Money Matters for Mothers and Daughters Alike
This Sunday is Mother’s Day. While many mothers may be treated to flowers and breakfast in bed, it’s also a day to celebrate the strength that comes with being a mother. But sometimes, that strength can waiver when it comes to finances.
"Be Prepared, Not Scared" is what I have been telling my clients for years. This is especially important for female clients. According to a 2012-13 Prudential Research Study on the financial experience and behaviors among women, only 22 percent of women feel “very well equipped” to make wise financial decisions. A likely reason for this is that, in male-female relationships, most often the “chore” of planning is handled by the husband. My goal is to change that. While most of my married clients are men, we push to get wives involved at the earliest point in their personal financial planning engagement.
The most effective way to engage individuals who are hesitant to discuss their financial situation is to help them feel comfortable. I often let clients choose a favorite restaurant as our meeting place. So much planning comes from casual comments, such as the desire to help a nephew with schooling or care for an aging parent. Planning is about "real" issues, not just saving taxes. Focusing on these issues will immediately gain an engaged client who wishes to be involved in the process.
Here are a few basic next steps to help any woman—mother, daughter, sister—begin her path to financial empowerment:
- Get organized. Begin by having her organize the family financial papers and/or records. It may sound simple, but can be daunting to tackle in one afternoon. Instead, I recommend spreading this first step out over several weeks. The most important part of the exercise is for her to read each document before filing and ask questions of the family's financial team (spouse, CPA, lawyer, etc.) if she is unclear about anything.
- Have her meet each member of the financial team, in person, and ask for a "review.” She should review the tax returns with her CPA, re-read the will and trusts with her lawyer to make sure she understands the documents she signed, and set aside time to understand the investment portfolio and how it is managed with goals in mind. For those clients who do not have these financial pieces in place, now is an ideal time to stress their importance. Better to meet for the first time before the 5 D's than after.
- Buy a scanner and keep every important document electronically. A simple scanner can help her get and stay organized. All electronic versions should be kept on a password-protected computer.
- Educate her. Encourage her to take a class on investing or start reading more about financial topics that are relevant to her—consider doing this with her as added encouragement. At a minimum, she should read what comes in the mail (bills, service agreements, statements, etc.) and ask any questions if she doesn't understand what she's reading.
The task is overwhelming for many but the sense of accomplishment far outweighs the fear!
What tips do you have for encouraging the women in your life to take control of their finances?
Susan J. Bruno, CPA/PFS, Managing Partner, Beacon Wealth Consulting. Susan Bruno is co-founder of DivaCFO.com and CollegeDivaCFO.com. She also serves as a member of the AICPA’s National CPA Financial Literacy Commission.