Straits Times Jun 11, 2006 

Why Women Need to Take Control of Their Finances
By: Lorna Tan, Finance Correspondent

They live longer and earn less than men, so they need to invest wisely for themselves.

FINANCIAL management matters did not feature much in the life of lecturer Wong Siew Jen till her husband, who was a doctor, died in a car accident three years ago, leaving her with their six-month-old daughter.

Prior to his death, Mrs Wong, now 31, never needed to fill up income tax forms because her husband did it on her behalf, nor did she have to pay any of the household bills. After all, her husband managed all the household expenses as well as the car and mortgage repayments.

After his death, Mrs Wong had to learn how to manage the family's financial affairs and to make tough decisions on running her household on her own.

In a recent interview, she recalled how she decided to engage a financial planner to work out a money management plan for herself after her husband died.

‘The only insurance plan I had then was purchased by my parents when I was young, and I carried on paying the premiums when I started working. I'd never felt the need to work out a personal financial plan for myself, thinking it was a man's job when I got married. After his death, I had to pull up my socks and look after myself and my daughter,'' she said.

She subsequently purchased various insurance policies that cover hospitalisation, critical illness and disability, and invested in unit trusts and a savings plan.

A man is not a financial plan, according to financial planning firm ipac's vice-president, Ms Yashodhara Mishra, who believes that while women are generally 'good savers', they do not take the initiative to do financial planning and do not do as much for themselves as they should.

'Most women are intimidated by financial jargon, and they get so busy with their families and children,'' she said.

Financial experts agree that while the steps of building an effective money management plan are the same for both men and women, the latter must be even more diligent than men because their risks of financial insecurity are greater.

''Women not just in Asia but also around the world live longer than men and almost invariably have fewer retirement resources than men,'' said Insead's Professor Sarah Mavrinac.

Let's look at the facts:

• Women have a longer life expectancy than men. According to research, Singapore women are expected to live to 80.4 years old, half a decade longer than Singapore men.

• Women have shorter careers. A woman's average working period with the same company is 20.6 years, almost a decade shorter than the average man's of 29.5 years. Women are more likely to have worked part-time because they take time off to attend to family needs.

• Women earn less than men. The average female in Singapore earns 25 per cent less than their male counterparts. Just before retirement, males have, on average, 1.69 times more money in their Central Provident Fund (CPF) balances than females.

• The divorce rate gets higher each year. After a divorce, the average man's standard of living goes up 23 per cent while that of the average woman goes down 10 per cent.OCBC's vice-president of wealth management, Ms Anne Tay, emphasised that women should have their own insurance policies, including those that cover medical needs.

Build your own nest egg over and above any joint savings or investments you may have with your husband. This is also prudent in the event that your husband is declared bankrupt or owes huge debts.

''Any savings or investments that are solely in your name and contributed by you usually cannot be touched by your husband's creditors,'' she said.

Prof Mavrinac added that besides being more diligent than men in their basic money management, women must also be careful in managing risk. For example, a woman with children who relies primarily on the husband as the breadwinner must be adamant that an insurance policy covers him.

''Health insurance must also be carefully monitored. Too often, older women find themselves in poverty because the family's savings have been spent on medical care for the husband in his last years,'' she said.

According to a study by the Association of Women for Action and Research and the Tsao Foundation for successful ageing, older women tend to be the 'poorest of the poor' because they live longer, have poorer health, have less income and savings, and depend on their family to look after them.

Ms Eleanor Ng, director of wealth management at independent financial advisory firm Providend, noted that women are less willing to take risks with their money.

It is not surprising that endowment insurance plans - which come with guaranteed amounts at maturity - are more commonly bought by women for wealth accumulation as opposed to equity type investments.

However, the returns on such instruments are low and may not necessarily help them to achieve their financial objectives, she said.

Ms Tay agreed that women tend to be more conservative with their investments and as a result, a larger proportion of women tend to place their money in fixed deposits and savings accounts. ''More women should think about growing their money more efficiently, take more calculated risks and take a longer-term view for their investment,'' she advised.

Single women have the 'greatest potential' to save and should make the most of it when they are able to, while married couples should review financial plans jointly, said Ms Mishra.

She also advised married couples to buy properties in 'joint tenancy' so as to ensure that the property automatically goes to the surviving spouse in the event of death.

For self-employed women, they should have a regular savings plan in lieu of CPF contributions.

Luckily for Mrs Wong, her husband made an effort to review his insurance portfolio when they got married - two years before the fatal accident - so she was not left in the financial lurch. Now she advises her sisters and friends that 'women should make an effort to be financially savvy'.

'We should strive to be in the know on the latest trend on how to invest and manage money rather than take a back seat and be concerned about cooking or looking after the family, because we think money management is a man's job,' said Mrs Wong.

Experts' advice

Save as much as you can while you are still single.

Rather than leave your money in fixed deposits and savings accounts, consider growing your wealth more efficiently with some equity type investments.

Have your own insurance policies, including medical plans. Build your own nest egg over and above any joint savings or investments you may have with your husband.

Buy your marital home in 'joint tenancy' so as to ensure that the property automatically goes to the surviving spouse in the event of death.

Self-employed women should have a regular savings plan in lieu of CPF contributions.