A recent study on equal participation in financial decisions conducted by UBS, which surveyed thousands of Australians, surprisingly showed that amongst millennials, only 20% of Australian couples have an equal contribution.
Equal contribution in decision making is of interest to roughly 88% of millennial women (between the ages 25 to 40). However, only 20% are actually participating equally after marriage.
What are the sources of this imbalance?
An obstacle to equal participation in financial decisions is the stigma women face from gender inequality. The study identified that for a lot of these women it felt easier to play a passive role. This is due to the assumption that their husbands knew better. Therefore, contributing to the unending cycle of the traditional family structure. Women’s tendency to gravitate towards household chores and taking care of the children has also resulted in this traditional behavior when it comes to family unit decisions and financial participation. However, it is important to note that although important decisions might be in the hands of males, the actual day-to-day running of finances is female-driven; as females are often the ones grocery shopping or paying the bills.
Previous studies have shown in fact that women have a better financial literacy ability than men. However, men have greater confidence when it comes to answering questions even if women might have more knowledge. This highlights the inequality experienced in financial participation comes down to a lack of confidence not lack of knowledge.
Taking the external environment and our community into consideration, we might also evidence these behavioral assumptions. As examples, when it comes to purchasing a car, salespeople might often be more inclined to approach the male of a couple due to the assumption that the end-decision is in their hands. Similarly, the financial industry is predominantly dominated by males which impacts how we perceive gender roles.
Why should you care?
It is important to have equal participation in financial decisions because most women outlive men. Therefore, women should be aware of their financial state before it is too late. Unfortunately, the last 30 years have seen an increased rate of divorce particularly for women over 50, making it particularly important for women to be part of the decision making; helping them plan retirement and take considerations around leave and superannuation, to ensure their retirement plan can still be on track.
8 out of 10 women have had to take responsibility of their own finances making this task almost inevitable. Therefore, relying solely on a male partner can be damaging and getting involved at an early stage is critical.
As mentioned previously, about 80% of millennial women wanted to be part of financial decision-making prior to marriage, however, after marriage, only 20% take an active position. This issue seems to be one of inaction that does not serve women’s desires and financial security well. Given the high probability a woman has of having to manage her finances at some point, it is extremely important that she can feel empowered to comfortably do so when the time comes, to ensure protecting the financial security of herself and her loved ones.
Relationship abuse can also happen through financial control, leaving females in a bad financial positions resulting from unawareness. Participating equally in these decisions can therefore be advantageous to personal wellbeing. The contribution and understanding of household finances is important to guide the direction of couples and protect their best interests.
It has been found that women over the age of 50 are currently experiencing the fastest rate of homelessness. Most of them have had someone else control their finances throughout their lives, leaving them in bad financial conditions.
What can we do about this?
1. Raise your voice!
Let your partner know that you are interested in playing a role in the financial decisions being made. You must remember that these decisions also impact your life. From years of money mentoring experience, what we have learned is that often, women are afraid to tell their partners that they want to be involved due to a fear that their husbands might think they don’t trust them. Often, this leads to frustration but stems from the male partner not being prepared to answer questions or feeling insecure about his own financial literacy, as opposed to him actually being reluctant to having his female partner participate in decision making. In fact, the study revealed that 94% of millennial men actually want their partners to be involved
2. Be open to asking questions
If you are meeting financial advisors, mortgage brokers, an accountant, or a banker, or even just discussing with your partner, ask the questions! Don’t be afraid to ask for explanations so you can understand everything.
3. Make it a part of your relationship
Have regular money dates! Think about discussing your finances as a part of your romantic life. Talk about your future and what you can do today to work towards common goals. Such goals can include retiring early, traveling again, and ensuring you can retire while being financially secure.
4. Stay actively engaged
Stay in the loop with news that relate to your financial future. Whether it be relating to your home loan or investment property, or even opportunities to increase your wealth. Showing an active interest and bringing the topic forward in a non-threatening way can help in showing genuinely. This helps assure your partner that your participation in financial decisions does not come from a place of distrust. Moreover, your partner can confide in you regarding financial decisions which could help relieve the stress on them.
5. Be confident!
At Rise High we regularly host financial literacy workshops and seminars which can assist in developing your financial literacy and boosting your confidence when it comes to acting on your knowledge. Working with one of our mortgage brokers or even accessing some of our free online resources such as our youtube Rise High TV content, can also help in developing your understanding of money management and financial planning.
We are always here to help you! So whenever you need, just reach out to us and we’ll be more than happy to help! Our consultations are free of cost, so you can rest assured that you will always have a helping hand to go through this journey.
What role do men play in bridging this gap?
Men also play a vital role in supporting these changes and being part of the solution. It is important for men to know how they can promote an environment of equal participation.
Feeling confident to request help when it comes to financial decisions, asking for feedback and including their female partner in appointments with their accountant and mortgage broker, and having the initiative to suggest romantic money dates, are all ways in which men can play their part in bridging the gap.
Envisioning and discussing how life could be in 20 years can also be extremely helpful in bringing a couple closer. This would empower their relationship to work towards a common goal.
Being open to expanding your financial literacy together as a couple is a great idea. This will keep the both of you well-informed and be able make right decisions to support common goals.
Throughout this article we have mostly focused on female-male relationships. However, it is also important to say that these conversations need to happen equally in same-sex relationships. Equal participation of both partners is vital for the health and financial security of a relationship, and we are always happy to talk to you and assist anyone that needs that extra bit of help and support through this learning journey!