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7 Things Every Woman Should Know About Family Finances 
7 Things Every Woman Should Know About Family Finances 
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7 Things Every Woman Should Know About Family Finances 

Money254
Doris Kendi
August 25, 2022

Traditionally, the role of managing the family finances was mainly left to the man. But this is no longer the case. In modern society, women play a significant role in the family’s general financial health. 

After all, studies have shown that women tend to be more practical regarding family needs and finances. For example, a 2021 Fidelity Investments study found that when it comes to choosing successful investment vehicles for the family, women outperform their male counterparts by 40 basis points (0.4%.)

And for women, the well-being of their family's finances is paramount. They want to ensure they're prepared for emergencies, have savings, make the right investments to achieve their shared goals, and protect their family long after they're gone. 

This is why the modern woman actively seeks to be part of the family’s financial planning, and when she feels like the husband is keeping her in the dark, disputes arise. 

So how do you avoid money conflicts in a family setting, leave the sidelines and keep up with all your family finances as a woman? This article will discuss seven things every woman should know about their family finances and why it's essential not to ignore them. 

Also read: 10 Long-term Financial Goals to Start Today

1. Family Cash Flow 

First and foremost, you will need to know the cash flow of your family, the total amount your and your husband bring home, and the total amount you spend. Full disclosure is vital at this stage; open up to your husband about your income and spending habit, and have them do the same. 

And this shouldn't stop. As you and your partner progress in your careers and bring more money home, constantly communicate, keep each other in the loop, and try to avoid any financial infidelity that might harm your finances and your relationship.

You and your partner should be honest about all your income streams and create a budget of how you spend, save and invest your collective money. Knowing about your family's cash flow goes beyond just avoiding money wastage. It will help you as a couple:

  • Create and accomplish family financial goals
  • Prepare for any family emergency 
  • Save and invest better
  • Avoid money conflicts as transparency will rule your relationship. 

Also read: Yours, Mine, Ours? How Couples Can Manage Money

2. The Family's Savings 

The only way to get peace of mind and ensure your family's financial stability is to know how much you have in savings, what you are saving for, and most importantly, your partner's savings attitude. 

The first thing is to ensure your family has rainy day funds. You and your husband should ensure you have saved enough money to cover at least six months of expenses. This will prepare you for emergencies, including loss of income or sudden medical expenses.

Also read: 6 Consequences of Not Having an Emergency Fund

Second, you should consider opening a joint savings account with your partner to save for big purchases, house down payments, family vacations, kids' education, and other vital family needs. Saving for specific goals in a joint account will help you keep track of your family savings goal.

Finally, keeping an eye on your family savings will help you determine your partner's saving attitude and what he values most, and all this will ensure you can keep all your saving goals aligned and achieve your dreams as a family.

Also read: Is Opening a Joint Bank Account A Smart Money Move For Spouses?

3. The Family's Debt Situation 

Of all the things that can negatively affect your family's finances, nothing comes close to debt. Consider this, your husband takes a big loan to start a business and uses your house as collateral. For one reason or another, the business tanks. Since he can't service the loan, the bank sends auctioneers to collect the collateral, and you lose your family's home. 

Once you say, "I do," and combine finances with your partner, every debt they take on has the potential to affect you. Suppose he delays or defaults on a loan that listed you as a guarantor or taken using your joint account. 

In that case, it will not only affect your creditworthiness but can also lead to the repossession of your joint asset by the creditor. The best way to avoid such surprises is to be involved in the family's finances.

You and your partner can decide to consolidate your debts and start a process of living debt free. And when you want to incur new debts as a family, you should discuss them and devise a framework for how you will service them.

Also read: 5 Investments Types Two-income Couples Should Try

4. The Family's Investments 

A woman's perspective is much needed when deciding on your family's investments. A study published by McKinsey & Company found that women approach investing and wealth management different from men because:

  • Women have low-risk tolerance; this echos a 2019 study by the University of Bristol found that women dislike taking financial risks and are more risk averse.
  • Integrated family financial goals, women will support investment strategies that favour their family's financial wellbeing and ensure life goals are achieved. 
  • Women are willing to learn, which in turn helps them make well-informed and well-researched investment decisions. 
  • Women think long-term when it comes to investing for the family's future. The Mckinsey research found women worry more about health care costs, long-term insurance, and being a burden to their children.

By stepping out of the shadows, you can partner with your husband and exchange investment ideas. This will help you align your investment goals as a family, lower your risk exposure, and invest towards long-term goals that will secure your family's financial future.

Also read: Homeownership Option 2: Rent to Own Properties

5. The Family's Goals

Family goals are essential, and they will determine how well you will thrive financially in the future. You and your husband should come up with important family financial goals and set a strategy on how to achieve them. Three goals to prioritise when defining your family goals include homeownership, education, and retirement.

You can then start saving and investing towards each specific goal individually. You should keep your family vacation savings separate from your education savings account. This way, you will keep track of money and you can lose sight of what is more important.

You should also revisit goals and change strategies as your income fluctuates. When what you bring home increases, instead of spending more on short-term needs, you can use the extra money to ramp up your retirement funds and rip all the benefits of compound interests.

Also read: Financial Goals to Set For Your Family

6. The Family's Estate Planning 

Protecting your family's future goes beyond providing your dependants with the best education and a roof over their heads. You have to think of how well they will be when you are incapacitated or no longer around. By taking part in the family's estate, planning women can ensure that:

  • The family has an updated will at all times.
  • The family's investments and assets are accounted for, and nothing will be lost when one partner dies.
  • The estate is divided equally among the dependants 
  • The family is looked after, and their assets are managed and transferred professionally by their selected trustee or fiduciary 
  • Decide guardianship for your kids.

Read Also: Why Estate Planning is Important in Financial Planning

7. An Exit Strategy 

The future is unpredictable, yet it's always vital that you take control of your financial future and make necessary arrangements to accomplish all your goals. 

When separations or divorce occur, women are likely to suffer financially and have to go through a lengthy legal process to get justice and their share of the family's wealth. Research published by the National Library of Medicine found that women experienced a 45% decline in their standard of living after a gray divorce.

By creating an exit strategy, you and your husband can decide how your wealth will be divided in case you separate. You can have a prenuptial or postnuptial contract that highlights the share each of you will receive. This will ensure you avoid the costly legal costs you will pay from your pockets.

If there's an income disparity between you and your husband, you should also discuss alimony. The person making more will have to support the person making less financially so that the quality of life they were accustomed to isn't affected by divorce and they can maintain their lifestyle.

Also read: Hiding Money From Your Spouse - Is It Ever Okay?

WRAPPING UP 

Knowing about your family's finances does more than keep you in the loop, prepared for emergencies, and plan for the future. It can ensure ownership and prevent victimhood because when goals are accomplished, you can celebrate your efforts together, and when an investment fails, you and your husband can take equal blame. 

The best way to know and keep up with your family finances is for your and your spouse to constantly talk about it. Consider having weekly money talks, creating budgets together, taking a financial literacy class as a couple, and encouraging a culture of openness and honesty regarding your finances.

Doris is a finance professional, freelance writer and SEO expert. She has experience helping businesses of all sizes create content that helps improve their site quality and increase their online traffic. She is a personal finance and wealth creation enthusiast and a frequent contributor to Money254. Visit Doris' personal website to learn more about her work.

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