Apr 7, 2022 4 min read

April is Financial Literacy month.

Unfortunately, American society is lacking in this area.

Our schools do not teach this subject in enough depth, and as a result many families face more stress and lower-than-necessary living standards. Financial pressure is a major factor in leading to divorce and family discord. Children raised in stronger family financial environments learn these skills from their parents and often perform better in school and thus have higher lifetime outcomes.

Although lack of financial literacy hurts all people, it is probably even more important to women.

For a number of reasons, women often carry more financial burdens than men. They are often the caregivers, and take on more responsibility for their children and for their parents. This requires a lot of time. It sometimes reduces the amount of time in the workforce to build up Social Security benefits, pensions, promotions and 401k balances. Sometimes, this results in lower pay and benefits at work.

Currently, there are more women than men attending college. While this is promising for future income, a scary fact is women now hold two-thirds of student debt. There are several reasons for this. When they enter the work force, they often get paid less so it takes longer to pay off loans, which costs them more interest expense. A recent report from student loan refinancing company Laurel Road says one reason women have more debt is they don’t understand how the system works.

Financial literacy can help elevate this situation.

Divorce is a situation that affects many American families. If a lack of money is a major cause of divorce, operating two households costs more than operating one. If both spouses were not involved in financial decision making, it becomes a major concern during a divorce.

The loss of a spouse is rough on everyone. Not only the emotional issues, but the financial ones can be devastating. More often, it is the woman who loses her spouse. This is because they often marry a man a few years older than themselves and women of the same age often live four to six years longer than men.

Upon the first death, almost every family suffers a loss of income. One Social Security benefit will be lost, and possibly some pension income. Most survivors get 50% of the original monthly income from a pension. While the income takes a big hit, living expenses do not reduce in half. In fact, they probably only go down about 15%. This is because you must still pay property tax, utilities repairs and many other expenses no matter how many people live in the house. You may even have to hire someone to do the chores that were done by the deceased.

Studies have shown that a 65-year-old couple will spend about $240,000 in health care expenses in the final phase of their lives. Women will account for about $130,000 of that total. Part of these expenses is a result of longer life expectancies. This figure does not include long-term care expense. If you visit a nursing home, about 85% of residents are women.

Decisions made decades earlier can have a major impact on later life. Knowledge is power. Take steps to improve your financial literacy and your family will be rewarded for years to come.

The benefits will be well worth the effort. We will discuss some other way to increase your family’s financial literacy in future columns this month.

Your Financial Future is written by certified financial planner Gary W. Boatman, MBA and CFP, who also wrote the book, “Your Financial Compass: Safe Passage Through The Turbulent Waters of Taxes, Income Planning and Market Volatility.”

If there is an area that you would like to see discussed in the column, send your suggestions to gary@BoatmanWealthManagement.com.