More Women Taking the Lead in Personal Finance Decisions

Filed under: Family Money, Personal Finance, Budgeting, Marriage, Planning

When it comes to making personal finance decisions, women are taking the lead, a recent survey by Ameriprise Financial called "Women and Financial Power" reveals. The survey, which included women ages 25 to 70 with at least $25,000 in investable assets, found that 56 percent of women say they share in making choices with a spouse or partner. Another 41 percent said they're making financial decisions on their own, including 37 percent of this group that are in long-term relationships.

The percent of women who believe it's their responsibility to understand their financial situation is higher among older women: 91 percent of baby boomer women, compared to 84 percent of Gen X women and 80 percent of millennial women.

Financial experts have suggestions for women in different age groups to help them take responsibility for their money.

Baby Boomer Women

Seventy-six percent of the baby boomer women (ages 55 to 70) surveyed by Ameriprise have a financial plan, compared to 56 percent of younger women. Overall, of women who share financial decision-making with a partner, baby boomer women are more likely to be involved in all five aspects of planning the study covered -- budgeting, saving, investing, insurance and estate planning -- than younger women.

"Baby boomer women face some of the biggest financial decisions of their lives between retirement and Social Security choices, so having trusted partners in their spouses and financial professionals is incredibly important," says Michelle Young, an Ameriprise financial advisor in Edina, Minnesota. "For those boomer-age women who are primary financial decision-makers in their households, we learned that this role can make older women feel anxious. These women are less likely to be in this role by choice. Asking for advice and help from a trusted friend, family member or financial professional can make financial decisions less intimidating, and creating a long-term financial plan can also help reduce anxiety."

Gen Xers

The Ameriprise survey showed that 62 percent of Gen X women say they're afraid they aren't saving enough and 30 percent don't feel in control of their finances.

"The most important thing women ages 35 to 54 can do to feel more financially confident is to set aside some time during their busy lives to focus on their finances and to create a financial plan that includes a monthly budget, retirement savings, proper insurance coverage, and an emergency fund," says Young. "Having these things in place will help these women mitigate some of the expensive life events -- expected and unexpected -- that can occur at this stage of life."

Pamela Yellen, a financial expert, author and editor in chief of The Women's Financial Edge, says that Gen Xers are frequently sandwiched between elderly parents who need may need financial help and kids who are either still at home, off in college or back at home because they can't make it on their own in this economy. All of those pressures often lead Gen X women to put their own financial futures in jeopardy.

"To get in control of their finances, Gen X women need to work toward adopting the 10/10/10 savings strategy," says Yellen. "Set aside 10 percent of your income for short-term needs such as vacations and gifts. Set aside another 10 percent for anticipated mid-term needs and emergencies, like a new car, college tuition or replacing a roof or major appliance. Set aside another 10 percent for long-term retirement planning. The money that's left over? That's what you have to spend."

Millennials

More millennials say they learned about finances from one or both of their parents than do women from older generations (62 percent compared to 45 percent of older women). And 26 percent say that making informed financial decisions defines success in their lives, vs. just 19 percent of the Gen Xers. In addition, more of these women said that a milestone or challenge in their life caused them to revisit their financial strategy and save more.

Millennial women are more optimistic about their financial future than Gen Xers, says Young. "More of these women [than in the other generations] who are primary financial decision-makers for their households say it's because they want to be or because they feel more knowledgeable than their spouse or others who help them with finances," she says.

In fact, 50 percent of millennials say they are "more knowledgeable than my spouse/partner" (compared to 47 percent of Gen Xers and 35 percent of baby boomers) and 41 percent "enjoy making these kinds of decisions" (compared to 25 percent of Gen Xer and 23 percent of baby boomers). Yellen says millennials are the most risk-averse group and the most committed to funding their retirement, but she suggests that millennials avoid target-date retirement funds.

"To gain control over your finances, every young millennial woman needs to stop taking the path of least resistance," says Yellen. "Rather than throwing your money and trust into the default investments of your employer's retirement plan, you need to do your homework and insist that your money gets invested in truly low-cost indexed mutual funds benchmarked to the broad stock market."
While the Gen Xers in the survey face more challenges and hurdles than the millennials or baby boomer women and are currently the least likely to have a financial plan, hopefully the example set by the older generation that values financial security will encourage Gen Xers to seek financial advice to improve their situation.

Michele Lerner is a Motley Fool contributing writer. To learn more on ensuring a comfortable retirement for you and your family, see our free report in which Motley Fool retirement experts give their insight on a simple strategy to take advantage of a little-known IRS rule to boost your retirement income.

 

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