Ok, ok we all know, gone are the days that women could count on a man for their financial security. Prince charming might have entered our lives but no matter how secure that relationship might feel, there are just too many uncertainties in life, in particular illness, death and divorce. None of us knows when we or our partner may die or when we may no longer be married, remember it takes two for a commitment.

I could write a book, not only because I have plenty of my own experience but, because of all the sad stories many of my friends had to experience. Sad stories, with a repetitive element- many are scared to death about what their financial future holds because they relied heavily on their husbands for their financial security and that safety net is no longer available.

Now, what? Where is the financial plan to fit women´s needs? How do we go about it?

• Some facts of life
• The rescue myth
• Do´s
• The 5 steps to a freedom fund
• Freedom fund

Some facts of life

• A stay-at-home Wife and mom raising the kids while her husband is the sole breadwinner for the family.  Having dropped out of university to marry and follow her husband around the world with his career, Wife has no outside-the-home job experience.  Husband comes home one day and says he no longer wants to be married.  As a new single parent, what does Wife do to support herself and her kids? 
• Wife of three decades, with a wealthy husband, a selfproclaimed manager of all things “money”, that includes Wife´s inheritance. Wife abandons her career to support the husband´s career. Wife is active in various global and local charities and has a busy social life. She manages a busy household, with lots of entertaining to help husbands career and is a devoted mom. tried to persue her career again. However, that caused rising tensions in the marriage. Discussions about money where blocked by the husband. 30 years into the marriage Wife files for divorce. A nasty divorce proceedures is the eye opener, she not only found out that she had no insurance, her husband never paid into any pension fund or social insurance. So no financial saftey net for her old age. The husband declared himself “bankrupt”. The inheritance, she had entrusted her husband with to make the “right” investment decisions, had been reduced due to missmangement. Now what ?She was scared, she worried about her finacial well being in the future. Going back to re-start a career at her age was no option. She lacked 30 years of work experience and in her mid-fifties.
• A young Widow raising small kids on her own.  Her husband died unexpectedly taking his income with him.  Widow doi s not know if husband had sufficient life insurance, a pension or enough social security benefits to continue supporting his family in the lifestyle to which they’ve all become accustomed?  Or will Widow need to downsize the family home and take her kids out of private school because she can no longer afford the house and tuition payments?
• A Retiree who lives comfortably with her husband, albeit on a fixed income.  Her husband is diagnosed with a debilitating illness and must go into a nursing home because Retiree can no longer care for him at home.  Nursing homes cost upwards of $4,500/month which quickly depletes their savings leaving Retiree with little income to support herself.
• 65 year old ex-Wife, divorce settlements rewarded her a monthly support. The entrepreneur ex-husband with a substantial income remarried, the wife 30 years his junior, he fathered two more children. After his business got in troubled waters so he stoped paying ex-Wife´s monthly support. Eventually ex-Wife, dependend on theses monthly payments, takes the matter to court. The verdict is as her ex-husbands has small children the priority must rightfully be his small childern. She would have to wait her turn until his business picks up again. As Wife never had an income of her own, a lifeinsurance, or an entitlement to a pension. At her age it is almost impossible to find a job, she is fearful of her future.

Most women hold command over the household budget and short-term financial decisions. Decisionmaking over large acquisitions in a household is shared equally. So far so good. However, only 23% of female wealth owners are active investors, 59 % leave longtime financial decision making to their spouses.  Reasons given, range from having no time and too little financial literacy to feeling overwhelmed and patronized by advisors. Actually, a staggering 60% say they´d rather talk about their own death than finances.

The rescue myth

When asking fathers about family finances or anything connected to finances, often the only advice girls may be given is: “Don’t worry”. Is this the unspoken assumption that, obviously, a man will take care of all things “finance”? For many a great advice because they don´t want to understand “money” anyway, and can not be bothered. They prefer to stay in their comfort zone and assume a man will come to the rescue.

So Prince Charming is assigned the rescue role: He budgets, pays the bills, makes investment decisions, and manages the estate and all other major decisions as well. He owns the authority over a powerful tool – money, and thus claims authority.

How this fits in with women’s vision of being independent nobody really understands. It’s part of our collective unconsciousness. It’s the way we’ve been raised over centuries. Men were the breadwinners. Women were the nurturers and caretakers. Our difficulties with money have very little to do with money and have everything to do with our fear of – and ambivalence about – power.

