The Power of a Plan

Posted by Heidi Clute - June 11, 2013

planWomen, Money & Life’s Transitions

When it comes to finances, that old cliché holds true: “hope for the best, but plan for the worst.” This is especially true for women. Why? On average, over the course of our lifetimes, women:

  • Live longer. According to the World Factbook, at birth, the male life expectancy is 75.35 years; female life expectancy is 80.51 years.
  • Earn less. According to the American Association of University Women, in 2010 the median earnings of men were $47,715, compared to women’s at $36,931.
  • Spend less time in the workforce. Women leave the workforce to have children or care for loved ones. As a result, there is less Social Security income.

Most women will experience four life transitions that carry unique financial implications.

  1. Rising Career/Rising Resources: According to the U.S. Census Bureau, in 2012 more women than men possessed a bachelor’s degree or higher. Women stand to inherit $6 trillion dollars, according to the 2010 MetLife Study of Inheritance and Wealth Transfer to Baby Boomers. Women also continue to start and run their own businesses at a solid clip.
  2. Falling Career/Falling Resources: It’s no secret that the “new economy” is volatile and unemployment is still an issue for many. The average period of unemployment in the U.S. has doubled since 2007 and is now 40 weeks, according to the Bureau of Labor Statistics. Layoffs and the “sequestration” of 2013 are prime examples of why uncertainty in our economy persists.
  3. Mother or Caregiver: The Social Security Administration estimates that one in seven middle-aged adults (15%) is providing financial support to both an aging parent and a child. According to the latest Pew Research, nearly half (47%) of middle-aged adults (40-59) have a parent 65+ and are raising a child or supporting a grown child.
  4. Sole Provider: Perhaps due to death of a spouse, or being single, 90% of women will be the sole breadwinner at some point in their lives. Divorce poses a financial hurdle as well, as men tend to experience a 10% decrease in income, while women are likely to experience as much as a 30% decline[1].

So it’s clear that life’s realities force women to take a closer look at how to build a more financially secure future. A sound financial plan, built over time and reflective of your own personal short-, mid- and long-term goals can empower you.

Phase 1: Where Are You Now?

Completing cashflow, networth and liability work sheets can give you a solid understanding of your current financial standing.

It’s also recommended that you check your credit report ( and all insurance coverage annually. Once you’ve compiled all of these figures, you’ve completed Phase 1, and should have a solid idea of your financial strengths and weaknesses.

Phase 2: Where do you want to go?

This phase is a truly personal one. It requires a bit of thinking and review of your own priorities. For example, is your goal financial independence and freedom? Or helping family and loved ones?

Weigh your priorities against your current responsibilities. Are you currently supporting an aging parent or unemployed family member? Are you paying down existing debt?

Consider your dreams! Travel? A second home? Jewelry, a car?

Writing your goals down will clarify your priorities about your long- and short-term financial goals. Remember, your goals should be specific, measurable, achievable and reflective of you.

Phase 3: How do I get there?

Now it’s time to lay out exactly how to reach your goals with a financial plan. Where you are in terms of major life transitions matters; as does age and lifestyle. Given your goals and time frame, consider which types and levels of investment risk are appropriate for you.

Investing and saving early and often is sound advice for any woman, at any age. Let the power of compounding work for you.

And finally, complete your plan by establishing or updating your beneficiaries, Power of Attorney, health care proxy, and will.

Helpful Resources

Never completed a cashflow, networth or liability work sheet? It’s not daunting. These worksheets may be downloaded for free. Visit our Financial Toolkit page.

1) [1] Tips for Women for Surviving Financially After Divorce, April 2008.

Heidi Clute, CFP® is the owner of Clute Wealth Management in South Burlington, VT and Plattsburgh, NY, an independent firm that provides strategic financial and investment planning for individuals and small businesses in the Champlain Valley region of New York and Vermont. For informational purposes only. LPL Financial does not offer legal or tax advice. Securities offered through LPL Financial, Member FINRA/SIPC. 

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