By Heidi Clute
If you’re a woman facing new life challenges — a successful proprietor of a growing business, an heir with a recent windfall or perhaps someone dealing with a fresh change in marital status or a recently diagnosed illness — then you’re in transition. You need to realize that you now have special financial needs.
Many women face this situation every year. Regarding widowhood, for example, the average American woman lives almost five years longer than the average U.S. man. The Women’s Institute for a Secure Retirement also reports that half of all widows become so by age 65 — and women are more likely than men to suffer a drop in income after a spouse’s death.
When you’re dealing with strong emotions (good or bad), business or personal finance issues aren’t likely at the top of your priorities. You need strategies for coping with necessary financial decisions during this time. And although each set of circumstances is different, women in transition face certain common issues.
Such women often report feeling like they’re moving through a thick fog or like their brain’s gone numb. If you feel this way, you’re not alone: it’s a basic human coping mechanism to shield us from an onslaught of stressful events and emotions.
Danger looms when this numbness extends to shielding us from the consequences of our financial behavior. The denial reflected in months of unpaid bills and overdue notices can quickly destroy a lifetime of good credit and take years to recover from.
Impulsive decisions — expensive vacations, gifting or hastily buying or selling major assets like your business, home or stock portfolio — can leave you with major regrets, tax liabilities and a diminished net worth for years.
Meanwhile, you may also be in a vortex of swirling, conflicting advice from well-meaning friends and family.
Certain financial strategies work for nearly every woman or can help nearly every woman in transition:
* Buy time. Defer all but essential decisions for a year. You may want to seek professional advice on what decisions you simply can’t defer, but in general you want to give yourself the time to work your way through your transition. If keeping on top of your monthly financial paperwork becomes unmanageable, for instance, you may want the services of a personal concierge or bookkeeper.
* Buy flexibility. Now’s not the time to commit all your cash to long-term investments or pay off your mortgage. Keeping liquid assets, such as cash and short-term investments, gives you the flexibility to make decisions later, when life calms down. A year in the future, your needs may be quite different; your goal is to preserve options for those imminent, beneficial changes. Again, objective professional financial advice may help.
* Take care of yourself. Sound, thoughtful financial decisions are more possible when you are rested, well and at peace with your stage of life. Eating healthy, making time for a daily walk or other exercise and carving out time for quiet meditation, warm baths or other soothing activities are proven coping techniques for the stresses and emotion-altering moments in life.
* Acknowledge your vulnerability. Many women unknowingly broadcast emotional vulnerability during a transition. Unfortunately, unscrupulous people sometimes take advantage. Be careful about the people and services you engage to help you.
(Our next article looks at specific transition situations that bring additional financial challenges — and traps.)
Heidi Clute CFP, is the majority owner of Clute Wealth Management in South Burlington, Vt., and Plattsburgh, N.Y., 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.