Laura Webb Article published in the December 2018 issue of WNC Woman
Recently, I was asked to speak to a group of female students, mostly juniors and seniors, at the University of Tennessee. The forum was called, “Success Like a Girl.” Spending two hours with 25 young women gave me hope, but it also underscored the challenges women still face when it comes to money and the power it has over their lives.
This speaking engagement came about from a conversation I had with a man from a well-known investment company who helps manage money for a foundation I care about.
During the conversation, he mentioned he taught two investment classes at UT. Now, it’s a passion of mine to help more women move into the financial services industry. Women typically make great financial advisors, but we make up only 17% of the professionals in the field*. So, I asked how many women were in his classes.
To make a long story short, I asked him to invite those young women to contact me if they were interested in learning more about the financial services industry from a woman’s perspective.
One of his students took me up on my offer, and, after several phone calls, made a visit to my office. She ended up asking if I could come speak to a group on campus called, “Trade Like a Girl.” One thing led to another, and I drove over to Knoxville one afternoon to answer the questions of these female students about money, investing and how to achieve success in the business world as a woman.
These young women wasted no time. The first question out of the box was, “If you could only tell us one thing, what is the most impactful thing we could do to make a difference in our lives?”
Bingo. Right to the point … and I loved it.
My answer: “Taking an active role in your finances. You’ll dramatically expand the range of options you have for the rest of your life.”
Well, the questions didn’t stop there. What should we do first? Where do we find the tools to help us learn? How did you make it as a woman in a male dominated field? And then came the really critical question. What’s the biggest mistake women make when it comes to money?
Getting a clear answer to this question at their age has the potential to change their lives.
My answer: “Women make quite a few mistakes. Not understanding what I call their money story … the often limiting beliefs they unknowingly inherited from their family or the culture at large. That’s one. Not taking an active role in managing their financial present or planning for their financial future is another.
But the 3rd biggest mistake, and probably the most important one women make is not saving and investing enough.”
Why is this important?
- Women on average live 5 to 7 years longer than men, and even if they earned, saved and invested at the same rates as men … which they don’t … they need more money to support their longer lives. **
- Social Security benefits are based on earnings made over one’s lifetime. Women on average, not only earn less than men, but they may also leave the workforce to care for children or relatives, which reduces their benefits when they retire. ***
- Of the 62 million wage and salaried women age 21-64 working in the United States, only 45% participate in a retirement plan. Women are more likely to work in part-time jobs that don’t qualify for retirement benefits.****
- Just as there’s a pay gap between men and women, there’s an investing gap. According to Sallie Krawcheck with Ellevest, women don’t invest as much as men do and typically don’t start investing as early as men do. They hold on to more cash. Those realities, coupled with the wage gap, the more conservative asset allocation strategies women typically choose, and a gender-specific salary curve add up to women often being in much worse shape at retirement than men. The shortfall for the average woman when she retires runs between $226,000 and $791,000! *****
Saving and investing are essential to a women’s long-term financial health. The good news? It’s not too late to develop great habits.
- Aggressively build a safety net of saving in the form of emergency reserves. We’re talking at least 6 months of living expenses.
- Move any amount beyond that need to an investment account and add regularly to that account, taking a little bit from every paycheck.
- Take advantage of your company’s 401k plan if they offer one, especially if they offer a match. The tax advantages will help your money grow faster. If they don’t offer one, begin investing in your own IRA (Individual Retirement Account) or Roth IRA.
Here’s the interesting … and sometimes maddening … reality. Women’s financial acumen is every bit as good as good as that of men. In fact, it’s better. A number of surveys indicate that women do more research, more accurately match their investments to their risk and goals, trade less, remain calmer during market disturbances and frequently perform better.
But they lack confidence.
So, remember ladies, when it comes to investing, estrogen rules. You have what it takes.
Instead of saying, “Yes to the Dress,” say, “Yes, I Want to Invest.” Begin by finding an advisor who feels right for you. Ask your friends and colleagues. Do your research. Search online. You want an advisor who puts your interests first, believes in diversification and prudent asset allocation, discloses fees, and will help you create a plan to meet your individual goals.
Finally, learn to talk about money and investing with your mothers, daughters, sisters and friends. Let them know you’re comfortable taking control of your money and using its power to take care of yourself.
Laura Webb, CFP® is founder of Webb Investment Services, a locally owned, wealth management and investment consulting practice and a Certified Financial Transitionist®. 82 Patton Ave, Suite 610, Asheville, NC 28801, 828-252-5132. www.laurawebb.com Securities offered through Raymond James Financial Services, Inc. Webb Investment Services is independent of Raymond James Financial Services, Inc. and is not a registered broker/dealer. Investment advisory services are offered through Raymond James Financial Services Advisors. CFP Board owns the CFP® marks in the United States. Any opinions are those of Laura A Webb and not necessarily those of RFJS or Raymond James.
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