The Wisdom in Taking Part in Household Finance Decisions

Posted on March 6, 2020

By Kim Ciccarelli Kantor CFP®, CAP®
Co-authored by Jill Rapps Ciccarelli, CFP®

Women have made phenomenal strides in nearly every job sector. Many now hold equal responsibility with their partner in supporting the household financially. In fact, studies have revealed that more than 50 percent of working women are responsible for half or more of a household’s income.

Although women are taking greater roles in building household income, when it comes to assuming an active role in long-term financial decisions, many women still struggle to maintain equal footing. A UBS Global Wealth Management report found that 56 percent of women between the ages of 20 and 34, and 54 percent of women over the age of 51, leave crucial financial decisions to a significant other.

In the past, it was common for women run the household and leave financial planning to the husband. This practice today could leave many women in a financially insecure predicament. A life-changing event such as divorce or the loss of a spouse can leave you suddenly and unexpectedly with full financial responsibility, perhaps unsure about how to move forward.

One question that often arises regarding finances in a relationship is, “When should we begin discussing money?” Many relationship experts agree that financial discussions should begin early and continue often. A survey conducted by LendingClub found that those who discuss important financial topics early in a relationship are less likely to feel isolated and more likely to prioritize personal health and well-being.

That said, understanding the need for discussion, and putting it into practice are two very different concepts.

Some people may be hesitant to discuss money. It can be hard to overcome the internalized alarms in our brains telling us to retreat when we approach an uncomfortable subject, but that alarm could also signal that we need to have that discussion. You could start small with metaphorical “discovery” questions such as, “Would you rather spend a moderate amount of money on a small vacation every year, or save a substantial amount and go on a big vacation every few years?”

Some women may still feel that taking a more involved role in the household’s financial affairs is just not for them, leaving them in a particularly vulnerable place.

Let’s take the fictional couple, John and Mary. Mary left the workforce years ago to care for their children and aging parents. With the stress of overseeing the care of the family, Mary has left the financial planning to John. One day, John has a stroke and is left severely incapacitated. Since Mary has not been actively involved in the finances, she lapses on the payments for John’s credit card, which was paying the mortgage and utility bills. She has difficulty making financial decisions and incurs penalties and fees. On top of overseeing the care of the family, Mary is now also responsible for the finances and becomes overwhelmed.

Taking part in the financial conversation can be scary, but it can also be extremely rewarding. Having financial autonomy not only provides a sense of security, but it also promotes leadership, accountability and positive self-esteem.

A study done by Everyday Health found that 63 percent of millennial women reported low self-esteem and self-confidence. Having a sense of independence and something to work toward together could help provide that extra boost of confidence.

“Independence” and “togetherness” may often seem like two conflicting terms but having the ability to achieve both can be highly beneficial in a relationship. Especially when money is concerned. Women often have different financial needs, especially when it comes to retirement. Staying uninvolved could leave women unprepared and overwhelmed; but having a say in how and where you want your money spent is empowering.

Becoming financially autonomous in a relationship is not an arbitrary goal. It could be a matter of necessity, and a goal all women should aim to reach.
Investment advisory services offered through Ciccarelli Advisory Services, Inc., a registered investment adviser independent of FSC Securities Corporation.  Securities and additional investment advisory services offered through FSC Securities Corporation, member FINRA/SIPC and a registered investment adviser. 9601 Tamiami Trail North, Naples, FL. 239-262-6577.