Women and Money

You might not think that a separate category of financial books for women needs to exist, but it does a lot of good for some women. The book A Woman's Guide to Personal Finance exemplifies the genre, and through its brief and broad coverage of a wide variety of topics, it can help many women get their financial ducks in a row. What's so bad about that?

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By Selena Maranjian (TMF Selena)
May 28, 2002

[Before I even begin, I encourage you to consider forwarding this article to any women you know. You might end up saving the financial hide of someone you care about. Just click on the "email this page" link to the right.]

I do not claim that all women, or a large portion of them, should enter into independent business relations with the world, but I do claim that all women should cultivate and respect in themselves an ability to make money. -- U.S. businesswoman Ellen Demarest, 1872

We women don't care too much about getting our pictures on money as long as we can get our hands on it. -- Ivy Baker Priest, U.S. Treasurer, 1954

There's a big nook within the financial information and guidance arena that focuses on women and personal finance. It's a controversial nook, though.

Many people think that it's silly to tailor financial information to women -- and I can see their point. After all, as someone once said, a stock doesn't know who owns it. Calculating market capitalizations works the same for men and women alike. And if Maya Angelou and Burt Bacharach each buy 100 shares of Librarian Supply Co. (ticker: SHHHH) at $23 and both sell their shares at $50, they'll generate the same capital gain (not counting commissions, which actually should be counted).

But then there's the flip side, which I covered back in 1999 in a Dueling Fools installment on gender-specific investing. One argument for differentiated information is that women and men do have, in the aggregate, somewhat different circumstances. For example, women tend to live longer than men, earn less money than men and generally will have less to live on in retirement. The main reason I think it's good there are books about money that target women is that those books can make a big difference for some women. If it takes a for-women book to wake some people up about getting their financial houses in order, then fine. Whatever it takes.

It's a critical matter. Ignore your financial well being and you may find yourself eating cat food in old age, wishing you'd socked away a little something in your youth. Don't trust that Social Security will cover all your needs or that your company's stock will reward you handsomely. Don't assume that some CDs and money market funds will increase your wealth significantly in a few years.

Have I depressed you? Buck up. The news is actually good. There are many things that you can do to improve your situation. It's not too late to make your future years better ones. Best of all, learning about getting your financial ducks in a row isn't nearly as dreary and dreadful as you might think. Find the right resources and you may actually enjoy the process!

Here's a little more encouragement, from Money Magazine in June 1992:

Women are often smarter than men about money:

  • They admit it when they don't know something.
  • They seek help.
  • They avoid risk.
  • They do their homework.
  • They set goals.

Below are just a handful of books (out of many) for women about money. If you're interested, check them out. If you have a Y chromosome, then keep reading and see if any of this information might be useful to your mother, sister, significant other, daughter, neighbor, or friend.

I was recently sent a review copy of A Woman's Guide to Personal Finance, so permit me to give you an idea of what someone might learn in such a book.

For starters, know that it's one of a series of books put out by Lightbulb Press, an innovative organization that specializes in presenting information in a surprisingly understandable way, partly by combining well-organized text with lots of clear illustrations. (Here's a sample page from their book on 401(k)s.) I've read several of their books and have always been impressed with how much valuable information they can cram into 150 or so pages.

Given the broad range of topics and the slim size of the book, it's clearly not a comprehensive all-you-need-to-know kind of book. But that's good -- it won't scare you off. And it will give you a solid introductory grasp of critical concepts and ease you into taking responsibility for your finances.

Here are some of the kinds of things you'll learn:

  • That a little estate planning can be worth it, saving your loved ones much hassle and ensuring that your assets are distributed as you wish, with minimal waste.
  • How to determine if you need a financial advisor, and how to find one. (In addition to the book's info, I recommend this article of ours on financial advisors and our own Fool-endorsed and inexpensive independent financial planning service.)
  • How to define and balance your short-term, medium-term, and long-term goals. Focusing too much on one can lead you to ignore the others.
  • How to optimize your banking. The book addresses the drawbacks and benefits of several kinds of banks, such as commercial banks, savings and loans, credit unions, online banks, etc.
  • How to choose credit cards, build good credit, improve bad credit, and dig out from debt. (Some good-credit tips: Get a credit card in your name, show stability, make payments on time, increase your assets, limit your credit applications, and obtain credit references by establishing relationships with your bank.)
  • How to teach your children about money. Some online resources the book points to include Kids Bank and Strong Kids (to which I'll add our own Fool Teens area and Jump$start's page of resources).

The book's stock section covers stock prices, company sizes, investment strategies, Drip plans, capital gains, and more. There's also a bond section, describing different kinds of bonds and how and why you might invest in them. The mutual fund section covers terminology well, but gives short shrift to the mutual fund mainstay of a Foolish portfolio -- the index fund. (That's okay, though. You can learn more about mutual funds and index funds here in Fooldom, to supplement your learning.)

In a section on risk and return, the book breaks out what kinds of investments should be considered to offer "some risk" (blue chip stocks, balanced mutual funds, etc.), "more risk" (growth stocks, international investments, etc.) and "most risk" (futures, high-yield bonds, etc.). A section on investment clubs can help you decide if a club is right for you, and it also rightfully points readers to the venerable investment club organization, the NAIC.

Other topics covered include annuities, IRAs, 401(k)s, avoiding fraud, the cost of divorce, dealing with illness and deaths, aging parents, insurance needs, health plans, taxes, gifts, inheritances. The book also offers tips to those who are running their own businesses.

All in all, this is a terrific little book, which should be very helpful to anyone who needs to jumpstart her financial awareness. 

If you'd like to enhance your learning with some Foolish educational fare (meant for men, women, and interested aliens), check out the 500 questions and answers in The Motley Fool Money Guide: Answers to Your Questions About Saving, Spending and Investing (self-promotion alert -- I wrote it) and our well-received online seminars (which offer money-back satisfaction guarantees). 

Also useful are information from Vanguard's Women and Investing area, the Mutual Fund Education Alliance, and the Women's Institute for Financial Education (with the amusing acronym "WIFE"). The National Association of Securities Dealers has a booklet available (Adobe Acrobat required) and the Christian Science Monitor has a list of handy links. You'll actually find that just about every major financial services company now offers some information for women on money matters -- in large part because it makes good business sense for them to do so. Be aware of this trend and be sure to gather information from a variety of sources, not simply your bank or broker.

Happy investing!

[Want to talk about it? Join the discussion on our Women and Investing discussion board.]

Selena Maranjian wishes someone had sent her an article like this 20 years ago. To see her stock holdings, check out her profile. And for more interesting reading than that, learn about The Motley Fool's disclosure policy.