We like to think that we’ve come a long way. After all, it wasn’t that long ago that women were relegated to kitchen duty and raising children. Other opportunities - any other opportunities - were few and far between.
Fast forward a few decades: Women now make up almost half of the workforce in Canada, and if the trend in the United States is any indication, they may be on pace to out-earn men in the not-too-distant future.
But in this wave of positive change, there’s one area where women appear to be a bit stuck. According to the 2012 TD Women Investor Poll, when it comes to household finances, the majority of women are clinging to the traditional role of budgeting and managing household expenses, leaving much of the retirement planning, investing and investment management to their male partners.
According to Sandy Cimoroni, president at TD Mutual Funds and executive sponsor of TD’s Women Investor Strategy, the things that have been holding women back when it comes to managing their own money haven’t budged since TD started gathering statistics on women investors 12 years ago. Fewer women than men are responsible for managing investments (32 percent vs. 49 percent), dealing with financial professionals (33 percent vs. 44 percent) and planning for retirement (30 percent vs. 38 percent respectively). And those behaviors have very tangible results. In households that are run by women, assets tend to grow more slowly, and are more likely to include a higher percentage of uninvested cash (23 percent) compared to households where men hold the money reins.
1) Starved for time
While a number of women may not feel familiar with the markets, just about every one of us could put a fine point on the value of one key commodity: time. According to the Canadian Index of Wellbeing, 23 percent of women (compared to 17 percent of men) report feeling high levels of time pressure. So it isn’t surprising that many women cite time as a major reason for why they aren’t as engaged in their finances as they could be.
“They think it will take a lot of time to learn about and manage investing,” Cimoroni said. “There’s also a lot of intimidation of not really knowing how or where to start.”
What you can do: Make a plan. Forty-four percent of women said they didn’t have one, and only one-third of women were working with an advisor.
“Start with the basics,” Cimoroni advises. “Learn about where you are today in your investment journey, then think about what’s important to you. That might be saving for retirement, protecting your family or saving up for needs and wants.”
Once you know where you are and where you want to be in the future, it’ll be a lot easier to envision how you can manage your money to help you get there.
2) Hungry for knowledge
The second reason women aren’t getting into the driver’s seat when it comes to investing and managing their money? They don’t feel they know enough about the markets to do it well. Cimoroni says this complaint is a legitimate one, but it’s hardly insurmountable.
What you can do: If finances make your head spin, just forget about the markets for a moment. Forget about stock charts and tickers and PE ratios. It isn’t that these things don’t matter. The problem is that we often get so caught up in those details that we forget to address the basics. It’s like trying to learn advanced algebra before you’ve even learned simple multiplication. The key to learning about the world of money is to start small and work your way up.
“There are all kinds of great resources,” Cimoroni said. “You just have to make sure you go to a reliable source. Ask your local bank branch if they have literature you can read or a seminar you can attend. Or perhaps there’s someone who’ll sit down with you and explain things. And of course, you can always ask around to find an advisor you can trust.”
Whatever you do, Cimoroni says, it’s important to look at your own finances before you start trying to delve into books about investing. If you don’t even understand your savings or retirement account, you won’t have much luck at taking your money management to the next level.
3) Not rich enough
Research compiled by TD suggests that women may not be approached by advisors as often as men. That’s certainly a problem, but a bigger issue may be that women aren’t stepping up and approaching advisors themselves.
“They think they aren’t rich enough,” Cimoroni said. “They’ll say they aren’t worthy of financial advice.”
What you can do: If you’re holding on to this misconception, you’re forgetting one very important principle of money management: well-invested funds grow. Everyone starts somewhere. If you aren’t investing and managing your money wisely, you’re missing that first step and setting yourself up for a financial trap with few ways out. Conversely, if you have an income and the will to better your financial situation, you could be a rags-to-riches story just waiting to happen. It may not be as dramatic as that, but money in the bank is enough to make most women feel like Cinderella – even if there’s no Prince Charming.
Breaking down this final stereotype
Women have come a long way, but when it comes to our money, statistics suggest that we’re still holding on to old stereotypes. Unlike breaking into the workforce, however, starting on an investing path isn’t something that’ll take decades to accomplish. In reality, getting started is as easy as changing your perspective and taking a little initiative – and you won’t even have to burn your bra to do it.
GoldenGirlFinance.com is a free personal finance and education site for women.
Nothing contained herein is intended to provide personalized financial, legal or tax advice. Before implementing any financial strategy, you should obtain information and advice from your financial, legal and/or tax advisers who are fully aware of your individual circumstances.