Women on Their Way to Wealth

I recently read the results of a survey that stated the majority of women associated wealth with the word “security,” while men generally associated it with words like “status” and “power.”  My personal experience in working with clients has been that both women and men strongly associate wealth with security. 


Security is something the men I work with value as much as the women; however, I do see differences in the way men and women think about security, which is reflected in their financial behavior.  It is no secret that, in general, men tend to rely on logic in decision-making more than on feelings, whereas women are more likely to be guided by their heart.  These differences are natural and beautiful, and neither way is the only right way 100% of the time.  But in practical terms, this means that


Women are more likely to risk their own financial security to give to others.


Some women follow their instinct to nurture and give sacrificially until they have too little left to take care of themselves.  This can have damaging effects on their physical and emotional health, and can also lead to devastating effects on a woman’s financial health if she gives of her financial resources in the same way. 


For example, some women save thousands of dollars in a college fund for children or grandchildren while leaving their own retirement accounts underfunded.  They may take significant amounts from their barely adequate savings to help adult children buy a nicer house than they can afford without financial help.  Wanting to help others live a better life is good, but helping is not good if it places you on the path to a financial crisis.  And it may not actually be a help in the long run.


There are two things women should remember before giving freely of financial resources:


1- You are compounding your existing financial disadvantages, making them harder to overcome.  Not only do women statistically earn less than men, but we are more likely to experience negative financial consequences due to caring for others. 


Sixty percent of all caregivers are women.  A recent Met Life study revealed that on average, a woman loses more than $320,000 in income during her career due to caring for children, parents, and friends.  This caregiving causes women to forgo promotions, matching 401k plans, and professional opportunities that would keep them competitive in the marketplace.  The cumulative result is a significant decrease in income and the amount they can save for retirement or wealth accumulation.


I am not saying that we should place more importance on money than on caring for other’s legitimate needs.  I am saying that the unique circumstances women encounter make it all the more important for us to be judicious in your financial giving. 


2- You may be “giving” your freedom away.

What will happen if you give to your kids until you no longer have enough to take care of your future needs? 

If that happens:

  • You won’t have your independence
  • Your children will have to learn to be financially independent and
  • You may have placed an undue burden on your children to take care of you in the future.


This doesn’t just apply to giving away money for frivolous things.  A college education is important, but there are many ways to pay for it, for example, there are loans, grants, and scholarships available to students who need help with tuition.  There is no such assistance for people who haven’t saved enough money to fund their retirement.  


Generosity ceases to be a virtue when it is not tempered with prudent financial decision-making.  You aren’t truly taking care of others if you give to the point where they have to take care of you.  You must balance your desire to give to others with your own need to take care of yourself. 


If you question whether your priorities are in balance, seek the help of a professional adviser who can offer an unbiased opinion.

Sandra Cleveland

Sandra Cleveland

Sandra Cleveland CFP®, CCPS is a Partner and Wealth Manager at BCR Wealth Strategies.