Women taking bigger role in family finances, despite men: Report

Women have taken on a larger role in household finances over the past several years – perhaps even larger than their male partners recognize, results of a recent survey suggest.

Nearly nine in 10 women who are married or live with a partner said they are involved in spending and investing decisions in their household, up from just 42% in 2012, according to a report this week from consumer research firm Hearts & Wallets.

Further, 31% of women who live with a significant other said they are primarily responsible for financial decisions. Men in such relationships, however, appear to see things differently – just 5% said that their partners have the lead role in saving and spending decisions.

In additional, 40% of married or partnered men said they share responsibility for household finances, compared with 56% of women, according to Hearts & Wallets.

“While #MeToo and everything else was happening, the percentage of women who said they are involved in their household spending has gone up,” said Laura Varas, CEO of Hearts & Wallets.

The report includes a recent survey of about 5,500 households and also uses information from government reports and Hearts & Wallets’ database of 50,000 households.

People who cohabit with significant others control more wealth than those who are single, the report noted.

Of the $33 trillion examined in the report, $21.9 trillion represents married or partnered households, while $5.8 trillion is in single-male homes and $5.3 trillion is in single-female houses, according to Hearts & Wallets.

“Partnership is good for the pocketbook,” Varas said.

However, women in two-income households face more challenges in saving for retirement than those in one-income households, according to a report from Prudential Financial and the Center for Retirement Research.

About 46% of women in two-income households are on track to save less than they need for a comfortable retirement, compared with 32% of married women in single-income households and 39% of all single women, that report stated.

That is in part because of a lack of planning that can occur when only one earner in a two-income household has access to a workplace retirement plan, said Jim Mahaney, vice president of strategic initiatives at Prudential.

WEALTH GAP

A small fraction of people control a massively disproportionate amount of wealth, the report found. Just 1.2% of households hold 40% of the personal wealth in the U.S. In 2019, of the $55.6 trillion of U.S. wealth, $22.6 trillion of that was held by people who had at least $5 million. In 2011, there were about one million households with that level of wealth, but that increased to 1.6 million as of 2019, Varas said.

That trend “goes across administrations,” she said. “If you’ve got more money, you can take more risks. The rise in private equity had something to do with this.”

DISPARITIES IN CONFIDENCE

Historical data show different pictures of how men and women view their investment acumen.

About 50% of married or partnered men said that they were very confident about saving and investing decisions, compared with 42% of married or partnered women, according to Hearts & Wallets.

But there are considerable differences by generation, at least for men.

Fifty-eight percent of millennial men said they were at least somewhat confident, compared with 48% of Gen Xers and 45% of male baby boomers. Meanwhile, 32% of millennial women expressed confidence, compared with 40% of Gen Xers and 42% of Boomers.

Separate research from Prudential Financial found that women place more importance on financial stability than men, though various factors make saving and investing difficult.

“We found that women are more likely than men to say that achieving financial goals is important to them,” Mahaney said. But, “the data also show that women face larger gaps between where they are and what they want to achieve.”

Factors include the well-established income gap between women and men, disproportionate caregiving responsibilities and different levels of debt, he said.

Women are more likely than men to graduate from college with excessive student loans, or those that eat up more than 10% of their monthly gross income, Mahaney said. “Digging out of that hole of debt is going to be challenging enough … but it also constricts the ability to save.”

On average, women spend more time on caregiving or household duties, with an average of 28 hours per week, he said.

The current pandemic could exacerbate financial disparities tied to caregiving as older adults and their grown children will be less likely to opt for assisted-living care facilities in the near future, Mahaney said.

That could lead more older adults to move in with their children, and women could bear a higher burden of that care, he noted. “There may even be bigger challenges ahead.”