April 16, 2013
Women “Reactive,” Not Planning Finances
What motivates women to get to work on their personal finances? Change.
Emotions are also important motivators. But “the most compelling factor” spurring most of the women interviewed in a focus group to take action was a significant life change, Utah State University researchers write in the Journal of Financial Counseling and Planning.
Since April is financial literacy month, Squared Away is again making an appeal to women, who continue to make strides professionally, yet lag men in understanding how to manage their money.
“Major life changes like a premature death of a spouse or divorce are often the wake-up call to people to reassess their lives,” said Utah State researcher Jean Lown, who also teaches a workshop, Financial Planning for Women.
This tendency isn’t necessarily a good thing for women. Rather than being “reactive,” she said, women need to learn to plan ahead and prepare for the future.
For Megan Rowley, who conducted the focus group, the women’s stories hit home. While Rowley pursued her master’s and worked full-time at Utah State, her husband left a part-time job to complete his MBA. After they graduated, he found employment at a pipeline company in Salt Lake City, and she became a stay-at-home mother, said Rowley, who wants to become a financial counselor when her three young children are older.
Amid all this change, the couple had to adjust to living permanently on a single income. They rearranged their financial priorities to buy life insurance and start college funds after they had the kids and to save a downpayment when they moved to Salt Lake City.
“We ate ramen and chicken so we could feel comfortable,” she said. “A lot of us know that we should be doing something,” but taking action “requires something a little more drastic.”
The following are personal stories from women in the focus group; they were identified by pseudonyms in the study:
Divorce was a powerful motivator for Darla, a 44-year-old with a master’s degree whose standard of living suddenly dropped. “I found out that after I got divorced that I needed to do something different,” said Darla, who took in a roommate to reduce her housing expense.
But Irene tried to head off trouble. She became concerned about her future after learning that a co-worker’s debt prevented him from retiring. “And I thought, you know, I don’t wanna be there. And if I kept going the way I was going I would be there without a house. And so I wanted to have a home and have it paid for, and have retirement savings … And so that was the big motivator.”
Marnie was inspired by her husband’s parents, who can afford to travel in retirement. “I just thought, wow, they did it right when they were younger. … So that motivated me a lot.”
Squared Away readers, have you made a change recently in your finances, and what motivated you?
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This research points to something important. We women are reactive. We need a push or really a shove to take action to improve our finances.
But we are really better than that. We don’t really have to wait to be faced with divorce, or the early death of a spouse.
We are good at planning other things–our children’s schedules, huge Thanksgiving dinner, vacations, etc. Can’t we apply that savvy to our finances?
I think we are smart enough to take that next step. Yup, I am confident.
What about you?