Written by Ronald Lang, Principal – Atlas Wealth Management, LLC
Articles on Building Wealth for you, your family and your business. We use both a macro and micro view of the markets to create the ideal portfolio. We have both a Suitability and Fiduciary duty towards our clientele.
Who are the “Women in Transition”? These women include not only those women that are Separated, Divorced or
Widowed, but also those who are dealing with medical issues, getting married, changing jobs and receiving an
inheritance. The least understood of these transitions is inheritance because it can transition your life into something both
good and bad. Some might say how can inheriting money be bad? The answer is because sometimes there are burdens
put on you as an executor. How do you save or spend it. You may not get the right advice to properly invest the money to
last for a period of time. Additionally, changing jobs can be very transitional in your life. You may need to move for this job,
a pay increase may change how you save or spend your money on things you want or your new retirement plan may offer
less or more options to grow that much needed future nest egg.
Attaining or acquiring financial stability is not an art, it’s truly a science. For women in transition, it’s something that needs
to be acknowledged well before transition starts if possible. If acquiring financial stability has been neglected, an
immediate assessment must be taken in order to understand your current situation and future financial impacts. It is very
important for women to take inventory of their life stage and get focused on life priorities if they are not already prepared.
One of the biggest concerns with transitioning from one point of your life to another is understanding “Finance 101”. The
first rule is, don’t spend more than what you have coming in. The second rule, refer to rule number one. If you follow
Finance 101, you are on your way. Many people live life without financial rules, either with themselves, their spouse, their
business partner or their kids. This is one of the cardinal sins towards the attempt to being financially sound. It’s tough to
say no to your kids when the cool kid in school has the latest and greatest sneakers, smartphone, jeans or video game.
But unless you say no, the more you are creating a potentially financially irresponsible monster when they get older. They
will still be 30 and asking you to buy them sneakers (don’t laugh, it’s been done). If you have a business and don’t have a
budget, how do you plan for future hiring, expansion, partner bonuses, etc.? What if your spouse or business partner is a
spendthrift and talking to them about curbing their appetite for spending hasn’t worked? If that’s the case, then a financial
intervention may need to take place or potentially a transition may need to happen instead. You can’t let a spouse or
business partner demonstrate fiscal irresponsibility. Remember, they are YOUR partner and you are affected by their
financial decisions. You cannot “turn a blind eye” and hope everything turns out ok. If it doesn’t, then you are in a
transitional phase, and it could be years before you dig out from debt. You will also become very behind in your
retirement goals. If either or both of these things happen, your transition years will be very difficult and taxing both
emotionally and physically. This is why “Financial Literacy” is so critical to you and any relationships or partnerships you
Financial “illiteracy” is NOT gender bias, despite the stereotypes. Not all men believe if women had the opportunity, they
would spend their life savings on shoe shopping and not all women believe men just want to watch sports with their
buddies and party. Financial illiteracy is an equal opportunity depriver of wealth and absorbs and deteriorates critical life
savings for families very quickly. By having a budget and focusing on the needs versus the wants and desires, hence the
“nice’s and vices of life”, savings and wealth building can become a reality. When women are in a transitional stage,
financial literacy must be a priority, even if there was never any discipline in the past. If you are a woman that owns a
business and there has been an economic impact to your revenue and profits, actions need to be taken to protect
yourself. It’s great to take care of your employees, but when things hit the fan, you, the business owner can’t be left
holding the bag with nothing in savings and retirement.
Unfortunately many women I speak with regarding their finances are usually after an event has occurred and their
transition has begun. This doesn’t mean it’s too late to be fiscally conscience. Apply Finance 101 and plan for your future,
but you also need to take immediate action, including getting educated on your current financial situation. Once you
understand where you stand financially, you need to figure out how to plan out your next 3-5 years at a minimum. How
much is coming in, how much is anticipated going out? When I setup a budget for clients, it’s good to add 5%-10% buffer
to expenses and take 5%-10% off on what you expect for incoming income. This helps for some unexpected shortfall(s). If
you are getting married, you will be pooling your finances at some point. You need to understand your future spouse’s
entire financial history. Are they savers or spendthrifts? Savers are great, but you must consider whether they are too
frugal and have a difficult time trying to live life. Of course, savers are still better than reckless spenders. Do they have
debt now (credit card, school loans, car loan/lease, mortgage, etc.)? This is a critical question because once you say “I
do”, then “you do” have to deal with their debt. If they don’t have an adequate and responsible plan to resolve the burden,
then it may fall on your joint budget, or fall on you. Being left with a financial burden is worse than spending everything
while you are still alive. Do you or does your future spouse have life insurance? This is important in case you buy a house
together and have kids. It is important that once you get married that your life insurance policies are reviewed and
amended. If you have a business partner, it is a good idea that you have business life insurance and the business as the
beneficiary in case something happens. This is extremely helpful, especially if there is debt or a possible buyout of your
partners’ shares. This would probably need to happen for their spouse or beneficiary. If there is no life insurance,
additional burdens may be placed upon you.
One bit of advice I give everyone, no matter your current or future situation, make sure you have good health insurance.
Not having adequate or any health insurance is the number one reason why people declare bankruptcy. Medical bills can
eat any and all savings and cripple you for years in debt. Say no to a new pair of sneakers over reducing health care
coverage. This does sound obvious but its critical reinforcement.
