Who Should Handle The Family’s Money?
More women are handling family finances than ever before and experts say they make a better job of it than their husbands
A BUSINESS EXECUTIVE got into financial trouble last summer and wound up in debt to two banks, two loan companies, the tax collector and a milk company. Things looked black as lignite until his wife stepped in, talked to one of the bankers and got a new loan to pay off the others.
“Wasn’t that a risky loan?” I asked the banker who told me this story.”
“It was,” he admitted. “I took it when I saw the wife assuming responsibility.”
That’s one of the biggest news stories of the decade and one you won’t find on the financial pages. Modem women are noticeably asserting their financial ability, demanding financial equality and getting it.
The Canadian Bankers’ Association has discovered that more women are handling family banking than ever before. Security counselors report that they’re having more to say about investments, too. Women gained financial sophistication during World War II when their husbands were in the Services and today it’s usually only in the older families that you still find the man handling all the cash.
A bank manager told me about a fellow like that who came into his bank recently, led his wife to the manager’s desk, tossed down a bankbook in her name and wanted it in his.
The banker sized up the situation. “We can’t transfer the account without your wife’s consent.”
“She says it’s all right,” the man said.
The banker turned to the wife and asked if she wanted the account changed.
“He wants me to,” she said timidly.
The banker handed her the book. “Think it over and let me know yourself if you want it changed,” he said.
That woman never did transfer her account to her husband.
Many financial experts are convinced the feminine drive to participate in finances is all to the good. Rather than being naïve the average woman is actually more experienced in handling money than her husband, according to A. R. Haskell, manager of the Toronto Better Business Bureau. And Don Smith, of the Montreal Credit Bureau, points out that they should be, for women now do about 90% of the family purchasing. Other experts have put the percentage considerably
lower but agree women do most of the shopping. “They do a grand job,” Smith says. “The percentage of women who mishandle money is small indeed.”
Maybe it’s because women aren’t burdened by male pride. Haskell gets more complaints from women than men about unsatisfactory goods or other unhappy transactions. Why? “Men don’t like to admit having been stung,” he says.
Female scepticism is legendary among bankers. One tells a story about a woman who demanded to see her money. She didn’t want to draw it out; just to see it. They showed it to her and she left satisfied.
People in the loan business consider women are actually better money managers than men. R. W. Harris, of the Household Finance Corporation, says, “Perhaps it’s because they have a greater realization of the family’s dependence on regular income, or perhaps men are more optimistic about their future earnings.”
Another loan man reports women are much sharper borrowers. “A woman always asks, ‘What’s the interest rate?’ A man either expects to make money with the loan or needs it too badly to
worry about getting it for a few dollars less. Or he deals with a particular bank because he has a friend there, or the bank once helped him out. A woman is no more sentimental about banks than about two stores with handbag sales. And are stricter about repaying loans than men.”
You bet they’re less sentimental about money! A banker tells about a young vet who went out to buy his girl a ring after the war. He found an impressively big one—for $240. The salesman suggested he could pay a little each week. When his fiancée found out they’d be paying for it long after they were married she made him change it.
A small-town banker says unhesitatingly that “the average housewife is a better manager than her husband. A man sometimes likes to be a grand fellow, or gets bored with saving. Women are more persistent about achieving financial goals.”
Plenty of men still feel money is their province. Some won’t even let their wives know how much they earn. Under such circumstances a wife not only won’t become money wise, but won’t have the respect for the stuff she might if she had to manage it. Nor does a man always curb expenses because he withholds cash. A grocer in our neighborhood does a thriving business because he advances wives $5 to $10 now and then and hides it in the husband’s bill.
Mabel Thompson, of New York’s Union Dime Savings Bank, one of the best-known budget consultants on the continent, has found that higherbracket businessmen are more inclined to manage money themselves than wage-earners are. But here, too, there’s a trend toward taking the wife into full confidence and working out budgets and other problems together.
