Facilitators Guide. Program Goal: To define and examine key money management practices for women at specific life stages.

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1 FCS5-459FG Facilitators Guide What Women Should Know About Finances: Planning for Life s Major Events The most effective way women learn about finances isn t through textbooks or lectures but through real stores, from real people. Barbara Stewart, financial analyst Rationale: Our financial needs change based on our life events. Throughout life, many women experience life events which present new financial circumstances. Therefore, it is important to help women understand financial basics which can help them navigate their personal financial situation, from marriage to widowhood and the many stages in-between. Program Goal: To define and examine key money management practices for women at specific life stages. Program Objectives: To identify key factors which place women at financial risk during different life stages To identify retirement needs To understand financial considerations for specific life events Pre-Program Preparation: Copy (FCS5-459) What Women Should Know About Finances: Planning for Life s Major Events publication Gather a copy of the Wall Street Journal, Money Magazine or other financial publication and a banana for the introductory activity Copy of Defying the Statistics slides Copy of Life Event Scenarios Introduction: Over the course of our life span, our financial needs change. Financial planning is important for all individuals; however, it is especially important for women. Throughout life, many women experience events which present new financial circumstances, such as marriage, growing a family, divorce, retirement and widowhood. Introductory Activity: Display the copy of The Wall Street Journal, Money Magazine or other financial publication for participants. Ask participants if this is their common perception of finances and money management? Explain to participants that individuals are often intimidated to discuss or learn about certain financial topics. However, these publications target a certain type of audience, and for the most part, do not represent day-to-day money management strategies.

2 Show the participants the banana. Explain to the participants, that if you handed the banana to anyone in the room and asked them to peel it, they would most likely hold at the bottom and peel from the top. Now flip the banana over in your hand, ask the participants if they have ever considered peeling from the bottom? Demonstrate peeling the banana from the bottom. Peeling the banana from the bottom is an example of a paradigm shift, or thinking about something from a different perspective. Explain to the participants that their challenge is to think about their personal finances in a different way today. Encourage the participants to be open-minded about learning more about specific financial situations which may affect them one day. Objective 1: Identify key factors which place women at financial risk during different life stages Although in today s society women have made great strides, they still earn less than men, work fewer years as a result of leaving the workplace to raise children or care for elderly parents, and, as a result, often have contributed less to retirement savings accounts and Social Security, as compared to men. Therefore, women need to be proactive in managing their finances and preparing for future life events. Learning Activity 1: Defying the Statistics? Share the following statistics with the group: On average, women spend 13 years less in the workforce compared to men. Women enter and leave the workforce for a variety of reasons including raising a family and caring for elderly parents or other family members. The wage rate for women has increased; however, a gender wage gap still exists. In 2011, women earned 82 cents for every $1a man earned. 1 Seven out of ten working women earn less than $30,000 per year in jobs. 2 Five out of ten women work at jobs which do not offer employee sponsored retirement plans. 2 Nearly seven out of every ten women between the ages of 75 and 84, do not have a spouse present. Nearly nine out of every ten women over age 85 do not have a spouse present. Eighty-five to ninety percent of women will be solely responsible for their own finances at some point during life, for most women this will occur later in life. 3 Explain to the participants that these statistics are not designed to be scary, but to be realistic regarding the financial obstacles many women face. Ask the participants to briefly discuss the financial consequences of each of these statistics. Depending on the size of your group, you may consider dividing the participants into groups of three or four participants to encourage 1 Bureau of Labor Statistics, Current Population Survey, "Table 39: Median weekly earnings of full-time wage and salary workers by detailed occupation and sex, 2011" (2012). 2 The Women s Institute for a Secure Retirement, What Women Need to Know About Retirement. Retrieved August 14, 2012 from 3 Brennan, P & O Neil, B (2004). MoneyTalk: A Financial Guide for Women. (NRAES-160). 2