Establishing an emergency fund is very significant when you are married, single or in transition. Many experts over the
years have said that you need (or should have) three months worth of expenses in a special emergency fund that should
not be touched. The advice I give people is based on their situation, but a minimum of six months should be an attainable
goal, but would recommend an optimal goal of 12 months. The reason for this is purely economic first, financial stability
second. If you are a one or two income family then you need to examine your expenses. If you are living at your means
for your total household income, then you need to have 12 months in your emergency fund. If you are a one or two
income family and live at 50%-75% of your means, then a six month emergency fund should be your goal. The same
should apply if you are a business owner. When there is an economic downturn and your job or compensation may be
affected, you need to be prepared for anything at anytime. During the good times, too many people (men and women
alike) are punch drunk with cash in their pocket and many times use their credit cards recklessly. This all comes back to
bite you when transitions occur.
Many people can anticipate a near-term or future transition and it is best to prepare as early as possible. But there are
many other transitions in life you cannot anticipate, however, if you are prepared, financially literate and fiscally
conscience, your transition will and should be less of a financial burden. Many people don’t like to talk or even think about
one or more of the transitions, but in reality you have to deal with the inevitable. As an Investment Advisor I have a duty to
setup a portfolio that is both Suitable and Fiscally responsible. Talking to clients, especially women before a transition
happens has always made the path a little smoother. I’m an educator when it comes to Finance 101 and financially
planning for the future; i.e. retirement, college fund planning, long-term care, next generation planning and corporate cash
surplus investing. None of this is possible without the willingness of the client to understand how finances can provide
comfort if proper planning is in place. Women have an opportunity to learn and take action to benefit themselves and their
family, especially if they are still married. In many situations they feel as if someone else will handle it for them. This is not
the right way to approach fiscal responsibility.
Let’s review retirement savings for women. The average person doesn’t pay attention to the stock market on a daily or
weekly basis unless a major event occurs. Only 47% of women contribute to their company retirement account. This
number is too low for women, but more women need to find a way to contribute to some IRA program and put in what they
can afford. You should start as early in your life as possible. Hopefully one got started before your transition begins. Once
you are in a transition phase, this may be more difficult, especially if you never worked or haven’t worked for a long time.
Even if you worked part-time or full-time, were you able to max out on your annual contribution? How many years until you
anticipate retiring and will you have enough to retire and live comfortably? These are questions you need to ask yourself
on a fairly regular basis. If you were in a marriage or now widowed but were not in charge of your finances or part of the
financial management process, you have suddenly been thrown into a difficult situation to now figure out how to manage
your life without a partner and how your finances will now dramatically affect how you live your life. Even if you are
working and have a good salary, the transition can be quite daunting on your emotions and psyche.
The final transition we will discuss is divorce. This is the most common transition that women associate with when it
comes to a change in their life. Sparing the details of how the situation got to the point of thinking about it or finally
moving forward with it (whether it was your choice or not), this is a major change in someone’s life. Essentially marriage
is a legal contract in the eyes of the law and whether you are entering into a marriage or ready to dissolve one, the legal
process does take over. More than half of the women I speak with that are in this stage do have a full-time job, but in
most of the situations they make less (in several situations less than half) of their husband. Trying to maintain the same
lifestyle on your own will be extremely difficult, especially if you both lived to your maximum (or beyond) means. If you
have children together, especially if they are under 18, they should be your biggest priority to provide for until the age of
18 and then discuss college education contributions. Just don’t arbitrarily agree start an education fund for your kids, look
into a tax-free fund such as a Coverdell or 529 Plan. Capital gains and dividends grow tax-free in both of these funds.
This will potentially save you thousands in taxes when they are ready for college. Consider doing this when they are born
(or at least infants). College is a tremendous expense now and tuition is not getting cheaper. Your next priority is “you”.
If you did not have a full-time job and you expect a settlement and possibly alimony for a period of time, you must put
together a realistic budget as we discussed earlier. Alimony is taxable and depending on how much you are receiving,
you should put a portion towards an IRA account. If you were a fiscally conscience wife, then you should be prepared for
a different lifestyle, even if you don’t intend to work. You may need (and welcome) a downsized lifestyle and prepare for
the next chapter in your life.
In summary, thinking of the future can be a daunting task, but I have a phrase called “financial nurturing” that can be
applied to women that are in or expect to be in transition. The more you can financially nurture yourself to get educated,
make a plan, look out for yourself and experience financial stability, the more you will feel independent and can attain the
freedom you want and desire.
It doesn’t matter what your transition may be, but it does matter what immediate and future financial steps you may
consider. During a tough time in your life, we have all heard at one time or another from a parent or respected friend or
mentor, “as this shall soon pass”, and it will. At some point once priorities and focus become crystal clear, thoughts
become lucid and actions become emphatic. Many people ask themselves during a transition, “how did I get here”, the
answer is, “life got in the way”. Time does heal all if not most wounds, but having your finances under control heals them
About the Author
Ronald Lang is the Principal at Atlas Wealth Management, LLC focused on working with clients to meet and exceed their financial goals through suitability and fiduciary requirements of their clients. Mr. Lang writes several articles on wealth management to educate and provide valuable information to both clients and non-clients. He is a frequent content contributor to the financial publication Investor’s Business Daily (IBD – www.investors.com) He believes that financial education is one of the most important skills you can have in life, but very few people pay attention to it until it’s too late. Mr. Lang also does several speaking events and volunteers his time to youth sports.
You may contact him at Ron.Lang@AtlasBuildsWealth.com or (888)403-9400.