You may have heard the saying, “A Man is Not a Financial Plan.” I love that slogan because it reminds us women that gone are days that we could count on a man for our financial security. (Before anyone accuses me of “man-bashing” here, let me say that I love my husband of 16 years.) No matter how secure we may feel in our relationships, there are just too many uncertainties in life, in particular death and divorce. None of us know when we or our partner may die (I have friends who lost their husbands at an early age) or when we may no longer be married (even if you are committed to the relationship, remember it takes two for a commitment and people do change—my grandparents divorced after over 40 years of marriage!).
I meet women everyday who are widows, or caring for disabled husbands, or single moms, or divorced or separated from their husbands. Many are scared to death about what their financial future holds because they relied heavily on their husbands for their financial security and that safety net is no longer available. Everyone (not just women) should have a financial back-up plan. Don’t believe me? Consider the following real-life scenarios I’ve seen firsthand in my practice:
- A stay-at-home Wife and mom raising the kids while her husband is the sole breadwinner for the family. Having dropped out of college to marry and follow her husband around the country with his career, Wife has no outside-the-home job experience and no college degree. Husband comes home one day and says he no longer wants to be married. As a new single parent, what does Wife do to support herself and her kids?
- A new Widow raising young kids on her own. Her husband died unexpectedly taking his income with him. Did her husband have sufficient life insurance, a pension or enough social security benefits to continue supporting his family in the lifestyle to which they’ve all become accustomed? Or will Widow need to downsize the family home and take her kids out of private school because she can no longer afford the house and tuition payments?
- A Retiree who lives comfortably with her husband, albeit on a fixed income. Her husband is diagnosed with a debilitating illness and must go into a nursing home because Retiree can no longer care for him at home. Nursing homes cost upwards of $4,500/month which quickly depletes their savings leaving Retiree with little income to support herself.
These are real-life examples of women like you and me who now find themselves without a financial safety net. Although not a guarantee that financial troubles won’t arise, the following checklist will go a long way to giving you your own sense of financial security should you suddenly find yourself without a financially supporting man in your life:
- Build up sufficient cash reserves. We’ve all heard about the importance of an emergency cash fund. A total of three to six months of household expenses is ideal, enough to take some of the financial edge off should you lose your job, your husband dies, you suddenly find yourself in the middle of a divorce or someone in your family has an unexpected medical crisis.
- Finish your degree and/or keep your job skills current even if you are not currently working outside the home. Statistics show that women with college degrees earn more and have more opportunities available to them than women who haven’t finished college. Further, stay up to date in your field and keep your licenses current so that you are more marketable should you suddenly find yourself having to go back into the workforce.
- Build your support system. A deep and wide support network can not only help you through a crisis but also provide you with resources you might not otherwise have access to for financial, legal and medical guidance. Join a church, a club, a trade organization or other group to meet people and then get involved. And make sure the people you do surround yourself with are positive and supportive of you. If you have negative friends, I say find yourself some new ones!
- Become informed about your family’s finances. Do you know what assets you own, how your assets are titled, where you bank, what your debts and monthly household expenses are? Do you know how to access your accounts online and what the passwords are? If you husband handles these things in your house, you owe it to yourself and your kids to get informed in case you ever need to take over the financial reins of your home.
- Do you and your husband have sufficient life and disability insurance? Term life insurance is cheap if you are in relatively good health. There are many factors in determining how much life insurance would be enough for the survivor and your kids but a good rule of thumb is 10x your annual salary if your family is dependent upon your income. Even if you are a stay at home mom, you should have life insurance to replace the services that you currently provide your household and kids, particularly child care. And don’t forget disability insurance either. We are statistically likely to become disabled before we die in our lifetime. If we become disabled during our working years, the loss of income can be devastating to your family.
This list is by no means an exhaustive list of the things we as women can do to create our own financial security but it will get you started on the right path. Just imagine for a second how you and your kids would fare if your husband and the financial resources he brings to the table were not in your life right now. Now, brainstorm the things YOU can do to create your own financial safety net. Remember, A MAN IS NOT A FINANCIAL PLAN!