“A man is NOT a financial plan.

A woman is NOT a domestic plan.“

Ian Ochieng

DO´s

Discuss your finances: 

Failing to discuss financial issues on a regular basis from the very beginning of a marriage can jeopardize the individual security as much as a couple´s. And don’t shy away from financial discussions because you are afraid you won’t agree. I know this is easier said than done because some men simply do not want this kind of discussion, as much as we try to avoid the topic.

There are men that react with aggression, and we become defensive and feel intimidated. A dangerous spiral that ends in no communication at all. Other men feel threatened and are afraid to be exposed, or their authority questioned and their freedom coming to an end. This spiral of aggression and unsatisfactory outcome leads to all future ” money talk” being avoided altogether. I know it is difficult to take emotion and shame out of the equation but this is what we need to do because not talking has far worse consequences.

Divide money management tasks:

Who is in charge of paying the monthly bills, who balances the checkbook, who is in charge of managing the? Is one of you in charge of your investment accounts, or do you make decisions as a couple? How you divide up the financial duties, make sure you know what the other is doing. This is not about control, on the contrary, it is about fair play and being honest. Leaving everything finance to a spouse is equal to handing over the power over your life to someone else. Losing control or misuse of this power, in that case, are self-inflicted.

Rank your financial priorities:

Where your individual goals coincide, make a list of the steps it will take to accomplish these goals. Where they collide, figure out which you can live without and how to combine the rest with your partner’s plans.

Set goals

Like how much needs go into the emergency fund, early retirement, going back to university, change of job, sabbatical etc.

Establish a budget: 

However big the monthly paycheck or full the shared coffer is, everybody needs to establish a budget. Without, you’ll end up spending beyond your means, and soon this coffer is quite depleted which can make it close to impossible to achieve any financial goal. Even if you and your spouse manage money separately, make a date once a month to review your respective checkbooks and bank statements, so you will both have a clear idea of how much you are spending as a family.

A life insurance:

There are many factors in determining how much life insurance would be enough for the survivor but a good rule of thumb is 10x the annual salary if you are dependent upon your spouse’s income only. As a stay-at-home mom, there should be a life insurance to replace the services that are currently provided in a household and with children by Wife. The annual salaries of a nanny, housekeeper, cook, party planner, secretary etc. multiplied by the years Wife stays at home would be adequate determining factors.

Keep your job skills current:

Even if you are not currently working outside the home. Statistics show that women with college degrees earn more and have more opportunities available to them than women who haven’t finished college.  Further, stay up to date in your field and keep your licenses current so that you are more marketable should you suddenly find yourself having to go back into the workforce.  

Get a sparring partner:

No matter how much knowledge you have, an expert to talk with is like having a financial coach. Adding a fee-only advisor to your “team” can be a great way to supercharge your progress. It’s hard to ask for and accept help sometimes when we are fierce, independent and successful on our own.  It’s also hard when a lot of information out there tries to convince and encourage you that do-it-yourself is the best way.  

There is huge value in having a thinking partner who can help you in moments that make a huge difference in potential outcomes. Also, with finances sometimes there is not a right or wrong answer or way to handle the situation – having an independent advisor can help you make the best choice.

Having have someone in the corner, allows one to keep the focus on all the other things that matter. Like a career, family, children, friends or special causes. Knowing that there is a support team helps to become aware of blind spots, changes in the law. A financial advisor helps to keep the focus on the bigger picture when working toward financial goals, and building financial resilience.

Start Money-Talk:

A deep and wide support peer network can not only help through a crisis but also provide resources we might not otherwise have access to for guidance.  Being part of an understanding peer group allows for more relaxed, shame-free and candid discussions. The peer group helps to build financial confidence and empowers more active involvement. 

If you want to go fast, go alone.If you want to go far, go together

African Proverb

The 5 steps to a freedom fund

While handling their busy day-to-day lives, too many women have missed out on building their key financial skills, their credit history, their retirement savings, or setting aside a substantial cash reserve, in their name! Married women need to think about themselves as individuals, not only as “the better half” of a couple.

#1 Become informed about the family’s finances 

What assets are owned, who is the legal owner of these assets, are these assets loan-free, who is the family´s banker and where are they, who is the wealth manager or financial advisor, and their contact data? Are there any debts and what are the families monthly expenses including debt repayment? How to access the family´s accounts If Husband handles these things, Wife owes it to herself and for the sake of the children to get informed in case they ever need to take over the financial reins.

