2020 hasn’t been easy on anyone. But study after study has shown that the pandemic has been harder financially on women. Women are shouldering the burden of homeschooling, and many have had to leave the workforce, perhaps permanently. They’re also facing increased childcare costs if they work from home.
So, how can women weather the Covid storm and come out the other side? One thing women can do is improve their overall financial literacy. Research has shown that on average women’s financial literacy lags behind men’s. Several women financial advisors spoke to CNBC. They shared the steps they’re telling their clients to take to improve their financial literacy. We thought we’d share them with you:
1. Women need to help each other
One key, according to female financial advisors, is for women to communicate more openly and formally with each other on the topic of finance, especially when they were deprived a financial education earlier in life.
“I am seeing clients with low confidence not having had conversations in their household growing up and now feeling like they don’t have anyone to turn to,” said Lauryn Williams, founder of financial firm Worth Winning and a member of the CNBC Advisor Council, who has been coordinating conversational circles with women.
“They don’t feel as educated and a collaborative effort is a way to turn it around, getting women in circles to discuss money,” Williams said. “Just talk, let’s just talk money stuff, period. Because there’s no space to be able to do that, ask crazy questions and things on your mind and talk about it all in a circle, in a friends’ group. … At the beginning of solutions, it’s just getting comfortable talking about money.”
Without that conversation, confidence will continue to be low and feelings of shame and embarrassment high. Williams has learned from watching the process unfold that, “they want a room full of other people talking about woes, what they did and didn’t know. It was a collaborative feeling in the room of ’let’s get this conversation going, we are all in uncomfortable place. I am not the only one who doesn’t have it all together and now I can go figure it out.”
2. Don’t let investment jargon scare you away
Stacy Francis, president and CEO of wealth management firm Francis Financial, and also a member of the CNBC Advisor Council, said the first step to become more comfortable with investing is to ignore the “huge myth propelled by the industry that it’s rocket science to build a diversified portfolio and only the smartest people can do it.”
“It’s just not the case,” said Francis, who also has been hosting money circles with clients.
“Anyone can learn about adding a mix of stocks and bonds,” she said. “It’s not about choosing a hot stock or the best investment. It is a lot more boring than people believe. You choose an ideal asset allocation, and stick with it.”
She said women should be encouraged by the fact that long-term data shows women to be better than men at doing this. Staying with a long-term plan and not making changes when the market is way up, or down, are the most important behaviors for long-term returns. “Women have all the behavioral traits to be great investors,” she said. “They just don’t feel like they are qualified. You don’t have to know all the answers. It is OK to not know everything about the stock market and everything about S&P 500 and Russell 2000.”
3. Save, even just a little
Williams said she encourages people, even those facing financial hardship, to save “just a little” because creating the habit of saving is more important than the total amount saved.
She said it can be difficult during a pandemic for women who lost work, and at the same time, have greater expenses related to child-care, to save anything. “The last thing on their mind is investing when they have to buy computers for their children for remote school and have no emergency fund and might be taking on debt to do that. Making ends meet is enough for a lot of people,” she said.
But it is critical to find a way to save in any situation.
“Mindset is a key part of it,” Williams said.
If women don’t save, even a little, because they think they don’t have enough to save, they will be stuck operating from a mindset of scarcity rather than abundance, and are less likely to ever take the actions that will result in greater financial security. “I’ve had people say putting as little as $5 in a savings account is not significant, but it is creating the habit and confidence so when things change, when you income improves, you can continue to bump up the amount,” she said.
As a woman-owned company, we hope these tips from CNBC are helpful. And if your business needs help with bookkeeping, process management, or administrative duties let us know. We have various packages that we will tailor to your needs.