RON: I'm Ron Corning for howdini.com. Did you know that women are starting companies here in the US at twice the rate of men. Working-wise contribute more than a third of the typical family's income. Even so, the majority of women still let men manage the famiy finances. So, how should women handle their finances? Author Stacey Tisdale, whose new book is The True Cost of Happiness, is here with some advice for women. Alright Stacey where do we begin with this because you could say that we're sort of set up in this society where it doesn't matter who makes what, one person is designated to manage the family finances and you just entrust that it's being managed to the best interests of both of you.
STACEY: Absolutely and a lot of these women saw men manage the money when they were growing up. They have a lack of role modeling. There are a lot of social stereotypes where men manage the money. You know financial service companies target men. Women have to realize that they simply can't afford this anymore. A lot of women out there are going to be widowed. I think one in four women are poverty stricken just a few years after their husband's death. Men managing the money is something they simply can't afford especially because we are living longer, stronger lives.
RON: And women leave the workforce at various points in their lives--maybe to care for children, maybe to care for an aging parent--and so overall they may earn less money and therefore save less and prepare less for what happens after their spouse is gone.
STACEY: Absolutely the numbers simply don't add up anymore. Women are out of the workforce for like five or six years. It means all of those years that a man is working he's contributing to his 401 K, he's contributing to his retirement savings. She's just not getting that money. You know whether it's child care or elder care. Social security benefits are determined by the amount of time you work. Take all that time out of the picture and they're just ending up with a lot less money than money. That's why 87% of poverty stricken elderly are women.
RON: So step one, every woman needs to take account of their finances, hopefully with the cooperation of their spouse--will also come to the table and realize that they need to do this together. So how do you do that? Where do you start taking account?
STACEY: The first thing you need to do is really know where you stand. Know what your family's income is, know what your family's monthly spending is, and know your net worth--that's your assets minus your liabilites. And I talk to so many women where you ask them these things--you know how much money has to be paid out each month--they just don't know it. How much money is your family worth. They just don't know it. Imagine they found themselves alone.
RON: And how would you know how much to save for retirement if you don't know really how much you have?
STACEY: Exactly the first thing you really have to do is know everything you have. Point one for everybody.
RON: Would you say credit cards are generally a no-no? Should you not really depend on them. I know that's more difficult to do than it is to say, but what do you say in regard to credit cards?
STACEY: If you can pay off your credit card bill every month and still have money to reach for your other goals, for your other savings targets, other investment targets--more power to you. Then they work for you. If you cannot do that, then you really have to examine that aspect of your life.
RON: You say ask for help but if the financial management world is focused more on men, where is a good place for women to go to get good answers for their questions?
STACEY: They have to empower themselves with a lot of knowledge. You can go into the financial services community, but you have to know what to ask. There is an actually saying on Wall Street, 'don't pitch the...[rhymes with witch]'. The thinking is that if a husband and wife, or a man and woman, come into an office she's going to need too much hand-holding. She's going to ask too many questions. So the money manager actually targets the man, wants to deal with the man and tries to leave the woman on the side. The thinking is that they're going to have to work less. So the whole--the industry is not supporting women getting financial literacy. Look at things like sub-prime mortgages. Women have a disproportionate number of these things because the industry is counting on their financial illiteracy. Then these are things that women are going to have to take into their own control to create resources out there for them to use.
RON: Ironically, single women bought houses because they wanted to feel empowered and felt like they were making a good financial decision, only in some cases to be taken advantage of.
STACEY: I know. That's why it's important to read that fine print. If you don't understand the fine print think about the concept--a lot of people I talk to say think about the concept of an adjustable rate mortgage--which got so many people in trouble. When interest rates changes, your mortgage rate's going to change. The decision means for a lot of people you're counting on it not changing. That's not realistic. Put your choices through a reality check.
RON: Alright Stacey Tisdale, author of The True Cost of Happiness. Thank you Stacey. And I'm Ron Corning for howdini.com.