When Elaine E. Bedel started her practice as a certified financial planner nearly 30 years ago, she and her colleagues spent most of their time educating clients on the basics of developing an overall strategy for their financial future. Up until then, the typical retirement revolved around employer pensions and maybe a few outside investments.
And most clients were men. It was typical for the husband to handle financial decisions because, more often than not, he was the primary income-earner.
Today, women are calling the shots, but they face unique challenges when it comes to financial planning.
While more women are in the work force than at any other time in history, they earn less-about 76 cents for every dollar earned by men-and are more likely to work part-time and to leave the workplace temporarily to serve in a caregiver role.
In fact, the Social Security Administration has found that women take about 12 years "off" to care for children or elderly parents, compared with less than two years for a man.
In a 2005 women's retirement survey commissioned by the notfor-profit Women's Institute for a Secured Retirement, 38 percent of women ages 30 to 55 said they worried that they will live at or near the poverty level because they can't adequately save for retirement. For women of color, that figure increases to 53 percent.
Planning is the key to controlling those fears, Bedel said.
"As women have become more independent, self-sufficient and more directive of their own careers, they're becoming more savvy with their own finances," said Bedel, president and owner of Bedel Financial Consulting Inc. "They're starting to recognize the importance of understanding their finances. The message is getting through that you need to plan for your future."
But it's still a challenge for financial advisers to get clients to plan for the long term.
"The message hasn't changed," Bedel said. "You really need to look at the whole picture-your goals and objectives. Where do you want to be in the next five, 10 to 15 years? You need to put an investment plan together instead of looking at things in isolation."
Many working women juggling demanding careers and home life are knowledgeable about what it takes to establish a secure future, but they're neglecting one important step-taking the time to track their expenses, said Alexandra Armstrong, chairman of the Washington-based financial planning firm Armstrong, Fleming & Moore Inc. and coauthor of "On Your Own: A Widow's Passage to Emotional and Financial Well-Being."
Track your spending
The most basic cornerstone of any financial plan is often the one that many women neglect, Armstrong said.
"I'm amazed by the number of working women, married and unmarried, who, when asked 'What are your expenses?' reply, 'I have no idea.' They're busy on the job; busy taking care of the children and their spouses ... . Keeping track of their expenses is the last thing they're thinking about doing."
However, it's crucial to take time to reflect on how your funds are being spent as a first step to establishing financial goals, she said. "You've got to know where your money is going if you're planning for your future," Armstrong said. "The $4 you spend every day on a latte could pay off in an earlier retirement if you were to invest it instead in your 401(k)."
Taking stock of your income and expenses will help you determine if you have a positive cash flow, Bedel said. Those basic steps will help you take the next step, which is establishing an emergency fund to take care of three to six months of living expenses. If you're planning a major life change, such as starting your own business, work on setting aside a year's worth of living expenses to help you get through the early stages of the business startup.
Prepare for the unexpected
The person in a marriage or other committed relationship who doesn't keep track of the family financial affairs must still be familiar with money matters.
"You don't have to become experts, but you need to be familiar with your financial situation," Bedel said.
She has seen women blindsided by unexpected events that leave them helpless in assessing their financial situation. "Whether the future brings divorce or the loss of a spouse, you want to be able to move forward," Bedel said.
Women can be at a financial disadvantage if they give up total responsibility to a spouse.
"You can see the fear, anxiety and stress that it can bring," Bedel said. "Don't let yourself get behind on the knowledge factor. Know what you have and what's happening to those investments, and the strategy being used for those investments."
For April Nelson, an early-childhood coordinator, the shock of divorce was severe. "Not in a million years did I ever think we had a problem or that some day I would be a single parent raising kids and doing it all on my own," Nelson said.
She had been a stay-at-home mother of three children when her husband asked for a divorce. Yet, she believes that her situation would have been even worse had she not had a handle on the family's finances.
"We had joint accounts, and we worked out all the bills together," she said. "I've had friends where their spouses handled all the finances. When they were left alone, it was a severe shock and struggle."
Determine future plans
No matter your age, one of the most significant steps you can take in any type of financial planning is to maximize the contributions to your retirement plan. "That's the No. 1 priority," Armstrong said.
Armstrong and Bedel agree that the moment you start working is the moment that you should start contributing to your 401(k).
The problem with single women, especially those in their 20s, is that, in most cases, they're not earning much money, Armstrong said.
"They're spending their money for rent and clothes and the occasional trip," Armstrong said. "If there's any way they can contribute something to their retirement, they should. The money you put in earlier is so much more significant as it multiplies over the years. If you put in a little, you're not going to miss it."
Bedel suggests that clients increase the amount of their retirement contribution with each raise.
In addition to retirement, another major priority for families with children is saving for college.
"We like 529 plans, but they're not the solutions for everyone. Your children may not decide to go to college," Armstrong said. These 529 plans-which include prepaid tuition and college savings options-were developed by federal and state lawmakers to give tax incentives for families wanting to finance future higher education expenses.
Early retirement and college savings were both top priorities for Deb Weddle, who, along with her husband, Scott, established a long-term strategy for meeting both of those goals. Weddle, a former director of development for Community Hospitals Foundation, and her husband set aside a separate savings and checking account to pay college tuition for their four sons, two of whom are in college.
The strategy behind those goals was set years ago, Weddle said. "We both had the same values. We wanted to live below our means to accomplish those goals."
"If you have 25 years to retirement, your investment strategy may be more aggressive and long-term-growth oriented," Bedel said. "If you're looking to make enough money for a down payment on a house, you're less likely to put your funds in a stock market. You may want to consider a certificate of deposit instead."
No matter your situation or age, the time to start securing your financial future is now, Armstrong said.
"At all stages of life, it's important to have a clear perspective on your finances."