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How to Take Control of Your Money as a Modern Woman

Women Financial Independence

For Much of Human History, Women Weren't in a Position of Financial Power

Unless we're talking about Cleopatra, women in the past were expected to marry at a young age, have children and manage the housework while their husband pursued a career and managed the household's finances.

Without access to money or marketable job skills, women in unhappy or even toxic relationships were unable to leave their marriage. And those who were widowed often found themselves in a financially precarious situation. This was especially true is their husband experienced an untimely death and their children were still living at home.

Labor Force Participation is Equaling—and so is Wealth

Luckily, things have changed (albeit slowly), especially since 1999 when the number of working women in the U.S. was at its highest, at 60% of the overall workforce. According to the U.S. Bureau of Labor1, as of February 2022, women make up 46.6% of the overall workforce. Although the pandemic reduced this number, and it remains to be seen if more women will come back again, 76% of women with children under 18 and 63.8% with children under three are still participating in the workforce.

What does this mean for the wealth holdings of women? A recent study2 by McKinsey & Company found that women currently control more than $10 trillion of wealth, a number expected to increase to nearly $30 trillion by the end of the decade. This is because as baby boomers are aging, there are many assets changing hands to women due to inheritance and widowhood.

Clearly, that’s a staggering amount of wealth. And even when that wealth is held jointly by couples, more women are beginning to take ownership over their household's finances. In fact, the same study found a 30 percent increase in married women making household financial decisions over the past five years. Anecdotally, this is definitely something I'm seeing in my financial planning practice. In almost all the cases of couples with whom I work, it was the female who reached out first. And many of my clients are the main breadwinner in their family.

Whether married or single and at every stage of life, women are carving out independent financial futures for themselves. They're educating themselves and making more meaningful decisions about how to safeguard and grow their own and their family's wealth.

Women Aren’t Just Inheriting Wealth—They're Also Earning It

Women are creating their financial independence for themselves in record numbers. Whether they work for a company or start their own business, women are well on the road to achieving and contributing to their household's wealth because of their efforts to focus on their career.

Forty-four percent of women with a private net worth of more than $100,000 are self-made.3 Since 2007, the number of businesses owned by women has grown by 58%.4 And when they work for someone else, women are beginning to have a clearer idea about what they're worth, and are more willing to ask for it.

Of the more than one-third of women who say they've asked for a raise, 74% were successful in their negotiation5. While men are still more likely to receive a raise more often than women, the women who don't ask certainly won't receive one!

Take Action: Get in the habit of tracking and gathering data about your work accomplishments. When it comes time to prepare your annual performance review, summarize this information for your manager. If you’re not offered a raise, you’ll be prepared to ask for one on-the-spot. (And if worse comes to worse, at least you’ll have some great data to include on your resume.) ;-)

Women Feel Differently About Their Money & Financial Security

Women are primarily concerned about creating financial independence and maintaining it for their entire lives. The biggest motivating factor for women in creating wealth is financial security. While 59 percent of men identify financial security as their motivation, 72 percent of women do. This impacts all aspects of managing their money.5

Here are the four main points uncovered in the research:

  1. Leaving a legacy isn't the main concern

  2. Early retirement doesn’t come up as often

  3. Spending wealth on “toys” isn’t really a thing

  4. Achieving social status through wealth isn’t as important

The same study cited in the stats above also found that generationally, women think similarly. Both Gen X and Boomer women cited “family security” as the primary reason for gaining wealth. This holds true with my client base when it comes to their kids. Far beyond thinking about their retirement, they want to make sure they're providing for their children, whether by saving for their college, helping fund a down payment on a first home, or making sure they'll be able to leave money behind.

Women Face Unique Challenges When It Comes to Money

On the other hand, many women decide to leave the comfort of a regular paycheck from a full-time job to stay home and raise their kids or care for aging parents or loved ones. Exiting the workforce or working part-time can decrease one’s financial independence in the long-term.

