Merriam-Webster’s dictionary defines financially secure as “having enough money to live on and not having to worry about money.” Financial security is based in confidence. Confidence that our cash flow (earned or from investment) will be for your lifetime sufficient to maintain a comfortable lifestyle, regardless of how your life may change, is essential to financial security. Confidence that any debt is manageable and on track to being paid off. Having confidence in our ability to manage our finances independently into the future. And confidence that our financial affairs and the affairs of those whose lives impact us are in good order. If you can have confidence in these areas, you should be free from worry about money. You have financial security.
One of the very important ways that we can have /improve confidence in these areas is simply through participating in the management of the household finances and in the financial decision making. The UBS Own Your Worth 2020 “Women, Wealth and the path to Financial Independence” survey says it best: “In the pursuit of gender equality, women and men share core beliefs. When it comes to money, for example, the majority (82% of women and 74% of men) believe that unless women are equally involved in long-term financial decisions such as investing, retirement and estate planning, there will never be true gender equality. These are decisions that directly impact women’s financial future… nearly all see it as a way to ensure women’s financial security.”
In fact, this year’s study looked into what women and men believe are benefits for women who participate in long term household finances. In fact, well over 90% of men and women who believe in the importance of joint participation, say being involved means:
- Women shouldn’t encounter any financial surprises
- Women should be prepared if something happens to their spouse
- Women should be able to walk away from a bad relationship
And yet, only 35% of couples participate equally in household financial decision making (49% of women let their spouse take the lead, and 16% are the lead financial decision-maker in their home).
It is impossible to truly be financially secure if you are not a part of the financial decision making in your household. Without being part of the conversation, you most likely will be in the dark as to aspects of your households’ finances. You won’t be able to say with confidence that you are on track to your financial goals or even be able to actually articulate what those goals are if you aren’t part of setting them. And for the 65% of couples where one spouse is taking the lead without their partner’s involvement, you are setting your partner up for an exceptionally difficult time if something were to happen to you. It means there is worry by at least one person in the relationship about some aspect of money.
While the division of labour may result in one spouse taking the lead on day to day administration of aspects of household finances, both still need to participate. When both spouses take part in the decision making, when finances are discussed and each spouse is informed, financial knowledge is acquired, lessons are learned, and confidence improves. Confidence because we know where we stand, confidence because we gain the experience needed to successfully take on the management entirely if we ever had to. Yes, financial security is about having enough. It is also about feeling confident you can manage what you have. And that can only come with equal participation in financial decision making.