Smart mom, rich mom: Build wealth for your family
Thursday, 2 June 2016
Journalist and author Kimberly Palmer has a visceral memory of lunching with two editors of a high-profile investing magazine, and being told they exclusively gear their coverage toward older men.
Their declaration confirmed what she already suspected from her experience as a financial writer and mom: There's a massive disconnect between the financial services industry's education efforts and women.
"It's insulting, really, when you start to think about it," she writes in her new book, Smart Mom, Rich Mom. "Why do men get magazines and books on investing and getting rich while women get lectures on pinching pennies at the grocery store and cutting back on our shoe collections?"
Studies show that women as a demographic aren't quite connecting with the financial services and smart investment tools targeting the general marketplace—meaning, men. Palmer says that historically, finance is a male-dominated, male-oriented field, peppered with attempts at change. "I heard from moms over and over again that they felt their financial consultant only spoke to their husbands or treated them in a condescending way," Palmer said. "One thing that helps is that a growing percentage of financial consultants and planners are women, and communication styles are slowly changing."
The family picture
Palmer says that in the average male-female marriage, a husband will manage financial planning and investing, while the wife pays bills. "This is not a stable situation for many reasons: In addition to the potential for divorce, women tend to outlive men, which means at some point we are going to be the ones in charge of managing our finances, if we aren't already," she says.
Palmer geared her book toward mothers because of their unique financial challenges and positioning. "We want to save for our kids' future college tuition while also paying for the day-to-day expense of running a household. We are often juggling working with childcare costs. We want to teach our kids financial literacy, too. Sometimes we also have responsibilities to help out our own parents, or expect to one day."
The book is written for the woman who is trying to navigate all the priorities at once—as well as for women who will someday become mothers, so they can better plan.
In Smart Mom, Rich Mom, Palmer emphasizes that women need to be earning their own money—even as they're raising young children or if they have left their regular jobs. But not everyone can hang a "consultant" shingle out and handpick a few hours a week for working. Other ways to keep the cash flowing include babysitting other kids, cooking for other busy families, running a day camp or fitness program, and coaching based on expertise and experience. "It really depends on what you are good at and what you enjoy to do," she says.
How to begin
The first place to start is by doing some radical truth telling about your finances to fully understand where you are. To do this, Palmer suggests collecting the usernames and passwords to all your accounts in a binder or secure online folder—savings, checking, credit, mortgage, insurance, etc. "Collecting all that in one place is no small task, but it makes it easier to review them all in one swoop to make sure you're on track," she says. "You need to know where your money is before you can figure out how to manage it."
"I also like to sit down at least quarterly to review the big picture of my finances, to see if I need to update my 401(k) or see if I need to rein in my regular household spending," Palmer says.
The next thing: Learn as much as you can, every day. As she writes in Smart Mom, Rich Mom: "At a time when we tell our daughters that they can grow up to be anything they want, why is it that even young girls report talking less with their parents about money and investing than young boys? At an age where more women are earning graduate degrees than men, why is it that even in their twenties, men have already accumulated far higher investable assets than women? (The gap is $58,500 versus $31,400, according to the 2014 Wells Fargo Millennial Study.) And, perhaps most disturbingly, why are so many women so utterly unprepared for retirement when the time comes, leaving them dependent on other family members or in poverty?"
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