Only 20 percent of heterosexual couples make big money decisions equally. Yup, you read that right—only one in five couples partner on important financial decisions, according to a new study by UBS called Own Your Worth. Even more worryingly, the study also found that more than half of all women in heterosexual relationships and 40 percent of women in same-sex relationships defer major money decisions to their partners. That means up to half of women don't talk to their partners about financial decisions that affect them: from major purchases to long-term decisions about investments and retirement.
The issue isn't just about making sure that women have a say in day-to-day family finances. Eight out of 10 women will end up alone at the end of their lives—solely responsible for managing their finances. Women consistently outlive men, and divorce rates have gotten higher recently, particularly for people 50 and over. More and more people choose to stay single. So it’s critical that everyone, especially women, understands money matters throughout their lives—both now and as they get older—so that they can be prepared for their financial futures.
Closing the pay gap in the workplace has been a popular topic of discussion as a way to bring about gender equality financially, but what's not talked about enough is how gender dynamics play out in the home—and how equality has to start there. FYI, this problem of deferring big money decisions isn't just for an older generation: Millennials deferred decisions around finances in their partnerships even more than older generations, the study found.
The good news is that both women and their partners actually want a better balance: 96 percent of married women and 98 percent of married men want women to be more involved in financial decisions, according to Own Your Worth. And the large majority of women and men surveyed by UBS also said that women’s financial participation is critical to gender equality.
In a new video series, UBS delved into this problem, speaking to real-life couples and individuals about money discussions at home and the consequences of not engaging with partners. Even though it sounds intimidating, there's never been a better time to look at the roots of this imbalance and start working to fix it. Women's financial health—and our overall well-being—depends on it.
Why Many Women Defer on Money Issues
There are a variety of reasons behind this subtle but pervasive inequality. Women actually know more than they think but may often have a confidence gap, deferring financial decisions because they believe their partner has more expertise. Other times, it's simply that couples are busy in the home, especially if they have children, and they take a divide-and-conquer approach to responsibilities—with finances being one partner’s responsibility. Sometimes, women simply feel like they don't have time to work on finances because of their many other household obligations; they can have a misinformed sense that it's not a woman's "place" to tackle finances or even a lack of interest in these matters.
Even though gender dynamics are changing, there's still a widespread perception that men just "get" money more than women. But that's not necessarily true—women have as much insight to offer in financial discussions. When one partner takes the full brunt of the responsibility, it hurts both partners, because it only includes half the couple's perspective and can inadvertently trap women into giving up their voice. It may also prevent both partners from having a full understanding of their financial needs, goals, and bigger picture.
The good news is that most spouses and partners want women to join them in making big money decisions. They feel like their relationship will be stronger, certainly, but it also takes the pressure off of them to succeed by themselves in the relationship's long-term financial health. According to Own Your Worth, over half of women who defer to their partner say they wish they were more involved—and 90 percent of men say they wish their wives were more involved, too.
The Lasting Impact When Women Don't Contribute on Finances
When women don't participate in major financial decisions, it can be a rude awakening if an unexpected life event forces them into a money management role for the first time. This can include long-term planning or lack thereof—over 50 percent of people in the U.S. don't have enough saved up for retirement, which can be an enormous problem as people get older—as well as everyday issues like access to account passwords and financial institutions.
Big life events have a way of exposing this kind of inequality. No one plans for an adverse health or life event, including sudden death, illness, or disability. But when they do happen, it can be a steep learning curve for women who weren't previously involved in the financials.
Couples are more likely to invest in estate planning to divide assets in case of loss, because they know that it's an important part of planning ahead. But they're less likely to think about what would happen in the day-to-day if one of them is gone—especially if that person was the only one managing family finances.
It's common to defer these conversations thinking that they'll happen at a later date, only to be caught off-guard when something does happen.
How to Take Charge and Make Changes on Finances in a Relationship
But there's still good news. Women who need to be more engaged on finances can make changes. Just simply taking the plunge and talking about money regularly—particularly with encouragement and support from the partner who normally handles it—can be an important first step. These discussions can include an explanation of big-picture savings and investments and a joint review of financial documents, as well as a discussion of the minutiae.
It's important to remember that these conversations can happen over time, since communicating so much information all at once can be overwhelming. A financial advisor can also be a useful ally here, since they're specialists in money management who are used to answering questions and helping individuals and couples develop tailored financial plans for the future.
It really all comes down to the concept of participation, according to Carey Shuffman, Head of the Women’s Segment at UBS. "You don’t need to be an expert to be meaningfully involved in your financial life. Women can identify the steps they’ll take to take their seat at the money table, which will help them actively design the life and legacy they want. And this is not just a women’s or a couples’ issue—everyone can be instrumental allies in removing barriers so active financial participation is possible for all women."
Another useful technique is to designate a regular time for these conversations to occur. Big picture talks don't have to happen as often, like discussing how much couples are saving for retirement every month. But understanding how money is flowing in and out, particularly if couples want to save or change their financial picture, should be a regular part of life at home.
There are many ways to split finances, and couples can find their own unique methodology for dividing up responsibility. But, no matter how it looks, a sense of partnership can be a powerful feeling. Own Your Worth found that couples who split money management and participate equally feel more confidence and less stress in their finances. Partners can be lifelong allies, supporting women in their journey to become financially knowledgeable and independent.
These discussions can also be useful in identifying when you need to speak to a pro about your financial needs—taking the burden off the relationship and getting some help from someone who understands you. UBS has created a framework called UBS Wealth Way that financial advisors use to help couples manage their money across the three key dimensions of their financial life: liquidity (short-term), longevity (long-term), and legacy (beyond).
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