Although they often become solely responsible for their financial wellbeing, many women don’t take an active role in their family’s finances. This is cause for concern.
In general, women today are living longer than ever and continue to outlive men. In addition to the money they earn, women may also receive a large inheritance. It’s estimated that women in Canada will inherit $900 billion in assets by 2026.1 Whether they are single, married, divorced, or widowed, women should be encouraged to take more control of their finances – and it needs to happen now.
Numbers tell the story
Let’s consider a few stats to gain more context:
- 33% of first marriages in Canada end in divorce each year1
- 41 is the average age a woman divorces in Canada. The average woman is widowed at 561
- 59% of widows and divorcees wish they had been more involved in long-term financial decisions2
- 74% of widows and divorcees don’t consider themselves very knowledgeable about investing 2
- 64% of widows blame themselves for not being more financially involved (53% of divorcees) 2
In the midst of Canada’s largest intergenerational wealth transfer in history, and with longer lifespans and the need to plan for an extended retirement and greater health care expenses, women face pressure to manage their wealth effectively.
Many women lack confidence in financial matters
Of course, achieving financial independence is important for anyone, but as the stats above illustrate, it’s especially crucial for women as they are typically starting from a disadvantaged position. Often under the belief that investing and financial planning are too complex and being financially prepared requires significant expertise and time commitment, only 31% of women are confident in their financial knowledge.1 That’s why the spotlight on women and their wealth is brighter than ever.
Women can become more financially secure if they gain a firm grasp or understanding of basic money management: budgeting, cash flow management, investing to meet their financial goals, and saving adequately for retirement. Learning how to manage wealth can be overwhelming, particularly for women who are primarily focused on taking care of their family and have delegated most money matters to their partner. Roughly 74% of men say they are the lead financial and investment decision-makers in their household, but 90% of women will have that role thrust upon them later in life, often as a result of divorce or widowhood.1 That’s the troubling disconnect we must address.
While the financial planning process may be complicated at times, it’s nothing you can’t handle and eventually master. Begin with the two action steps below:
- Empower yourself with financial literacy. Learning more about investing, budgeting and overall financial planning will help form the building blocks you need to gain confidence in your financial management abilities. You should also take charge of your specific situation. What are your most important short- and long-term goals? Do you know how much savings you have and where/what your investments are? How about your debts, such as credit cards, loans, mortgages, etc.? If you have a partner, the goal should be full financial transparency so you can get an accurate picture of your household finances. Only when you fully understand your assets and liabilities can you determine what gaps may exist in your financial plan, and how to address them.
- Benefit from financial advice. It’s critical to work with an advisor who understands your unique financial needs, objectives, and challenges. An advisor gains deep insights into the complexities of your life and will create a personalized plan with strategies and solutions to help you achieve financial success – however you choose to define success. Significant life events like divorce or widowhood can have an immense impact on your financial wellbeing. Working with an advisor, you can be more secure about your financial future, even when dealing with difficult circumstances, and be confident that your comprehensive financial plan will sustain you now and in the future.
Contact our office today if you'd like to review your financial plan and gain more insight into your finances.
1 Women & Wealth: Financial confidence comes with finding the right advice, IPC Private Wealth, 2018.
2 Own your worth: How women can break the cycle of abdication and take control of their wealth, UBS, 2018.