There’s no doubt that a family’s finances are better off when both partners are involved in the planning and decision-making process. Unfortunately, studies show a disturbing disconnect among many American couples with regard to this crucial aspect of their lives.
Last year, a study conducted by Fidelity Investments found three in 10 couples agreed that one partner takes a primary role in financial decision-making. Of those couples with one primary decision maker, one-third disagrees on the extent to which the less-involved partner wants to be involved in those decisions.
Women Continue to Take a Backseat
In the law profession in particular, female attorneys are continuing to close the gender gap. They are taking the lead in major lawsuits more than ever, and they are gaining representation in the trial community – among other huge strides. And yet, women are generally less likely to be primary decision makers when it comes to financial matters at home. Fidelity’s 2013 Couples Retirement Study found that while more women are now assuming the role as the “family CFO” (a jump from 15 percent in 2011 to 24 percent in 2013) a gap still remains for many couples when it comes to sharing the responsibility of managing family finances.
One obstacle points to the fact that women are still generally more confident in their partner’s ability to assume full financial responsibility of retirement finances than in their own ability – and the fact that the men in their lives agree. In fact, just two in ten women surveyed admitted to having only some or no input regarding day-to-day family financial decisions.
Why is this gender imbalance happening in the first place? Fidelity notes that women still have less “financial confidence, decision making, engagement and approach to investing” than men. Women’s lower financial literacy and lower confidence in their own ability to manage family finances may be attributed to antiquated stereotypical perceptions of finance being a male-dominated field, according to a recent post by the investment management firm BlackRock.
Regardless of the cause of the imbalance, as female attorneys and other professionals continue to make big gains in gender equality, they should also be proactive as co-chairs in their own family’s financial planning.
Starting the Conversation: Beginning to Plan Finances Together
Making joint financial decisions is critical for couples’ current and future economic stability. To begin planning finances together, both partners should know and agree on:
- Each partner’s individual income, debts and assets
- An appropriate family emergency fund
- Expenditures and an appropriate budget
- The household’s investable assets
- The couple’s expected retirement age and lifestyle and a plan to achieve that goal
Meeting with a financial planner can be the first step toward open communication when a couple is ready to start making joint financial decisions. Speaking with a professional can not only help a couple wade through these topics, but it can also ensure all aspects of a family’s short- and long-term finances are covered, understood and agreed on by both partners.
A West Point graduate where he served as captain and military aviator, John Bair continues his commitment to our country through his efforts within the settlement planning industry. He has represented families of victims lost in the Flight 3407 crash, offered pro bono services to the families of 9/11 victims and drafted the first consumer protection bill for plaintiffs (H.R. 3699).