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The Professional Trustee Team

Women And Money

In the last couple of weeks I've been honoured to be able to speak at a couple of events, attended exclusively by women. These events focused on issues relevant to women such as maintaining a "work-life balance". 

I of course spoke about the issue of women keeping their eyes on the ball and looking after the moo-lah. No one in their right mind would ever ask me to discuss a subject such as "work-life balance". 

On occasions I've even had to look up the words to check their spelling so you can imagine I've got no conception of what the phrase actually means.

Although in saying that, I did get a bit of balance in last night when I indulged in some Christmas cheer with a few of my own girlfriends. We got around to discussing what had occurred at the women's events I'd presented at and they suggested that I write a blog setting out my own thoughts about a couple of issues that had come out of these presentations. This seemed an excellent idea after two glasses of red and by the time morning came around, the idea had stuck. So here I am putting pen to paper.

Before we start, I want to be sure I'm not shot by the Politically Correct Squad so I'll make this declaration up front: the points I am raising in this blog can equally apply to both sexes and the views I am expressing are my own, based upon my own observations gathered from about two decades of practice.

So... on the subject of money, here are some things I've noticed over the years that are pertinent to women.

1. Relationship With Money

Women often have a strained relationship with money, in my view. I'm not saying they don't understand money. What I'm saying is they seem to fall into two distinct camps. They either really take the trouble to get to grips with the subject of money, where it's coming from, where it's going, money goal setting, investing, etc, or they simply refuse to get their heads around the subject. In other words, there seems to me to be two mindsets – those who are truly interested in money and think of it as an essential economic good that they need to know about, and those who adamantly refuse to deal with the subject at all.

Men, on the other hand, don't appear to me to fall into two such distinct groups  They might or might not be interested in the subject. They might or might not be good at managing money. They seem, however, not to have such strong feelings about the subject of money as I see women having. In other words, they are much more laidback and ambivalent about the topic. Summing it up, money for men doesn't appear to be an emotional topic for them at all.

Of course the type of relationship women have with money affects how they actually deal with the commodity.

2. Discussions About Money

This is a really biggie. It affects not only how women deal with their own money but all sorts of other subjects, such as asking for a raise at work or asking their spouses what is going on in the money affairs department. Women frequently seem to be backward in raising the subject of money. For some reason they seem shy and uncomfortable about discussing the topic. 

By way of an example, a women I spoke with last week was about to permit her boyfriend of 6 months to move into her home. He had two ex-wives and four children. She had no idea of what he earned, what assets he owned, what his commitments were to his ex-wives and children, and what money he would be contributing to what would become their joint household expenses. When I asked her if she would be discussing these points with him, she said she 'didn't like to'. 

Now I just don't get this. She was about to permit someone to get really closely involved in her life and she didn't have a clue as to what he was about financially. That is just plain scary in my book. How can you start to build a lifetime commitment with someone that you can't discuss the subject of money with? 

Men, I've noticed, don't seem to have much trouble talking about the green stuff with either their prospective partners or their employers. As a result, they frequently get to grips with the views that their spouses and employers have on the subject and they then make decisions about their own behaviour accordingly. 

Of course not being able to raise and engage in a discussion about money leads women to either taking or advocating control of the coin, which can have some really startling consequences.

3. Working With Money

I guess it goes without saying that if a person isn't interested in the subject of money and doesn't feel comfortable discussing money, then they aren't likely to really work with money. What I mean by this is that they will not feel comfortable asking questions and challenging another person's viewpoint about what should be occurring with the moo-la. Unfortunately, women often fall into this category. 

To illustrate my point I want to discuss the case that recently came across my desk, involving Jillian. Her husband was running a bookshop which actually did pretty well financially. They always managed to pay their mortgages and they enjoyed a reasonable standard of living. Jillian had always left the running of the business and their money to her husband, saying he had everything under control.

Her husband wanted to 'get ahead' as he put it, and so he wanted to buy another bookshop. Trouble was it would involve them getting a very big loan. But Jillian didn't want to appear unsupportive so she didn't question him about things and just signed the loan papers that were put before her. 

She did feel a little uncomfortable about them borrowing such a large sum of money to buy the second bookshop and she wasn't that happy at the time at having to put their home up as security, but she nevertheless went along with things. She even gave a personal guarantee for the borrowings herself. 

They went ahead and purchased the second bookshop but despite her husband's best efforts, the business still wasn't making money after seven months of trading. As luck would have it, however, a distant relative died around this time and left Jillian $80,000. Her husband suggested that Jillian put in the inheritance she had just received to help the business along and Jillian, again not wanting to appear unsupportive, agreed. 

