholly responsible, I know that role models certainly play a role in the way women approach finances. Having been raised in an extremely religious, traditional community my earliest female role models seemed to rely on their husbands to earn and manage the bulk of a household income. Even though I am motivated to buck that fading tradition and earn my own way through life, I have no doubt that these early influences are instrumental in my financial decision-making confidence. My desire for financial independence has been planted by successful, self-sufficient friends, mentors, colleagues and other influences that came a little later in life.
If role models impact women’s financial behaviors it is crucial to examine the impact of media on women and finances. According to SheSource, a program of the Women’s Media Center, “on the influential Sunday morning political talk shows, women represent only 14 percent of guest appearances.” Producers' and journalists' inability to find women experts is the main reason noted for their male counterparts outnumbering them in the media. Women’s Media Center president Jehmu Greene rightly noted that "…so many time the experts that are tapped to tell our stories, to help young people envision their future...so many times those stories are told without representing half of the population."
With financial media the story can be interpreted as the financial advice, who is giving it and how the viewer, particularly women, can relate to them. Greene also pointed out that women generally are socialized to be most comfortable taking advice from their peers, their social network and people to whom they relate. "That’s why you do see us represented in higher number on social media and that now needs to be reflected in traditional media.”
The results of the Prudential report show promise of more women with financial independence now and in the future. In spite of the challenges for younger women I find the results simultaneously hopeful and overwhelming. I am less concerned with retirement planning as a single woman in the youngest age set of the study but I agree it’s something I should be thinking about. Saving and planning can be overwhelming, especially for the young, underpaid, and underemployed urban set but it’s encouraging to see that women are moving closer to financial independence. Especially for us young women who might be in the planning to plan phase of financial planning.
You can access the complete report here.