Financial knowledge is power—especially for women

Many women hold their own as far as their personal finances go. However, things can get complicated if they’re not the primary breadwinner in the family, if they’re part of a blended family or if they simply aren’t in tune with their spouse’s financial holdings.

According to Associated Bank’s Michelle Long, having a clear picture of your family’s finances can be an intimidating task, but it’s critical for handling both planned and unplanned money management. As a lead financial planner, she’s seen the challenges some of her female clients face and emphasizes the importance of being well-prepared and well-informed. 

Women face unique financial circumstances that make it critical for them to understand their family’s balance sheet. On average, women live five years longer than men, requiring more retirement savings.

And building these retirement savings can be a challenge in itself. In addition to ongoing gender pay gaps, some women leave the workforce to start a family. “Sandwich generation” situations can also make a difference, as women can struggle to keep up with their jobs and childcare, as well the needs of their elderly parents. But even being out of the workforce for a few years not only cuts into lifetime earnings but potential retirement dollars from employer-matched 401(k)s, pensions and other workplace benefits.

However, Michelle believes the biggest barrier to financial gains can be a lack of confidence. Even though more women control more money than ever before, many still feel uncomfortable about dealing with personal finances. This can lead to serious issues if something unexpected happens. In an emotional time, you don’t want to have to scramble to locate information. The most important thing you can do is be prepared and, even better, have an action plan in place.

From her experience helping women become more familiar—and more confident—about their finances, Michelle says it all comes down to education and awareness. In a recent interview on WGN Radio, she offered a to-do list of things that you can do to get a better focus on your financial picture.

• Be an active participant in family financial matters. Keep an updated list of your and your spouse’s banking, investment/retirement and other accounts (along with usernames and passwords).
• Keep information about your assets and liabilities well-organized and easy to find.
• Know tax ramifications of your different types of accounts. For example, traditional IRAs are subject to taxes when you start using them. This can take a big bite of your fund’s total value. If you’re negotiating assets during a divorce, you need to consider these kinds of issues so you don’t come up on the short end of the stick.
• Know both sides of your balance sheet—what you own and what you owe. Track all liabilities like mortgages, credit cards and HELOCs, as well as assets like real estate and less-obvious but high-value ones like the amount of capital your spouse may have in their workplace.
• Build your own credit history. Get a credit card that’s fully in your name—not held jointly. Pay the balance off regularly to maintain good credit. This can give you the power to do things like secure a mortgage.
• Understand your cash flow, including all income sources and expenses, such as workplace bonuses you or your spouse receive, investments that require regular contributions and tax bills.
• Know where your estate planning documents are and how they’re set up. Do they need to be updated to fit your current family situation?  It’s important to know; this can avoid potentially contentious situations down the road.
• You’ll also want to review life insurance and retirement policies, especially ownership and beneficiaries. This is important in blended families; don’t assume you’re the beneficiary of your spouse’s account.
• Lastly, take time to get to know your family’s advisors: bankers, investment advisors, financial planners, insurance agents, accountants and lawyers. At the very least, keep a list of their contact information.

Remember: a solid grasp of any finances that affect you personally—both assets and liabilities—can be key to keeping your fair share in a split, supporting your children’s education, staying in your home and enjoying a comfortable retirement. By knowing the score, you’ll have a powerful edge when it comes to making plans and handling the unexpected.

To contact Michelle Long at Associated Bank, call 312-544-4343 or email her at Michelle.Long@AssociatedBank.com.