Things just got worse. Month by month the business lost more money. The loans were unable to be repaid. Jillian's husband took action and did sell the second bookshop, but the sale proceeds they got were not enough to pay back the loans. So he then sold the first bookshop they owned. But still there was a debt left owing to the bank. So they then sold their home. Of course being in a downward market, the house didn't realise as much as they hoped and there was a debt left over that had to be paid back to the bank. 

As you can imagine, all these events put enormous pressure on their marriage and Jillian and her husband separated.

As if this wasn't bad enough, letters from the bank started to arrive demanding repayment of the money that was still owing. Jillian went to the bank and explained the situation. The bank, whilst being sympathetic, told her that she would have to pay them and that if she didn't, they would sue her under the personal guarantee that she had given.

Of course Jillian had no money and no assets and so that is exactly what happened. The bank sued and then bankrupted her. 

Jillian through not wanting to deal with the issue of money had lost her home, her half share in the first profitable bookshop and her inheritance.

4. Responses To Money Troubles

In my previous lifetime I use to head up a team at a bank. One of the functions of that team was to deal with customers who were defaulting on their loans. And this is where it gets really interesting. When the loan was in a joint name, it was usually the women who picked up the telephone and called to find out what was happening and how the problem could be worked through. 

From the couple of years' work that I did in this capacity, I had to draw the conclusion that when money troubles were on the horizon, women were more inclined to take the bull by the horns and move into 'clean up mode', as I thought of it. 

I never really did come to understand why it was the fairer of the sexes that tried to sort things out when they'd gone bad, especially given the fact that these very same women weren't at all involved in the decision of where the money went in the first place. Perhaps this is just one of the mysteries of life I'm going to have to live with. 

The point that I'm making, however, is women are good at cleaning up money issues but frequently woeful at dealing with the setup of the monetary situation. If they were more involved and better at the inception of the money decisions, the money troubles may never come home to roost.

5. Solution

Millions of books have been written about it and loads of money has been made from the subject over the years. It's called "Communication". That's the only solution to dealing with money. Quite simply, you have to sit down with yourself and explore how and why you feel a particular way about the subject. Then, assuming your financial future is tied up with a nearest and dearest, you have to get down to the nitty gritty, take a deep breath and talk to your spouse about the subject. You can do it in a non-threatening way. You don't have to argue about the subject. You can even agree to disagree. But you do have to talk.

Once you've explored your reaction to the subject and your spouse's reaction, you have, in my opinion, a really good base from which to grow. You see a little acorn of knowledge can lead to the growth of a whole tree. And whilst you're busy planting, you will start getting comfortable about the subject. Which in turn will lead you to asking questions and finding out more about the fruits of the tree, including how to look after what the tree is producing. Which leads me to my last point.

For all those women who are either in business themselves or who have their financial future tied up with their spouse who is involved in business, ensure you get good advice. You don't have to put all your assets at risk. Nor do you have to lose all your assets, including your inheritances, if the business goes bust.

An ounce of prevention is worth a pound of cure. Get advice. Get protection. Get the right structure.  Look at what amount of money is being borrowed and by what entity. Think about and decide who should be directors and shareholders. Review who is going to give personal guarantees. Seriously consider putting in place general security agreements in favour of yourself. In all circumstances, understand what is going on and feel comfortable about what you are legally agreeing to.

Your goal in life is to minimise your exposure and to protect what you have built up. Don't let your own feelings of being uncomfortable about the subject of money be your downfall. Get advisors around you who help you feel relaxed about the subject. And if someone is trying to make you feel inferior or unsupportive or just plain incompetent about the subject of moo-la, then take a step back – that's their issue not yours.

The only dumb question in life is the question you don't ask.  So as always, get the right people on the bus, sitting in the right seats to help you. And of course it goes without saying, I'm one of those people who are happy to help you.  I

I'd much sooner be pro-active and help you plan your financial future than be the ambulance at the bottom of the cliff, cleaning up the damage.  So if in doubt, please request an interview or contact us.

The Professional Trustee Team
The Professional Trustee Team
© Gilligan Rowe & Associates LP

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Disclaimer: This article is intended to provide only a summary of the issues associated with the topics covered. It does not purport to be comprehensive nor to provide specific advice. No person should act in reliance on any statement contained within this article without first obtaining specific professional advice. If you require any further information or advice on any matter covered within this article, please contact the author.
Hi Mathew. Thanks for meeting with us.  I took your advice and have started on Property 101 and more than half way through. I now realise why you advised us to stay where we are  and look for properties with land in Hamilton or Waiuku.  Information, calculations and case studies in this book are priceless. I'm so glad you decided to write this book and managed to find time to do it. Thanks very much for this and for advising us to check with you should we need to. Thanks - Helen - July 2015

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