That’s why it’s so important for women to think through their options to maintain their financial independence if they decide to do so. Things like adjusting the household budget to reduce expenses, working a part-time or contract position in the chosen career field, contributing to a SEP IRA (if running a small business) or to a spousal IRA and/or starting a college savings funds are all smart moves.

Take Action: Research options for better budgeting and how to continue saving for retirement and your kids’ future education if you decide to leave your job or scale back in your career. Discuss these ideas with your partner so you’re both crystal clear about each of your money expectations. Not doing so almost always leads to resentment down the road when it comes money decisions.

The Path to Financial Independence

Women have some advantages with investing and financial planning. They generally don’t trade within their investment accounts as often as men do, so may have lower fees. They aren't as likely to engage in panic-selling during downturns and to remain invested during times of volatility. This can lead to potentially better gains over time.

However, they also don't take advantage of investing as much as they should—women tend to hold more than they need to in cash. They also have some specific challenges that require a financial plan that's tailored to their needs.

  • Longer lifespans mean their retirement funds need to last longer—so saving sooner, saving more from each paycheck, and investing with a higher risk profile during the early to mid working years are all key.

  • Healthcare costs more. Having kids and living longer is expensive. Setting up a Health Savings Account (HSA) early on and consistently saving provides tax benefits and a source of healthcare funds in retirement.

  • Women have more education debt. They graduate from college at higher rates than men, but a consequence is that two-thirds of education debt in the U.S. is owed by women.6

Cash flow planning that links budgeting to short-and-long-term goals should be a priority in order to tame big student loans.

How to Get Started Taking Control of Your Finances

The best way to get started on a financial independence plan, no matter what stage you are at, is to get educated. Working with a fee-only financial advisor that focuses not just on the “what” but the “why” is a good place to start.

Hopefully it’s no surprise that financial advice isn’t what it used to be. You aren't stuck with a glorified salesman (almost universally a "man") who works for a big firm, or a robo-advisor that offers little to no individualized planning. Fee-only fiduciary advisors have many different options for working with clients. These options include:

  • Some advisors have built customized online courses that run for several weeks, let you move at your own pace, and offer a specified number of live Zooms so you can ask questions and get over rough patches. These Zooms are often in a group format, which creates a built-in community to keep you motivated.

  • Many advisors offer a one-time plan for a flat fee in which they get you set up and sorted out, and you can take it from there.

  • Many advisors also offer ongoing financial planning designed to help you adjust to life's inevitable changes. This takes the onus off you, creates a long-term partnership that grows with you as your life evolves, and can bring you a team of people that will help you meet your goals.

The Bottom Line

Women are creating and controlling vast amounts of wealth. As they make choices and move towards financial independence, having an awareness of the particular needs and challenges of the female financial journey is critical. Working with a planner that focuses on education lays a solid groundwork for the success that's most important for women: financial independence and taking care of loved ones, even after we're gone!

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1. U.S. Bureau of Labor, February 2022 labor statistics.

2. Pooneh Baghai, Olivia Howard, Lakshmi Prakash, and Jill Zucker, Women as the Next Wave of Growth in US wealth management, McKinsey & Company, July 29, 2020

2. Michela Tindera, Women Hold Nearly One-Third of Global Private Wealth, Forbes, June 16, 2016.

3. Women’s Business Enterprise Council, The State of Women-Owned Businesses in 2018, October 10, 2018.

6. American Association of University Women, Deeper in Debt: Women & Student Loans, 2021 report.


This work is powered by Advisor I/O under the Terms of Service and may be a derivative of the original. The information contained herein is intended to be used for educational purposes only and is not exhaustive.

Diversification and/or any strategy that may be discussed does not guarantee against investment losses but are intended to help manage risk and return. If applicable, historical discussions and/or opinions are not predictive of future events.

The content is presented in good faith and has been drawn from sources believed to be reliable. The content is not intended to be legal, tax or financial advice. Please consult a legal, tax or financial professional for information specific to your individual situation.


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