3 conversation. If you divide into smaller groups, ask the groups to share their responses with the larger group. You may decide to use the following example to start the conversation: Statistic 1: On average, women spend 13 years less in the workforce compared to men. Women enter and leave the workforce for a variety of reasons including raising a family and caring for elderly parents or family members. Financial Consequences: As a result of women working fewer years than men and entering and leaving the workforce, in general their lifetime earnings will be less. They will have contributed less to Social Security. They also will have contributed less and in some cases nothing to employer sponsored retirement plans. Ultimately, women may have less retirement income available to them. Wrap-up the discussion by sharing, that most of the statistics leave little control for things such as wages earned and marital status. However, women do have some control in their lifestyle choices. These decisions are not right or wrong and with proper financial planning, woman can better their situation. Objective 2: Identify retirement needs Regardless of age, from 18 to 108, women need to be thinking about and planning for retirement. Retirement savings should start early. For many women, retirement seems several years away. However, retirement investments grow over time, so it is important to start planning and saving early. Often retirement savings are postponed to finance current lifestyle choices, such as general living expenses, travel, entertainment and financing education, either for themselves or for their children. This decision can be costly in the future. Learning Activity 2: Establishing Retirement Goals Explain to the participants that although retirement may seem many years away, that time often passes much quicker than we realize. Therefore, the time to start planning is now. Establishing specific goals for retirement can help individuals determine the amount and types of savings they will need. It is important to establish SMART retirement goals. A SMART retirement goal is one that is Specific, Measureable, Attainable, Relevant and Timed. Share the following example of a SMART retirement goal. SMART Goal example: We plan to reduce our monthly entertainment budget to pay an additional $150 per month in principal on our home mortgage for the next five years, to pay-off our house before we retire. The goal is Specific because it states exactly what the couple would like to do, which is to make additional payments on principal to pay-off their home. The goal is Measureable because the couple can keep track of their mortgage balance by reviewing their monthly statement and determine if they are making progress toward decreasing their home mortgage debt. The goal is Attainable because they are reducing their monthly entertainment budget. The goal is Relevant because it will help the couple achieve their retirement plans. The goal is Timed because the couple identified the payments would be made monthly for five years. 3

4 Ask the participants to share some of their retirement dreams or goals. Encourage the participants to continue to think about their retirement goals at home. Urge participants to write their retirement goals on paper and double check if each goal is a SMART goal. It is important to remind ourselves of our retirement goals often. Post the goals in a common place, such as the refrigerator, laundry room, etc. Explain that this will help keep them on track with their retirement savings. Retirement goal setting helps us determine the amount we need to save for retirement. The typically retiree needs 70 to 90 percent of their current expenses in retirement income. However, based on your specific goals, this number may be more or less. Explain to participants to make a list of their current expenses and review each item on the list. Based on their retirement goals, put a positive or negative sign next to each expense if it is anticipated to increase or decrease during retirement. For example, often expenses associated with work, such as eating lunch out and clothing decrease during retirement. But if someone plans to travel, this is an expense that may increase. Obviously some expenses will stay about the same, such as home utilities. Objective 3: Understand financial considerations for specific life events Life events such as marriage, divorce, remarriage or widowhood all have specific financial considerations. Learning Activity 3: Life Event Scenarios Explain to the participants, we are going to consider four different life events and the financial considerations women may experience during each event. Divide the participants into four groups. Four to five participants per group would be considered ideal. Provide each group with a different Life Event Situation Scenario. Ask the groups to identify a recorder and a spokesperson. Ask the groups to read their scenario and identify key financial considerations for the specific life event. Allow groups five to seven minutes to discuss their scenarios. Ask the spokesperson from each group to briefly share their scenario and the action plan developed by the group. Summary: Often a change, both positive and negative, can feel overwhelming. However, being aware of your specific financial situation and considerations throughout life can help you plan for future life events. Summary Activity: Remind participants of the importance of keeping an end goal in mind. Ask participants to quickly reflect of the things they value in life. Examples may include having a safe home, church, saving for a grandchild s education, medical care, providing for their family. Then challenge participants to remember the people or things they value as they make spending choices in their everyday lives. Often, the idea of keeping an end goal in mind helps people prioritize spending and save for the future. 4

5 Jennifer L. Hunter, Ph.D. Extension Specialist for Family Finance June 2013 Copyright 2012 for materials developed by University of Kentucky Cooperative Extension. This publication may be reproduced in portions or its entirety for educational or nonprofit purposes only. Permitted users shall give credit to the author(s) and include this copyright notice. Educational programs of Kentucky Cooperative Extension serve all people regardless of race, color, age, sex, religion, disability, or national origin. 5