Women’s financial decision-making: How involvement and confidence grow together

It's important to recognize that women's focus on day-to-day money management is evidence of their active role in financial decision making. Yet, the common misconception that many women are less involved with finances overall persists. Contrary to what many believe, women generally want to be more engaged when planning for their long-term financial goals. However, their efforts are hindered by their focus on immediate financial activities, which often prevents them from having the time needed to plan ahead. As a result, it can be difficult for women to assume a more active role when both time and confidence are limited.

The proprietary Women, Money, and Relationships study conducted by Zeldis Research Associates for Equitable, examines how women’s attitudes and behaviors regarding their finances change over time. Data shows that women become more active in managing their finances as their confidence in their financial decision-making skills grow - and that additional involvement is likely to yield better results.

An initial short-term focus and confidence deficit

The study reveals that 4 in 10 women feel confident about achieving their financial goals. This sentiment remains constant regardless of age, income and assets; though it can shift a bit when considering a woman’s relationship status. 

The reality is that many women prioritize short-term financial issues instead of focusing on longer-term goals, a decision that may be rooted in a lack of confidence. This is not surprising as our research shows a majority of women feel confident about handling day-to-day finances and budgeting but only 29% of women said the same about retirement planning and a mere 20% in regards to investing. 

As roles evolve, confidence grows

With women's roles and responsibilities evolving, the time is always right to take a more proactive role in their finances.  This involvement increases their self-assurance as well as the likelihood they’ll succeed at reaching their financial goals. The research highlights that most women report that by taking a more active role in financial decision-making, their skills and confidence continue to grow.

Over time, a woman will hit career milestones, earn more, she may marry or become a parent, or find herself divorced or widowed. With each of these changes, her financial needs and priorities are likely to adapt. The study found that those changes are often the catalyst for women to take more active roles in their finances.   

One widowed participant in the study explained how her change in marital status shifted both her financial reality and her view of her finances: “My late husband always took care of our finances. After he suddenly passed away, I was put into that situation on my own. I learned the hard way how not to manage your money.” 

Women become more poised in their ability to manage their finances and achieve their goals as they become more involved in financial decision-making - whether motivated by career advancement, becoming a parent, or a change in their relationship status. Essentially, confidence grows with a plan, practice, and trusted guidance.

Financial professionals can help build women’s confidence

Beyond a more hands-on approach to their finances, another critical way for women to build their financial confidence is to work with a financial professional. The study found that when women work with a financial professional, they become more involved in making financial decisions. 

Women who engage a financial professional feel more informed about financial decision-making, feel calmer and more financially secure, and are more likely to believe they’ll reach their financial goals.

The benefits are tangible with real outcomes. Nearly all women who work with a financial professional are actively saving for retirement. Further, 5 times as many have a written financial plan.

A divorced participant’s comment highlights the many, intertwined benefits women can enjoy from working with a financial professional. “Right now, I'm learning how to manage my portfolio a lot more by researching and from advice from advisors.”

New habits and good guidance put financial goals within reach

It’s not uncommon for women to put immediate needs, like groceries and housing, first before tackling goals such as paying off debt or building an emergency fund. The habit of emphasizing just short-term expenses over long-term financial planning can become a problem over time. This reality can exacerbate feelings that goals are out of reach, and lead to a sense of financial insecurity. As a result, as financial interests and priorities shift over time, women report feeling increasingly eager to become more involved in long-term financial planning.

Connecting with an advisor who can provide high-quality financial information and access to education is helpful for most women, according to the Women, Money, and Relationships study. When engaged with the guidance of a financial professional, women report feeling more confident in their financial decision-making and the ability of their plans to adapt as situations change, helping to ensure a fulfilling life.