Why Women Need to Engage in Financial Planning

Patricia DeChant
Tue Oct 09 13:00:00 GMT 2018

In today’s world, women are corporate executives, entrepreneurs, independent investors and leaders in their communities. They  control over half of the world’s wealth , and their share is rapidly rising.  One in four married women is the breadwinner , and  they are increasingly becoming the key decision-makers  when it comes to personal and family finances.  Yet,...

In today’s world, women are corporate executives, entrepreneurs, independent investors and leaders in their communities. They control over half of the world’s wealth, and their share is rapidly rising. One in four married women is the breadwinner, and they are increasingly becoming the key decision-makers when it comes to personal and family finances.  Yet, on average, men have over 50 percent more saved for retirement than women do. Recently the landscape has changed for women, but the problem remains the same—by and large, women are not taking a sufficiently active role in planning for their financial futures.

It’s Never Too Soon

We frequently see women waiting until a major life event, such as divorce or the death of a spouse, to take ownership of their finances. However, the likelihood that a woman will be solely responsible for her own finances at some point during her adult life—whether planned or unplanned—is increasing.

Consider this: On average, women tend to live about five years longer than men. Getting married is no longer a top priority for many women, and among those that do get married, approximately half will end in divorce. These trends paint an increasingly convincing picture that women should feel empowered to take a more active role in their financial affairs, rather than rely on someone else to make these important decisions on their behalf.

In addition to saving for retirement, adequate preparation for future financial hurdles comprises a multitude of considerations. As women take on more prominent roles at home and at work, it’s more important than ever to have a financial plan—one that considers their own unique circumstances, needs and goals—and to take an active role in the planning process.

Getting Started 

Education and proper planning are the first steps on the path towards financial independence. Whether you’re married or single, beginning your career or well-established in your field, the following steps can help you take control of your financial future. 

  1. Get Organized

Take inventory of your current financial situation. Organizing your financial information will save time and frustration when you or a loved one needs to access it. Understanding where you are today is essential for developing a plan that helps you reach your financial goals. Start by making a list of your financial accounts, how they are titled and where they are held. Store important documents in a safe place, as well as contact information for key advisors and any relevant online accounts and associated passwords. 

Establishing an estate plan is also important, even if you think having one seems unnecessary. Regardless of your financial circumstances, reviewing and updating your retirement plan beneficiaries, creating a will, determining whether you need life insurance and designating agents or even a revocable trust in the event you can’t make decisions for yourself, are important proactive measures. 

  1. Set Goals

Financial planning can seem intimidating if it isn’t your area of expertise. It is important to incorporate these discussions with a trusted financial advisor in order to solidify your understanding of the process. However, investment management is just one piece of the puzzle. Identifying your financial goals and aspirations is the cornerstone of financial planning—once you’ve done this, you can focus on determining the best approach to successfully achieve them. 

Consider your current and future expenditures. These might include purchasing a home or condo, paying your children’s tuition, caring for aging parents, funding your own retirement or even all of these things. If you have aspirational goals—for instance, taking a once-in-a-lifetime vacation, starting your own business or actualizing some philanthropic intentions—you may need a more detailed plan. Everyone has unique needs and goals that set the stage for their financial plan. 

  1. Draft a Financial Plan 

Finally, develop a plan that sets you on track to achieve your goals. Your plan will likely involve creating a budget, establishing savings targets, implementing an investment strategy and defining milestones to measure your progress along the way. A thorough financial plan also creates a framework for handling unanticipated cash flow needs. 

Rather than waiting for a major life event to take responsibility for your future, be proactive. Talk to a trusted financial advisor about how to get started, and together, develop a plan that helps you reach your goals and prepares you for life’s events. You can also visit our website for even more financial planning resources.

Remember to review your plan annually or when significant events happen. The more you plan, the more likely you will live the life you envision for yourself. 

Patricia DeChant is a vice president for CIBC Private Wealth Management, with more than 30 years of experience assisting high net worth individuals, families and institutional investors in achieving their long-term financial goals.