Conventional wisdom often says that women don’t participate much in their financial well-being, but a new study suggests that wisdom is only partly true.
In fact, more than 80% of women globally are highly involved in their short-term finances, such as daily expenses, budgeting and cash flow, according to UBS Global Wealth Management’s Investor Watch report, which surveyed more than 3,600 high-net-worth (HNW) married women, widows and divorcees in nine markets including the U.S.
Women reportedly are “acutely aware” of their long-term financial needs. The top three financial needs identified by the majority of women globally include retirement planning (76%), long-term care (72%) and insurance (68%). Surprisingly few, however, take the lead in managing their own long-term finances. Only 23% of women globally take charge of long-term financial planning decisions.
Lack of Engagement
So why do many women focus on the short-term but ignore the long-term? According to the report, women’s deferral of important financial decisions to spouses extends to all generations, but for different reasons across markets.
More than half of women globally (58%) defer to their spouse to manage long-term decisionmaking for reasons ranging from “my spouse never encouraged me” to “we take a divide-and-conquer approach.” Yet, the main reason apparently has to do with women’s assumptions about who knows more. An overwhelming 82% of women think their spouses know more about long-term finances, citing this belief as their top reason for deferring.
And somewhat surprisingly, Millennial women in the U.S. were even less likely to take charge, with 56% of women age 20-34 deferring to their spouse, as opposed to 54% of women over 51 years of age.
UBS emphasizes that this lack of participation stands in contrast to the urgent calls of U.S. widows and divorcees (98%) to push greater financial involvement, and the clear benefits — such as increased confidence and lower stress levels — for women who do partner with their spouses.
“When 58% of women around the world – including the next generation of Millennials – defer to men on important financial decisions, we need to ask why,” notes Paula Polito, Global Client Strategy Officer at UBS Global Wealth Management. “This dynamic could go on for generations to come, unless both men and women make a commitment to engage in financial decisions together.”
Unfortunately, many women are introduced to important financial decisions that have been made for them during critical life moments. The study found that an overwhelming number of widows and divorcees (74%) discovered negative financial surprises when they were compelled to take control.
In hindsight, 76% of widows and divorcees wish they had been more involved in long-term financial decisions while they were married, according to the findings. Moreover, nearly 8 in 10 (77%) of these respondents urge other women to take a more active role.
As such, the survey found that women who participate in long-term financial decisions with their spouses not only increase their chances of financial security, but they feel more positive about the future. For example, it notes that 9 in 10 women who make joint decisions feel less anxious and more confident about their financial security. And nearly all respondents feel more prepared to manage their finances if something happens to their spouse.
“Couples must recognize that sharing responsibility across all money decisions actually yields a dramatically better and more sustainable outcome than each partner handling one aspect alone,” notes Jane Schwartzberg, Head of Strategic Client Segments at UBS Global Wealth Management.