#2 Emergency cash fund

Jointly discuss setting up an emergency cash fund. Agree to set aside a total of three to six months of household expenses, to take some of the financial edges off should incase Husband lose a job, Husband dies, one partner has an accident and can not work, or in case of a divorce.

#3 Personal financial profile

So, do you know what your personal financial profile looks like from an outsider’s view? Have you done anything related to establishing your own financial freedom?  Do you have joint accounts with your spouse and all money is “our” money? That’s not a bad thing but it can be a problem for building a unique financial profile and record.

#4 Daily money-read

Money things are not rocket science nor does it need to be boring. Look for information in a language you feel talked to and comfortable with. The Financial Times or the Wallstreet journal are not a must. It is about understanding the bigger picture and making sense of a certain context. Browse headlines, skim paragraphs and if something really interests you go down the rabbit hole. Start with a few minutes every day and increase to 30 minutes (that excludes the in-depth study of an article) – do it regularly until it has become a habit. It is the best way to grow financial confidence.

#5 20 minutes for personal finance

Learning about personal finance is a huge topic and can feel like a daunting task. It certainly is not about restrictive budgeting. Sit down get a notebook and write down what you want to know and learn. Careful, do not write down a list of what you think you should know but, make a list of things that you find interesting or close to your heart. Spent 20 min. every week to learn something new about personal finance

#6 Be chatty

Join, or form a ladies-only weekly meet-up about money. No, talking about money is not vulgar but a necessity! Find or form a like-minded peer group, takes the feeling of self-consciousness out of the equation and makes money-talks less grave. A more selected peer group has plenty of shared issues, others might have a problem relating to. Ideally, the group is a good mix of people to share with, learn from and give to. Schedule a weekly meeting either online or if possible in person, and make this a fixed date in your calendar.

#7 Save for the Freedom Fund

It does not take a lot of money to create wealth. It’s just small steps, consistently taken. Start with asking the bank to open an inaccessible account in your name. If you earn your own money or you have any other income divert 6-10% of your monthly income to that account. Try paying yourself what you need not what you earn. If you are dependent on a husband as a breadwinner, try to divert 6% of your household spending to that account., but make sure to discuss it with your husband first. Start a decision-making process over what is more important a pair of new Louboutins, the Chanel handbag, or long-term financial wellness. Each time you manage to quench a buying impulse, reward yourself by putting the money you did not spend into your freedom fund account. Make changes to your facial, hairdresser, massage, manicure, or lash extension routine – the money you save goes into your freedom fund

Coming up with your own goals and figuring out how you’ll achieve them on your own terms is empowering – and fun.

A man is a partner, a helpmate, someone to love and cherish, to share your life with. But the odds are real that one day you’ll be financially responsible for yourself.

Freedom Fund 

The freedom fund is women´s key to retaining their financial dignity. It should be in WIFE´s name only and simply is an individual saving or investment account at a financial institution (bank).  It’s not an account that is attached to the joint family´s checking account. The freedom fund is financed over time with amounts that the joint household monies allow. Decisions over this account are made by Wife only, with no approval or veto power by HUSBAND or partner.   A freedom fund makes life easier for all involved in family finances and estate planning. It is important for women´s self-esteem to have one account outside of household obligation that gives a wife the freedom to either splurge, safe, or invest as they see fit.  

Even with small amounts in their freedom fund, women can start to become active investors. The small amounts invested over a long time will add up, so start as early as possible, today is the day to start. . By compounding earnings, and reinvesting earnings the fund will grow at a steady pace.

Finance novices or those starting with six-figure amounts should see an advisor or wealth manager respectively. Robo advisors, charge low fees and are ideal for investing or experimenting with smaller sums. It’s never too late to start.

Even if the day-to-day investment management can be outsourced, it doesn’t mean looking at statements on a regular basis becomes void. Creating a portfolio strategy can also be outsourced, but for the plan to be successful it needs to be adhered to by the fund’s owner.  An advisor is a sounding board when it comes to making a financial decision, but executing that decision is the sole responsibility of the fund owner. 

Women who don’t earn income, don’t feel confident about managing money which contributes to their lower self-esteem. With having a freedom fund women become CEOs of their financial life and gain control over their financial futures. With a Freedom Fund, women can have financial dignity and long-term financial wellbeing, irrespective of what a husband decides-whether he stays, where he goes, or when he dies.