How Women Can Get Control of Their Finances

A recent study conducted by the insurance and investment company Prudential found that, while a majority of women are taking an active role in household financial decisions, they admit there's still work to be done when it comes to the knowledge needed for long-term financial planning.

"Early Show Financial Adviser Ray Martin shared the results on the study on the broadcast Thursday, as well as some simple advice on developing a solid long-term financial plan.

So what kind of picture does this survey paint when it comes to women and their finances?

Martin said, "This is the 10th anniversary edition of Prudential's Financial Experience & Behaviors Among Women study. And for me, it revealed a couple different things worth pointing out. The first thing I want to highlight is that the study found that 95 percent of women surveyed said they're involved in household financial decisions, with one-quarter acting as the primary decision-makers. When it comes to their ability to make wise financial decisions, half of the women surveyed said they need help. A third said they need a lot of help. But fewer than two in 10 women feel 'very prepared' to make wise financial decisions, which is something I feel needs some work."

Why does this disparity exist?

Martin said, "It has something to do with fact that women, as a whole, spend all their time dealing with the day-to-day decisions: how do I get from today to tomorrow, from this week to next week, from this month to next month? These are short term financial issues and they chew up a lot of time. There isn't a long term decision in any of that. So it has nothing to do with whether or not women are good or bad at long term financial planning, it has to do with the fact that they just don't have the time."

He continued, "Many of the women I talk to, and I have a bunch of female clients, they know how to spend and get by on a short term basis, but they have a time getting a grip on their long term saving and planning."

To help women take a more active role in the financial planning process, Martin recommends taking an inventory of all existing accounts and benefits.

Martin explained, "Write down all your account/joint account information: investments, bank accounts, savings accounts, etc. So start there. Gather a list so you can see just how much money you have scattered all over the place. You might find out there are a lot of accounts and a lot of money, or you may find there a lot of accounts and no money. There's not much you can do without knowing where you stand with your accounts."

He added, "Take inventory of all sources of income. Present income - here's what I make here's what he makes. Future income -- here are the pension benefits I have, here's the income I'll have if he dies. It's not something people look forward to thinking about, but it's important. If your husband dies, what kind of support will you get from his pension benefits? Or from Social Security? If you find out there is no pension, there's the stark reality of, 'How are we going to live if we have no source of income when we want to retire?' We have to save save save, and we have to start spending less."

Martin says saving is particularly important for women.

"Women must save more than men do," he said. "Why? A few reasons: first, because you're going to live longer. Also, your career is likely to be interrupted because of your responsibilities as the primary caregiver for children, or even for parents when they get older. Consider unique savings opportunities for women, such as an IRA."

Martin also advised women should look for companies when seeking employment that offer paid-parental leave programs and good retirement savings programs.

"This combination of benefits can help reduce the impact on retirement savings when taking extended leave," Martin said. "Look for employers who offer retirement plans that include employer matching contributions."

He shared the example of the software company SAS, which boasts a laundry list of benefits: high-quality child care at $410 a month, 90 percent coverage of the health insurance premium, unlimited sick days, a medical center staffed by four physicians and 10 nurse practitioners (at no cost to employees), a free 66,000-square-foot fitness center and natatorium, a lending library, and a summer camp for children.

Martin said, "There are companies out there who are aware of and looking out for the financial futures of their female employees, you just have to find them. Also, make sure you have husband contribute to a spousal IRA. Spousal IRAs allow non-earning spouses to continue to accumulate retirement savings in their own retirement accounts, which provides additional individual retirement security in the event of divorce."

And finally, Martin suggests women negotiate with an employer over wages.

He said, "All things being equal -- a man and a woman go after the same job -- the employer says, 'I'll pay you 50 grand a year.' Many times the woman will say, 'OK, I'll do it,' whereas the man is more apt to negotiate aggressively for a higher wage. Women need to stick up for themselves and negotiate a raise and negotiate a higher salary. It's just not in their DNA to be aggressive like men when it comes to negotiating for more money. But hey, women have just as much a right to that money as a man does."