One broker told me that because a man has made money doesn’t necessarily mean that he’s good at conserving it. Wealthy doctors, for example, are often babes in the investment woods. In investing, men are more inclined to seek excitement. Women are more interested in a nice, steady income. They’re more likely to seek investment advice too. But they do have a weakness in acting on it. A woman is apt either to swallow the advice whole, or pay no attention to it; a man is more inclined to listen, then do some thinking of his own.
Miss Thompson finds that many modern young couples thrash out money questions and set up a budget even before marriage. This has resulted in fewer quarrels over money, she says. In fact, in wage-earner families she discerns too much tendency now to turn over all money and responsibility to the wife. She thinks that’s a mistake too.
While women are generally more careful with money, they aren’t necessarily as knowing. And while women are more inclined to want to plan, the
financial experts say, men are often better at drawing up the actual plans.
The ideal policy is a partnership.
I asked financial experts what they find is the chief cause of financial disaster in mpst families. All their answers hit at the same problem: lack of planning.
“They fail to work out a budget tailored to family income and essential living pattern,” answered loan-man Harris.
“They don’t plan their spending; the money goes into one pocket and soon it’s gone,” said budgetexpert Thompson.
“They obligate themselves for luxuries before necessities are paid for,” analyzed Frank Hunter, of the Bank of Montreal.
“They don’t look ahead to large expenses of the future, those too large to be paid out of any one pay cheque,” commented consumer-education authority Sylvia Shiras.
Your Family Co., Ltd.
Every family is a little business. In its lifetime it may have a good quarter of a million dollars. In a successful business the first thing the partners do is set up an operating plan. Here’s a procedure by which a family can build such a system :
1. What are your goals? The whole family meets and asks each other: “What do we want most of all? A lovely home? A car? Or grand vacations? Or security, as represented by solid savings? Of course, we’d like to have all these—but if we can’t let’s list the most desirable goals.”
It’s all-important that there be a frank discussion of the family’s financial status, problems and aspirations by all members. Miss Shiras is convinced by her experiences with families seeking help that this open discussion technique leads both to better understanding and better managing.
2. How to achieve your goals? This means setting up a budget. First the family lists its basic inflexible expenses, such as rent and utilities, payments on debts, reserves for medical emergency, minimum food and clothing costs. Then it can decide what to allot for the goals it rates most desirable. (For more suggestions see “A New Budget for 1950,” Maclean’s, Jan. 15.)
3. How to handle the money? For week-to-week expenses, envelopes for each item, or a box with compartments, is a handy device. But too many families stop there. They’re apt to keep too much money around the house; it’s too easy to get at and doesn’t earn any interest. The compound interest you get on savings accounts amounts to worth-while sums over the years even on small accounts. Bankers like to tell this story: two young men at 20
started to save $20 a month. At 60, one had $10,000, the other more than $20,000. Why? One deposited his savings at compound interest.
Bank accounts are also a definite aid in managing your money. One family of five I learned about actually has nine accounts. The man has a master current account. All his income goes into it and he draws a cheque to his wife for the household, clothing and other expenses she manages. She has a savings account and current account. He has charge of three additional savings accounts: for insurance, house expenses and “emergency or investment fund.” Each child also has its savings account for the money it’s responsible for using.
That’s too elaborate for most of us, but it shows how to use separate accounts to manage money. This system can help you cut costs too. In just one case, if you deposit insurance money monthly in a separate account and pay it yearly you save up to 11 %.
Another family of four that manages well has five accounts. Husband and wife have a joint current account. She has a separate current account for household money. They also have a joint savings account for “safety cushion” funds and each child has a savings account.
Every family would find it helpful to have a separate account untouchable except in serious illness or long unemployment. How much ought to be locked away like that? That depends on the size of the family, its expenses and stability of its income, but three to six months’ income is a fairly plump cushion.
Here’s one system for dividing ycur money:
Weekly cash expenses, including food, cleaning aids, drugstore needs can go into envelopes or budget box to be handled by the wife, except for individual allowances for carfares, spending money, and so on which should be in charge of the individual involved.
Monthly expenses, including medical reserve, auto, vacation, insurance, taxes not withheld from earnings, money for fuel, can be deposited in another account to be handled by the husband.
