Recently on Money Matters, I interviewed best-selling financial author David Bach. Now, I typically don’t do interviews for my radio show, but this was a very special occasion. Bach is like the Michael Jordan of the financial planning world, and his books have sold over seven million copies and earned nine consecutive slots on the New York Times bestseller list. Wow.
When I sat down with Bach, I wanted to, in part, learn more about the motivation behind one of his books that just celebrated its 20th anniversary – Smart Women Finish Rich. This book, written way back in 1998, is designed to help bring women into the conversation when it comes to family financial planning.
Why did Bach focus on women? Because, statistically speaking, women are on the sidelines when it comes to financial planning. Put simply, too many women rely solely on their husbands to manage their family’s investment portfolio.
That’s unfortunate because there are some common scenarios which leave the matriarch of the family in charge of the money. As Bach points out in his book, “It’s neither safe nor practical to assume that the man in your life can be counted on to take care of your finances.”
For starters, women often live longer than men, so a wife will likely outlive her husband of similar age. Then there’s the chance that the love won’t last and the couple will part ways. Finally, there’s the idea of security in knowledge – that knowing what your financial planner is doing will help you sleep better at night, and help protect you from being taken advantage of as you grow older.
Some women (and men) out there may be “investment adverse.” “But why do I have to play the investment game at all?” they may ask. And Bach has an answer ready: “The fact is, none of us really has a choice: We are all playing the money game whether we want to or not. The only question is: Are we winning?” And to answer that question, we have to be knowledgeable and engaged.
A prime example of this point comes by way of Bach’s paternal grandmother. Here’s how the story goes:
Bach initially didn’t realize that most women aren’t clued into what’s going on with the household money and investments. That’s because his grandmother was a savvy investor, to say the least. She used smart investing to grow her net worth from next to nothing at age 30 to over a million dollars when she retired.
The influence of her knowledge on the family was far-reaching – Bach’s grandmother taught his father how to invest, and his father later became a financial advisor. So, financial planning and comfort with investments ran in his family.
During his first year as a financial professional, Bach realized that his family was the exception, and not the rule.
Working with his father, Bach met with three women who had been recently widowed within a one-month span. In each of these meetings, the questions were the same: Where is my money? How much is there? What do I need to do to pay my bills? You’re going to take care of me, right?
Bach was surprised to see that these clients knew so little about their financial affairs. So much so that he decided to start teaching courses aimed at teaching women the basics of financial planning and money management. For his first class, Bach had 225 women sign up. The classes grew even more, and eventually, Smart Women Finish Rich was written.
Today, this book is as relevant as it was when first published.
If you are a woman reading this, consider another of Bach’s quotes from the book, in which he advises, “Don’t ever put your entire financial fate in someone else’s hands.” It pays to ask yourself if you’re taking a back seat to your family’s financial affairs, or if you’re truly “invested” as a 50/50 partner in the process.
If you don’t feel up to speed on your family’s money situation, ask your husband today to sit down and take you on a grand tour of the finances. Ask questions. Offer your input. Share your concerns.
As part of this conversation, you should discuss your financial professional’s performance. Unfortunately, there are still money advisors who don’t fully understand or embrace a woman’s role in her family’s finances. You and your husband are both clients and deserve the same level of attention, information, and explanation. If, for instance, you have a financial advisor who speaks only to your husband and ignores you during meetings, it’s time to tell your husband that the two of you need to find a new advisor.