Let me tell you a story.
Once upon a time, there was a world-famous photographer. She earned a seven-figure salary from a top magazine in addition to the tens of thousands her photographs and books commanded.
Now, according to a lawsuit filed in New York last month, she is being sued for $24 million she had borrowed and, evidently, cannot repay. She is in jeopardy of losing her homes and even the rights to her own art, decades of work.
It's unwise, I know, to generalize too much from any one person's predicament, especially an extreme one like Leibovitz's. But there's still far too much evidence that many ordinary women are handicapped when it comes to money. And it's not a price we can afford to pay.
The female financial gap
- Only a third of women say they pay their credit cards in full each month, whereas two-thirds of men do.
- About 74% of women say they pay their bills on time each month, compared with 90% of men.
- Only half of women say they spend less than they earn each month, compared with 71% of men.
- Only a third of women, compared with half of men, say they have an emergency fund sufficient to pay their bills for a few months.
Now, who knows how accurate this survey is. It's based on 3,500 men and women nationwide who wanted to take a financial education class, provided by Financial Finesse, and filled out the company's online questionnaire. It's self-selecting and self-reported.
Still, I'd wager that respondents were trying to appear somewhat financially adept and cast their answers on the rosier side of reality.
Or let's say they didn't and were trying to be as truthful as possible. Either way, the results for the women are pathetic, especially when you consider that most respondents earned between $60,000 and $75,000 a year.
Income is no guarantee of money smarts, I know (see poor Ms. Leibovitz above). But if the more financially successful women are still lagging behind in basic financial management, that worries me.
No, I'm more than worried. I'm furious.
It starts early
I'll spare you the regression analyses and give you the CliffsNotes version of my research (which is still in progress):
- Women aren't taking themselves seriously as financial people.
- Women's lack of financial skills and acumen is putting them in deep financial danger -- in the short and long term.
And it starts early: Recent surveys of teenagers by Charles Schwab and Capital One find that even in high school, girls are not as financially confident as boys.
That lack of skills and confidence hinders women as they mature: Young men are almost twice as likely as young women to have individual retirement accounts or other investment accounts -- 21% of men versus 13% of women, according to a 2009 Schwab survey of 23- to 28-year-old adults.
It gets worse
- Less than half of today's working women have access to a pension or retirement savings plan through their jobs. That's according to a June report by the Women's Institute for a Secure Retirement, a research and policy group in Washington, D.C.
- Of those who have access to a retirement plan, 72% of female heads of households participate in their plan, compared with 80% of eligible men, according to a survey of 5,000 401k plan participants in 2007 by the Employee Benefits Research Institute.
- And women who contributed to their 401k plans earned an average of only $57,000, compared with an average of $84,000 for men, according to a study by Hewitt Associates, a global human-resources company.
What does this all amount to? Let's just say that millions of women are on a collision course with poverty.
The combination of shortsighted spending and saving habits, plus generally lower salaries and less time in the work force (because of child rearing), means that many women's retirement benefits end up being about one-quarter the size of men's, according to the National Center for Women and Retirement Research. (Read more in "Why women fall behind in retirement.")
Nearly a third of women (29%) who are 65 and older are single and living close to the poverty line, according to the Social Security Administration.
Apparently, women aren't connecting the dots between their money habits now and where they are likely to end up in 10, 20, 30 or 40 years.
What will you do?
But in the meantime, my fellow countrywomen, our financial well-being rests in our own hands. What are you going to do about it? A few ideas:
- Join the Women in Red message board. The Women in Red motto -- "Financial sanity through community" -- works. Together, women learn to save, pay off debt (more than $4 million and counting) and tackle daily money problems in order to create enduring financial stability.
- Talk about money. Talk about spending, about saving, about how you want the future to unfold. Don't be afraid to ask questions.
- Take small steps. Rome wasn't built in a day, and my own financial journey has taken thousands of steps over the years. Keep moving.
- Learn. There are hundreds of financial resources -- Web sites, blogs, books -- many of them written in plain English. A new favorite of mine (short and easy to digest): money tips from DailyWorth.
Above all, get to know yourself as a financial person, and take that person seriously -- her fears, dreams and needs. If there's a money block in your way, get yourself a chisel (or a small grenade) and blast it out of your path.