In Manisha Thakor and Sharon Kedar's new book, Get Financially Naked: How to Talk Money with Your Honey, the authors argue that many women make the mistake of relying too much on the men in their lives to provide financial security. That's despite the fact that one-third of women earn more than their husbands and recent research from the Center for American Progress shows that 5.4 percent of working wives now have husbands who are unemployed, up from 2.4 percent in 2007. Thakor and Kedar say it's time for women to take more control, starting with honest conversations about finances. Here are excerpts from our recent conversation:
What mistakes do women make when it comes to relationships and money?
Kedar: Assuming that your Prince or Princess Charming has it together, financially speaking, and not knowing your financial picture. That's not to say you have to be involved in every detail, but we've heard too many women getting the short end of the stick. When we say, 'Get financially naked,' we mean when you're in a serious, committed relationship, understand what each other owns, owes, your credit score, and how much you each make.
Thakor: It's amazing, we found at all levels of the income spectrum, we met professional women [not knowing about their finances]. There's a social taboo associated with talking about it. Money is actually more intimate than sex these days.
When should you start to talk about finances with a significant other?
Kedar: When you're willing to take your clothes off in one way, you should be willing to get financially naked. When we talked to audiences around the country [after our first book came out], women told us these terrible stories.
Thakor: Examples I've heard are individuals who married people who were not aware that [their partner] had massive amounts of credit card debt or student loan debt. Or married people who didn't realize their partners were maintaining these lifestyles that were completely at odds with their financial picture. They didn't understand until they got married that a lot of their lifestyle was funded by debt. In Texas we have a phrase for that—'big hat, no cattle.'
Do younger women make those mistakes, too?
Thakor: Yes. Both of us pride ourselves on being strong, we think so many things are changing, but so many aren’t. This 'man is a financial plan' mindset is this insidious seed that runs through the media, advertising messages, and jokes from family members. The subtle messaging is combined with the fact that there's not any formal program or framework to counteract that message—it's not like we're all taking financial education classes to graduate.
Is it okay if the husband is the one who is mostly in charge of the finances, or is that a mistake?
Kedar: No, that's not bad, but it's about knowing and playing a role.
Thakor: My marriage is a classic example—I love personal finance. I can be on Twitter for hours reading links to personal finance stories. My husband and I sit down twice a year and talk about what we owe, own, what we've earned, and whether we're making our savings goals. My husband doesn't want to deal with it on a day to day basis. He's more than happy to delegate it to me.
Kedar: I completely agree. Our husbands are involved but we take the lead. We're kind of abnormal.
Suze Orman also wrote a book on money and women; how does your advice differ from hers?
Kedar: In our view, it provides groundbreaking language about how to talk money with your honey. It's that talking piece, and figuring out what fits for you as a couple.
Thakor: We agree with a lot of what [Orman] has to say. With personal finance, a lot of the basic information is out there, but it's just not resonating with people, so there needs to be a variety of different voices talking about it.
When you meet that someone special, people always ask, 'Are you physically compatible? Spiritually?' But when was the last time someone asked if you were financially compatible? But as all the studies show, money is the number one cause of fights and divorce. Our big point is let's rethink this in the post-recession world, and bring some of that missing language to the table.