Even as her husband of 35 years was dying 18 months ago, Ellen Solomon refused to sit and listen to him talk about what he had done with their money during the course of their marriage.
“He finally gave up,” she said. “He wrote it all down in a black notebook, which I still have.”
That notebook became Solomon’s roadmap to learning about their finances after her husband’s death. She was lucky enough to have three financially-aware sons and hire the advisors she needed to bring herself up to speed.
Although some women have begun to push through the glass ceiling, success in business doesn’t mean you automatically understand, and get involved with, your money. Solomon, now the director of women’s issues for the State of Illinois Treasurer’s Office, said she had never paid any attention to money, even back in college.
“My father balanced my checkbook,” she said. Her husband took over after graduation.
In hindsight, she admits it was a dumb move. “I am an intelligent person and I didn’t have to put myself into the position I got into,” she added.
Like many others who are now focusing on women’s financial illiteracy, Solomon is disturbed by a how few women actively take charge of their household finances. Women may do the shopping, but even female attorneys and bankers let their husbands manage their investments and balance the checkbook.
In what is hopefully a sign that some women are coming around to the idea that managing their money can be a good thing, single women comprise the fastest-growing segment of the housing market. Twenty years ago, lenders and agents were less likely to treat single women home buyers seriously. Even today, some women complain that agents and lenders are more likely to defer to a man, even if he is not the one purchasing the property or borrowing the cash.
Becoming a homeowner means you must have a certain grasp of your finances. You must be able to maintain and balance your checking and savings accounts. You must be able to build up enough savings to cover your down payment, closing costs and fees (unless you finance these) and have enough cash in reserve to satisfy the lender.
The building blocks of a successful financial life are basic: You must be able to spend less than you earn and invest the difference. It’s as simple as that. Add to that your basic banking accounts, retirement accounts (401(k), IRA, Roth IRA, Keogh or other account), and perhaps a brokerage account for funds saved outside of retirement, and you have what it takes to create a well-funded life.
So why do some women find this so difficult to navigate? Solomon says she’s talked to many women and in some cases, they don’t feel smart enough to run the numbers.
“Of course, that’s not the case,” Solomon adds.
With the average college senior graduating with some $18,000 in school and credit card debt, there’s little doubt that both men and women could use a few lessons in managing their money. But with the average age of a first marriage rising, there are several years between college and the wedding altar for young men and women to hone their money management skills.
With credit card companies targeting kids as young as 16, there are plenty of temptations to let your spending get out of hand. Taking responsibility for your financial life means understanding that if you buy something you can’t pay for today, you’ll end up paying three times that cost if you finance it on a credit card.
And if you want to be a homeowner someday, letting your financial life run amok is one way to make sure you never get there.
April 15, 2002.
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