A Fidelity study recently showed that more women are taking charge of the family finances. This sounds great, but if you read the study closely, you’ll see that this refers to bill pay — and not investments.
“Women are less likely to be the primary decision maker,” says the study. “Regarding retirement decisions, men are significantly more likely to see their role as ‘primary’ compared to women.”
Ahem! To me this says that women are the secretaries, while the husbands make the “big decisions.”
“You just manage the passwords and bill pay, sweetheart. I’ll take care of the heavy lifting when it comes to investments.”
I do not believe this has anything to do with aptitude. Women make awesome investors! Unfortunately, most of them just don’t know it yet, so they simply handle the clerical work in their families and stop there.
This has to stop, no matter the gender. Managing passwords is only the first step in managing your finances. It’s admin work, and we need more than admin work in order to thrive. I am convinced that every household needs a true money manager, emphasis here on the word manager. I’m talking about upper level management. I’m talking about chief financial officers, Chief Home Officers (CHO).
How to Invest in Real Estate While Working a Full-Time Job
Many investors think that they need to quit their job to get started in real estate. Not true! Many investors successfully build large portfolios over the years while enjoying the stability of their full-time job. If that’s something you are interested in, then this investor’s story of how he built a real estate business while keeping his 9-5 might be helpful.
The Path Towards Building Wealth for Your Family
So let’s talk about the broader scope of responsibility towards family wealth building.
What do managers do? They make sure deliverables get done, yes, but they also strategize for continued success. They take stock of their resources and make plans to turn those resources into profit. Do you do this in your family? Someone has to if you don’t want to live paycheck-to-paycheck into your golden years.
I’m not convinced that any one gender is better at this than another, but I am convinced that women don’t empower themselves enough to try — which means too often that no one is the CHO. Which means that bills get paid, maybe savings accounts get contributed to, but no strategizing and goal setting is done thereafter. This is an expensive oversight. How will you retire? How will you deal with deflation of your savings accounts? These are questions a good CHO regularly asks themselves and addresses with their partners.
Why don’t women make the “big decisions”? I’ve thought about this a lot. Maybe we’re scared. Maybe we’re nervous about investing on behalf of our families. Maybe we are unfamiliar with the language of the financial industry. All of that is understandable but not insurmountable.
Here is a little data that should make the ladies feel better: Research shows that when women do make the “big decisions” about investment, they are more profitable than their male counterparts. Sadly, most of us just don’t know how capable we are yet because finance seems so inaccessible. A colleague recently admitted to me that she was the begrudging Chief Home Officer because finance seemed too intimidating. Believe me, I get that!
Learning About Finance the Old Fashioned Way
When I stopped working full-time, I went through a brief period of feeling powerless for not contributing a regular paycheck to my family. In order to combat that powerlessness, I started to study finance. I remember sitting at my desk and saying to myself, “OK, if you’re not going to have a regular paycheck, you’d better figure out how to do the best you can with the money we have now and the investments we are making.” So I started to binge read personal finance books, and to my surprise, I learned that investment did not have to be scary. I learned to read the hieroglyphics on my bank statements. I researched and executed trades in our investment accounts to great effect. And then I went to real estate school and learned to co-pilot our real estate investments.
I gained financial literacy the very old fashioned way — with my library card. I do not have a fancy degree in finance, but when I sit down to my computer to execute plans on behalf of my family, I feel perfectly capable (most of the time).
If I were to write a job description for a Chief Home Officer, it would go a little something like this:
Seeking financial manager to take stock of, strategize, and execute quarterly budgets and investment strategy.
This is what I do. I assess my family’s net worth every quarter. I figure out how we can maintain a healthy budget, increase savings and investments, and invest the resources we have in those investments. And yes, I manage the passwords, too.
“Chief Home Officer” is the term marketers use to refer to the person who makes the financial decisions in the household. But it is also a term of empowerment. It means more than just deciding what detergent to buy. It means deciding which investments to buy and how best to fund those investments. There is no reason that a woman can’t employ the same strategies she puts towards grocery budgets towards investment budgets. And there is no reason that a man can’t, either. But someone in your house has to be promoted to this C-level role — and the sooner, the better!
Who plays this role in YOUR household? How did you educate yourself on investing and finance?
Let me know your experiences with a comment!