Women & Wealth: The Duality of Money

According to McKinsey, the great wealth transfer is upon us and American women stand to control approximately $30 trillion by 2030.¹ This shift in wealth presents opportunities and challenges for female investors and financial decision-makers, and understanding our biases, emotions, and financial behavior about money will help us manage our wealth and teach the next generation the importance of financial responsibility.

The Technical Side of Money

Money is a tool and a currency used for everyday life.  It’s important for consumers to identify clear and realistic financial goals, create a spending and savings plan, develop debt repayment strategies, and invest appropriately to fund near-term and long-team goals. To help make sense of these financial strategies, advisors engage daily with clients and develop unique plans. However, many of us delay implementing these best practices, which hinders the ability to establish plans that align with our goals and values and keeps us further from financial freedom.

The Emotional Side of Money

Money is also a metaphorical currency for power, control, self-worth, and acknowledgment. Our financial belief system forms in early childhood and can be influenced by culture, gender, socioeconomic status, family financial history, and attitudes about money². Beliefs about money are inherited, much like financial legacies, but change as our lives and financial experiences evolve. Sometimes, there’s a gap between what we believe and how we behave, leaving room for us to make financial missteps. Uncovering these beliefs is the first step toward creating a healthy relationship with our finances and moving forward with advice that guides us toward our goals, which often requires additional support and encouragement.

Similar to what I mentioned previously, women will be responsible for investing and consuming trillions of dollars over the next several years. Understanding our underlying beliefs and emotions about money is essential for successfully managing it.

Here are three actionable steps you can take now:

1. Reflect on Your Money Beliefs: Spend some time identifying your personal beliefs about money. Write down what you think and feel about wealth, spending, and saving. It’s important to show self-compassion during this step. Recognizing the influences that are dictating our behaviors can help us change them.  Consider taking a short trip down memory lane to recall one money memory you have. This exercise will bring awareness to the beliefs you may have formed about money in childhood, both positive and negative, which we internalize and become a part of our self-concept and identity³.

2. Explore Spending, Savings, and Investing Habits: With the understanding of how our beliefs and habits are intertwined, we can shift to a proactive money mindset and make intentional changes that align with our financial goals. This awareness allows us to replace unconscious financial patterns with purposeful strategies that support long-term wealth and security.

3. Lead by Example: Demonstrate responsible money management in your daily life. Show your friends, family, or peers how you budget, save, and make informed financial decisions. Share how working with a financial planner can help with setting and achieving financial goals. 

By taking these steps, you can ensure a healthier management of wealth and instill a sense of responsibility for money in the next generation.

^{1 https://www.mckinsey.com/industries/financial-services/our-insights/women-as-the-next-wave-of-growth-in-us-wealth-management?utm_source=chatgpt.com
2 Klontz, B., Chaffin, C. & Klontz, T. (2023). Psychology of Financial Planning: The Practitioner’s Guide to Money and Behavior. Hoboken, New Jersey: Wiley. Pgs 49-51
3 https://www.psychologytoday.com/us/blog/being-your-best-self/202110/beware-of-your-self-fulfilling-prophecy}