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4 Tips to Financially Empower Yourself (Or a Woman in Your Life)

Summary

Women make great investors—once they get started. Candid conversations about money could motivate a female friend or family member to plan for her financial future. Here’s a four-point guide you could offer to help turn interest into action.

Of the women you know, close family members and friends, how many of them have started investing for themselves?

There’s been a great amount of research on gender and money—studies with large sample sizes, long timeframes, and consistent findings. One big advantage for women stands out repeatedly: they slightly outperform men as investors. Another encouraging trend: 67% of women are now investing outside of retirement accounts, up from 44% in 2018.1

Consider how you could encourage a close female friend or family member (perhaps even yourself) to move toward fulfilling her potential as a successful investor. If you are a female, modeling positive behavior can serve as a powerful influence. If you are a male, sharing personal experiences can help normalize discussions about money. And, if you personally have not yet begun your financial investment journey, inquiring with someone whose judgment you trust can help get you going.

Discussing financial topics can be tricky. All too often we steer clear for fear of being impolite, raising anxiety, or sounding like we are showing off. But breaking the taboo helps get useful information out in the open. Try recounting a significant moment of your life to set a tone of humility and candor, for instance: the first time you applied for a car loan, or your response to a salary requirement question during a job interview. If you’re the one seeking guidance, pose questions around decidedly positive events, such as asking a friend who just moved into a new home how they decided on a mortgage broker, or asking your aunt about when she realized she could retire on the younger side. After a conversation about money sparks an interest in financial goals, what actionable suggestions could direct you, your niece, or your friend’s daughter just out of college onto the path of financial planning? Here’s an easy-to-remember, four-point guide:

 

1. Make a plan

Start by setting both short- and long-term goals. They are yours to determine! They also define a purpose for building a financial plan. Understand that a plan is more than a portfolio; it’s a roadmap to your goals. And if you need to take small steps, keep your eyes focused on the big picture. The very first draft of your plan may address basic, top-level intentions for budgeting, investing, and retiring, but eventually the plan should encompass more, so seek guidance from a professional advisor when it feels right for you. An all-in approach with a CERTIFIED FINANCIAL PLANNER™ planner could help jump-start the process offering a burst of energy and confidence.

 

2. Invest now

The maxim about time being money is true. The sooner you start saving—and moving those savings into investments to grow—the better. It’s all too easy to put this off by creating a mental checklist of preceding tasks, or other life responsibilities that need to be dealt with in a particular sequence, that could turn into hurdles or obstacles. Do you have a barebones plan, or an obvious action item, like contributing to an employer-sponsored 401K plan? Studies find women are more likely to not invest or invest too conservatively,2 which ultimately puts them at a disadvantage. Furthermore, staying on the sidelines poses risks for retirement plans and other long-term financial goals you hope to attain.

 

3. Schedule reviews

Keep engaged with your finances across all levels and on a routine schedule. A regular look at spending habits, could reveal, for instance, a recurring charge that doesn’t seem like much but adds up over time. You could also explore technology tools that reveal patterns in your financial data. Many banks and financial institutions offer financial planning apps that will link all your financial accounts in one secure place for a clear overview.

Meet with your financial advisor on a consistent cadence to ensure your plan continues to align well with your goals and circumstances. Schedule a review sooner if you’ve hit a life milestone, such as a new job, to figure out if you need to make any adjustments. During a review, a committed advisor will also make sure you’re on track toward the financial future you envision with a well-diversified global portfolio. Choosing investments designed  to keep pace with or exceed inflation is an especially important concern for women, who generally have longer life expectancies than men. An advisor will revisit this, and other variables, to refine your allocations.

 

4. Speak up for women

None of us can single-handedly close the wage gap, but advocating at the right moment—for yourself or for the women around you—can make a difference. Use your voice to support women who are asking for a raise, negotiating a contract, or seeking to improve their financial equality, security, and freedom. Talking about money, including salary ranges, can help women raise their income, and in turn increase the amount they can direct toward their financial plan.

Speaking freely about financial topics also helps to remind women that everyone deserves a seat at the table when it comes to investing. If you want to learn more about women and investing, there are plenty of great conversation starters in this Mercer Advisors podcast episode, “Do Women Make Better Investors – With Laura Cuber.”

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Mercer Advisors Inc. is the parent company of Mercer Global Advisors Inc. and is not involved with investment services. Mercer Global Advisors Inc. (“Mercer Advisors”) is registered as an investment advisor with the SEC. The firm only transacts business in states where it is properly registered or is excluded or exempted from registration requirements.

All expressions of opinion reflect the judgment of the author as of the date of publication and are subject to change. Some of the research and ratings shown in this presentation come from third parties that are not affiliated with Mercer Advisors. The information is believed to be accurate but is not guaranteed or warranted by Mercer Advisors. Content, research, tools and stock or option symbols are for educational and illustrative purposes only and do not imply a recommendation or solicitation to buy or sell a particular security or to engage in any particular investment strategy.

All investment strategies have the potential for profit or loss. Changes in investment strategies, contributions or withdrawals may materially alter the performance and results of your portfolio. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment will either be suitable or profitable for a client’s investment portfolio.

Certified Financial Planner Board of Standards, Inc. (CFP Board) owns the CFP® certification mark, the CERTIFIED FINANCIAL PLANNER™ certification mark, and the CFP® certification mark (with plaque design) logo in the United States, which it authorizes use of by individuals who successfully complete CFP Board’s initial and ongoing certification requirements.

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