Long-range funds, including those for education, safety-cushion and special goals, can go into a savings account to be managed jointly.
Retirement funds can go into the joint savings account too, or part might be invested in highgrade bonds.
Savings accounts and bonds don’t draw as high a return generally as do common stocks, but involve less risk. Sound investment counselors never advise a family to invest in stocks unless it first has a substantial cash reserve, money set aside for the children s education, sufficient insurance, and mortgage and other debts
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paid up. If the stocks lost value the family still would have its basic protec-
Before investing in bonds or stocks get all the advice you can. Speak to your banker (several if you can). If a company offering stock is unknown to you ask your local Better Business Bureau if it’s a recognized investment, or if there’s anything shady in the background of its promoters. If you’re dubious about the statements made by one securities dealer check with others.
For ordinary savings, joint accounts on which either husband or wife can draw are increasingly popular, banks report, specially among younger couples and those very old. (The oldsters like this arrangement because it sometimes eliminates the need for a will while making sure the money goes to a particular person in case of death.) There was trouble during the war when some men married in haste, put their savings in joint accounts, then came home to find them closed. There are also continuing instances of husbands (and sometimes wives) getting involved in gambling and secretly emptying joint accounts. But these are the exceptions and bankers feel joint accounts work well when husband and wife trust each other completely.
Saving in Secret
Not all couples do. Bankers say a surprising number of wives have secret accounts, generally to protect money a man might use for a car or other spending the wife doesn’t consider vital. The women are generally more concerned about their children’s needs.
There’s another type of joint account which eliminates any chance one partner will shanghai the cash—both signatures are required for withdrawals. Bankers aren’t too keen on this arrangement because sometimes wife or husband seeks a solo withdrawal. The plea often is that the other person is too sick to sign an authorization, but the bankers can’t be sure.
When you want to keep money in your name but make sure it goes to a particular person on your death a savings account can be held “in trust” for the second person.
Savings accounts aren’t as convenient as current accounts but do draw interest. Also you may have to pay a fee for a current account if you maintain a little money in it and draw quite a few cheques.
Families manage financial affairs more efficiently if they set aside a definite place where records are kept and family business transacted. It can be a desk, shelf or chest, but should have space for paid and unpaid bills, the budget book, and guides and pamphlets on money management available from banks, government and other agencies. For example, you can get informative pamphlets from the Better Business Bureau in the larger cities for the price of a three-cent stamp apiece. These cover such subjects as how to buy fuel, confidence schemes that may take your money, how to buy or build a home, what you ought to know about business.
It’s wise to avoid making recordkeeping so detailed and penny-watchful it becomes burdensome, and the family tosses planning overboard in favor of just drifting. Sharing of decisions will do much to eliminate quarrels. But continuing forbearance is vital. The husband can’t bird-dog his wife’s every grocery expenditure as long as she stays
within the agreed-on bounds. She on the other hand will be wise not to dig too deeply into his manner of spending his own money, or dig down too often into his pockets to cover up her own shortages.
One puzzler for many husbands is whether they can trust their wives’ financial sense enough to leave their insurance in a lump sum, or plan it as monthly income.
“That depends on the wife,” insurance advisers comment. “If she’s a flibbertygibbet who might spend it quickly or invest unwisely the income
plan is safest. But if she’s a sensible woman who will seek sound counsel she might make the cheque produce more income than by leaving it with the insurance company. Even a $10,000 policy provides only $50-60 a month in cases if paid on an income basis.”
Frank Hunter, of the Bank of Montreal, says it’s unusual for widows to waste money left to them.
Some male diehards may grumble that men should never have started all this by giving women the vote. But let me cite my case. My wife handles all our money except insurance and taxes.
I’d also probably handle the investments if we had any. At the end of each month we check up. If we’re managing our respective departments well we close the books. If not we chip in on solutions. Rather than resigning any male prerogatives I feel like the chairman of the board.
As for womanly extravagances, I find my wife is definitely tighter with cash now that she has charge of it than when I doled it out to her. Then, what I gave her she spent. Now, as a lawyer friend of mine groans, “I can’t get my wife to part with a dollar.” +