Navigating Economic Disruptions: The Value of Financial Planning for Women

June 1, 2020

At Blue Trust, we offer strategies and principles to help our clients navigate through all of life’s seasons, including periods of economic disruption. We believe it is important to empower women to become more involved in their finances, and that having a customized financial plan is paramount so they are prepared for unexpected situations, including the current crisis. In the final installment of our “Navigating Economic Disruptions” series, we discss questions to consider as an initial step in developing a plan that can help you have financial clarity and confidence through some of life’s unpredictable times.

The following was written by Sherri White, a Senior Private Wealth Advisor in Blue Trust’s Greenville, South Carolina, office.

The phrase “financial planning” may immediately evoke thoughts of a sophisticated, well-diversified investment portfolio. However, just like with our health, our relationships, and our careers, our finances have many moving parts that we must intentionally manage in order to find success. Previously, we have written about the growing importance of women and investing. Today, we’d like to expand on that article and look at how an effective financial plan considers all areas that impact our finances, not only investments.

Considering all areas of your finances in the planning process can help you gain clarity and confidence, which is especially important for women. Women are controlling more of the private wealth in our country each year, and their influence and impact has grown over the last decade. However, research studies ⁽¹⁾⁽²⁾ show that it is still common for women to feel ill-equipped or to take a back seat when it comes to managing finances. Financial planning is critical for everyone – men, women, couples, widows, and singles. However, there are certain life factors that are more likely to impact women, such as having a longer life expectancy, lower salary levels, or a greater likelihood of income gaps if they take time off to care for children or aging parents. These life situations are completely independent of other economic disruptions that may occur. Therefore, developing a plan that positions a woman to appropriately address these challenges in a variety of economic environments is key to having financial clarity and confidence.

At times, the biggest obstacle to putting a plan into action is simply determining where to begin. In order to know where to begin, you must first assess where you are currently. Have you ever noticed the maps in the welcome centers on the interstate? They always clearly point out “You are here.” Likewise, you must have a good assessment of your current financial situation before you can begin to map out where you want to go. There isn’t a right or wrong time to begin your journey, but you do need to know your initial location in order to get started.

Below are some questions to consider as you begin the financial assessment process. Whether the answers give you a sense of security that your finances are in order or highlight areas for improvement, this is a positive exercise to complete.

Cash Flow:

• Are you spending less than you earn?
• Do you know where you are spending your money? Do you know your current living expenses?
• Could you easily list out all that you own and all that you owe (net worth)?
• Are you working toward getting out of debt (credit cards, student loans, and car loans)?
• Are you able to give to charitable organizations as you would like?
• Do you have liquid savings available for emergencies?

Employee Benefits:

• Are you taking advantage of the benefits available through your (or your spouse’s) employer? Life, health, and disability insurance are often more affordable when obtained through an employer’s plan.
• Are you maximizing the benefit of the employer retirement plans that are available to you?
• If you are self-employed, have you addressed the need for insurance and retirement savings?

Insurance Coverage:

• Do you have a clear understanding of what your property and casualty (i.e., home and auto) policies cover and what they do not cover?
• Do you have or need life insurance policies outside of employer coverage? If so, when did you last review the policies?

Estate Planning:

• Have you considered how your finances will be handled when you pass away? Most people know they need a will, but many put off creating one. The details of your will (or trust, when applicable) allow you, rather than the state, to direct how your assets are distributed and can provide specific instruction for the care of minor children.
• Have you reviewed the titling and beneficiary designations on all your accounts? Did you know that the titling (for example, transfer on death or joint with right of survivorship) and beneficiary designations generally take precedence over the terms of your will?
• Have you considered who you would like to handle your finances if you were unable to take care of them due to extended illness or disability? Financial and healthcare powers of attorney are important documents for every adult, regardless of age, health, or financial situation. This component is often overlooked, but it is a vital part of a comprehensive financial plan.

These questions are not exhaustive but cover situations that apply to most people and provide a good foundation for your initial financial snapshot. Once you have an adequate assessment of where you are now, then you are ready to consider the best route to your destination and determine the necessary stops along the way. Often, it makes sense to hire a financial advisor as a partner to help you create plans and navigate decisions. Making good decisions together with your advisor can help ensure that your finances are in line with your financial goals.

After you have a plan, it is important to periodically reassess where you are on the journey so you can quickly identify the items that need to be addressed when unexpected life events or economic disruptions occur. The recent pandemic rapidly changed almost every aspect of our lives and highlighted the value of having a plan to guide our decisions during a crisis. When you know where you are, where you want to go, and that you’ve already taken steps to prepare for unexpected events or potential detours in life, the challenges are no longer seen as roadblocks but simply curves in the road that you can navigate with confidence.

At Blue Trust, we consider it a privilege to assist women with developing their financial plans customized to their unique situations and goals and to help them navigate decisions based on biblical principles. To learn more about our specific resources for women, please visit our library page by clicking here.

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⁽¹⁾ www.usbank.com/newsroom/stories/survey-says-women-are-leaving-money-and-influence-on-the-table.html
⁽²⁾ www.ubs.com/content/dam/WealthManagementAmericas/documents/2018-37666-UBS-Own-Your-Worth-report-R32.pdf

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