The Importance of Financial Literacy for Women

At least once a week, I’m asked why I’m so passionate about the importance of financial literacy, and especially women’s financial literacy. I think some of the statistics that are circulating during this Women’s History Month/International Women’s Day make the point. While we all know that American women score a D (or lower) on financial literacy quizzes, that nearly 80% of elderly women live below the poverty line, and that women lost 5.3 million jobs with this pandemic compared to 1.8 million men, there are some deeper issues at play when a woman lacks the financial wherewithal to understand her fiscal situation.

Based on estimates from the new World Health Organization study, and considered low by social services professionals handling the issue, at least one-third of women have experienced some form of domestic abuse and those numbers don’t include the majority of the pandemic months when domestic violence has risen over 40%. What does this have to do with financial literacy? Stunningly, financial abuse occurs in 99% of domestic abuse cases (per the NNEDV) and the lack of financial literacy exacerbates this issue. If someone doesn’t understand money issues, they are far less likely to understand when they are being taken advantage of or abused.

As we move into the 2nd year of COVID (Seriously??? Year 2??), financial literacy can help someone understand how to interpret the information they are being fed by the government / the media / social media. While sources have been celebrating that COVID death rates are dropping, anyone who has even a modicum of financial literacy can easily recognize that dropping to 2,000 deaths/week only means we’ve reached levels from last summer when we were all pretty sure life was teetering on the edge of craziness. Part of financial literacy is being able to put perspective to numbers the same way we determine the value of something we are paying for. For example, I may be paying more for a pair of shoes but I know that designer makes shoes that don’t make my feet ache (and I’m not ready to give up the heels….).

Moving away from COVID and the pandemic, let’s chat about climate change / environmental pollution (because, why not hit another third rail, next up religion…No, I won’t do that to you all). Helping women better understand their finances can help them put the resources together to move away from a bad housing situation. Shockingly but not surprisingly, the Greater Rochester Area has more than its fair share of environmental clean-up areas (thank you Eastman Kodak, 3M, and DuPont) and anyone living along the Lake understands the impact of climate change. If you don’t understand finances, how can you evaluate repair quotes or wisely choose a new home that you can afford? Too many women default to “that house costs more than I’m paying now” and forget to incorporate things like additional medical co-pays from living in a situation that makes their kids sick or all the other expenses that could change with a housing move. Understanding what we’re spending is also understanding how those different categories relate to each other.

Moving on to politics (I took religion off the table, not politics…), a financially literate woman understands that no law school (at least none we could find) requires any financial or economic courses to earn a law degree so when she casts her vote for an attorney running for office (54% of Senators and 37% of House members), she is casting her vote for someone with no educational background to evaluate the financial decisions being made about the fiscal future of our country. That means her vote is now a conscious choice, which is a far more educated choice, than voting for someone simply along party lines.

So, yes, I am passionate about the importance of financial literacy. Without it, I fear that the new normal will feel a little more like wrestling with Cujo than strolling in Kansas with Toto.


Divorce: The Biggest (Financial) Decision You May Ever Make

Divorce is often a gut-wrenching process. It is also one of, if not the, most important decision you’ll ever make. The average divorce today takes about a year, sometimes longer, to resolve and it can also cost as much or more than what you spent on your wedding (in today’s dollars). Divorce also has the potential to be financially crippling, now and perhaps even more so in the future.

According to the Journal of Financial Planning, female caregivers are estimated to lose, on average, $324,000 in lost wages, social security benefits and pension. Unfortunately, after divorce, many women find themselves in a much lower financial position than their ex-spouses. Not only is this due to the caregiving roles many women have, it can also stem from a lack of clear understanding of the marriage’s total financial situation, such as the long-term investments the family holds, the family’s tax picture and actual family income. It would be difficult for any woman to make sound decisions, especially when faced with a divorce, if she is not aware of the complete financial picture.

Step 1: Understand Your Household Finances

One of the smartest things any woman can do is understand the family’s financial well being as soon as possible, no matter her situation. To get started, seek to understand what the assets are (stocks, property, retirement), what the actual family income is, and what are the family’s expenses. If thinking of a divorce, what maintenance (alimony) and/or child support would be needed to maintain your standard of living and cover your children’s needs?

Step 2:  Understand the Financial Implications

Even if divorce is just a whisper in your head, a clear way to help you make an educated financial decision is to engage the services of a Certified Divorce Financial Analyst (CDFA). A CDFA will help you review the family finances and guide the conversation to help you understand the short-term and long-term financial implications of the decisions you will need to make.

Remember…divorce is a negotiation. Amazon didn’t buy Whole Foods without understanding their market share, profitability, and liabilities. Kodak and Xerox didn’t spin off parts of their businesses without taking into account how that was going to impact their future bottom lines. Divorce is essentially the same thing. What you need to ask yourself is what is the level of maintenance can you realistically accept/offer and what does that mean to your cash flow?  How do you split the family assets to be equitable and what are the long-term ramifications of those decisions?

Step 3: Seek a Professional Divorce Team

Attorneys have their place during your divorce as they counsel you through the legal aspects. However, most people don’t realize that the majority of attorneys and judges do not have a strong financial background (few law schools require any financial classes in their curriculum). This makes picking the right attorney for your particular situation critical. A strong attorney will incorporate the work of a financial professional into the process.

Getting divorced is hard enough, working with a team of divorce professionals can ultimately reduce the cost of the divorce and reduce the time it can take to make that divorce happen. Most importantly, before making any decisions in terms of divorce be as prepared as you can…financially, emotionally and legally. I often suggest that women check out a local divorce advice workshop like Second Saturday.

Even if you are not thinking about divorce, understanding and staying on top of your family’s finances can help you navigate whatever surprises come your way.

Kitty Bressington is a CERTIFIED FINANICIAL PLANNER™ and Certified Divorce Financial Analyst®. She is the owner of Linden Financial Consultants, a fiduciary financial advisory firm, and founding member of Foundation for Women’s Financial Education.


What’s in Your Resolution Wallet for 2017

With the New Year, almost without fail, most of us make our resolutions and one of them probably has something to do with money. A common resolution is to “save more for retirement” that often, as weeks or months go by, turns into “I’ll set aside a few dollars after I do this or pay that….” Let’s turn that on its head and suggest that you spend this year getting a handle on how you are spending money.

Even with the economy rebounding, more Americans are stressed out about money than ever before and many women carry the weight of that burden. This financial stress is actually hurting us, both emotionally and physically. Financial stress is directly linked to high blood pressure, ulcers, headaches and depression not to mention it’s the second leading cause of divorce in our country. How about we take a different tack to that New Year’s Resolution and spend the year figuring out why we’re stressed?

For many people, one of the roots of this stress is simply not knowing where their money is going. Understanding where we are spending our dollars is the first step to understanding why we are spending those dollars. Are you eating out too often simply because you aren’t sure what to cook, or perhaps, as a newly single woman, you aren’t thrilled about going home to an empty house so you delay the inevitable by eating out.

Just like a personal trainer can help you get in shape physically, a financial coach can help you get fit with your money. They can help you understand your financial issues and habits and guide change in your behavior with your money. There are many great financial coaches but be sure to look for one that has had rigorous and comprehensive training.

This year, make your New Year’s resolution to understand how you spend your money so all your future years can be less stressful and more savings focused.