The virus of inequality

While the broader economy may be roaring back in 2021, for some it may feel like little more than a whisper.

A new poll from Fidelity Investments found that 79% of women feel weighed down by job and money stress today, up from 67% last fall. This figure aligns with a fall 2020 survey conducted by One Poll on behalf of BOK Financial^®, which also found that 64% more men than women feel confident that they know enough to manage their finances and successfully plan for the future. And men are two times more likely to give themselves an A grade for their financial management skills than women.

So why the significant disparity between men and women? During the pandemic, women faced higher unemployment rates. But Kimberly Bridges, director of financial planning at BOK Financial, says women have historically been far less likely to receive the knowledge, tools and education necessary to manage their money effectively.

“This is a well-known issue we frequently encounter in the personal finance industry,” said Bridges. “I always tell women that it’s up to us to take charge of our financial future. We should empower ourselves with information and planning.”

And that tide is turning. Fidelity’s poll found that seven in 10 women plan to take action with their money within the next six months, and 60% of women are talking more about financial topics with family and friends—a whopping jump from 34% at the start of the pandemic. While these developments are encouraging, Bridges says the best place to start taking charge of your financial future is by making a plan.

“To achieve financial empowerment, you must be in the driver’s seat of your finances,” explained Bridges. “Building your savings and retirement funds, reducing debt and ultimately achieving financial independence all start with a plan.”

If you need some help, Bridges offers some pointers to get started.

Begin by getting a handle on your current financial situation

Examine your income, expenses and savings to determine where your money is currently going.
Build a statement of net worth and track your net worth from year to year. This will tell you if you are building wealth or simply treading water.

Set financial goals and make sure you are saving toward them

Start with a plan to pay off debt and establish an emergency fund that will cover six months’ worth of expenses.
Plan for large expenses such as education funding, home improvements and car purchases.
Make retirement savings a priority.
When you are ready, turn to a trusted advisor for help in determining the correct amount to save toward your goals.

Make sure you have an estate plan

At a minimum, you should have a will. This is especially important if you have children because you need to name a guardian.
Review the beneficiaries on your insurance policies and retirement accounts to ensure they are correct, as these designations trump the will.
Use joint titling with rights of survivorship carefully. While sometimes used for convenience, it is important to know that if you die, the assets will automatically pass to the joint owner rather than to the beneficiaries named in your will.
As you get closer to retirement, other considerations should be addressed.

Plan for future healthcare costs

If using a high-deductible health plan, fully fund your Health Savings Account (HSA) and consider holding it for health care expenses in retirement.
Make a plan for health insurance if retiring before age 65, when Medicare eligibility begins. Study your Medicare options and understand how Medicare works with your employer-provided plan, if still working at age 65.
Consider how you will cover the cost of long-term care, if needed.

Evaluate your Social Security claiming options

Consider strategies to maximize income for your surviving spouse.
Understand the impact of taking early benefits.

While getting a handle on these items is the first step toward financial success, Bridges cautions that you should re-visit your financial plan when making big decisions or when your situation has changed materially. Even if you already have a plan, the events over the past 12 months might warrant a refresh.

“The economic turmoil over the past year has impacted everyone in one way or another,” said Bridges. “For some, 2020 impacted emergency savings; for others, it changed values around work-life balance. Regardless, now is a great time to create, or reevaluate, your financial plan.”