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Women Get It: Financial Knowledge Is Power

March 8, 2018

THE HASHTAG FOR this year's International Women’s Day was #PressforProgress: progress on closing the wage gap, ending sexual harassment and achieving gender parity in business, in government, and everywhere else that men’s and women’s lives intersect.

It’s a day to celebrate the accomplishments of women (and they are many), but also to call attention to the progress that still needs to be made. Movements like #MeToo, #TimesUp and #GirlsWhoCode have gained great visibility this year. Beneath all the headlines and the hashtags are women pursuing their careers, raising their families, and taking control of their finances. They recognize that with financial knowledge comes power—and the freedom to walk away from jobs that don’t pay well and colleagues who harass them; the freedom to invest in companies and candidates that support gender equality.

 

Women hold two-thirds of the $1.3 trillion in outstanding student loan debt in the U.S., according to a study by the American Association of University Women. For strategies on paying off your student loan debt, click here.

The wage gap widens with age, due to an accumulated loss of potential raises and promotions, as well as time spent out of the workforce to care for family. So how can you help to close that gap? Gender lens investing could help. Read more here.

But depending on where you live, you could be responsible for any debt taken on during your marriage. Your spouse’s existing debt could also be a roadblock if you apply jointly for a mortgage. Get tips for handling your finances when you tie the knot here.

According to 2016 research conducted by the Center for American Progress, a 26-year-old woman who takes five years off to care for her children could lose $500,000 or more in cumulative wages and retirement benefits over the course of her career. That’s a reduction of at least 19% in lifetime earnings. Get 5 questions to ask before becoming a stay-at-home parent here.

Women live five years longer than men, on average. One way that women can boost their income in retirement is to delay the age at which they start taking their Social Security payments. More tips here.

 

For International Women’s Day, we spoke with several Merrill Lynch advisors who devote their practices largely to serving women clients. They shared advice on the importance of financial empowerment, as well as some very personal stories about how they became interested in all things financial.

 

Girls want to understand the ‘why,’ not just the answer. —Private Wealth Advisor Alyssa Moeder

 

“A fascination with investments.” While many families spend Friday nights at the movies, as a young girl private wealth advisor Heather Goodbody was home watching PBS’s Wall Street Week with her parents. “I’ve always had a fascination with investments,” she says. “It was a regular discussion topic at our dinner table.”

 

Private wealth advisor Alyssa Moeder’s father also began teaching her about money at a young age—she bought her first stock at 16. But it wasn’t until September 11, 2001 that the lessons hit home. “My sister lost her husband on 9/11,” says Moeder. “She was not involved with her finances at all. That was really eye-opening for me. I was there to help, but it reinforced for me the importance of women being engaged in the family’s finances.”

 

 

“Hungry for information.” Financial knowledge is the key to independence, agree all the advisors we spoke with. “Learning can begin as soon as a young person starts earning an allowance,” says Goodbody. “After that, when a teenager enters the workforce, he or she should look at their first W-2. Sit down with someone to start truly understanding finances.”

 

I know so many 80-year-old widows who are completely money savvy and schooling their 50-year-old sons. —Financial Advisor Pamela Kiernan

“By age 25, young women should be investing as much as they possibly can,” says financial advisor Pamela Kiernan. Millennials are hungry for information, notes Moeder, who encourages her clients to bring their children in for meetings so that they can ask questions about money management. She’s often amazed by how much they already know. “Girls want to understand the ‘why,’ not just the answer.”

 

At the other end of the age spectrum, Kiernan says, “I know so many 80-year-old widows who are completely money savvy and schooling their 50-year-old sons.”

 

Women face some unique financial challenges as a result of the wage gap and the fact that they tend to live longer than men and often take years off from work to care for family. Test your knowledge of those challenges by reviewing the questions and answers in the slide show above. Then click through to articles that can provide you with insights to help you #PressforProgress toward your financial independence.

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