Kathleen Burns Kingsbury is a wealth psychology expert, founder of KBK Wealth Connection, and the author of several books including How to Give Financial Advice to Women and How to Give Financial Advice to Couples.
She took the time to talk with us about having a healthy money mindset and some of the differences in financial goals and habits of men and women. With her experience and background in this field, her expertise is valuable to anyone looking to create a healthier financial lifestyle.
Why is it so important to focus on women related to wealth and financial planning?
Women have been overlooked and neglected by the financial services industry for too long. The focus on women is long overdue and really important given the fact that women control the majority of personal wealth in the US, are starting businesses at twice the national rate, and are more often than in the past the primary breadwinners in their homes. Women as a group have unique financial planning needs, as they typically live longer than their male counterparts, often take time out of work to care for children or elderly parents, and as a result often have underfunded retirement accounts. Many women fear that they will be a burden to their children or that they will run out of money when they get older, but they can take proactive steps to save more, become more financially literate, and continue to let their financial advisors know that their needs are different from the men that they serve.
How does your background enable you to be so successful at this?
I have a very unique background, as it's a blend between finance and psychology. This allows me to look at the issues around women and money from a different vantage point. I understand the technical aspects of finance but also truly understand how an individual's psychology around money may prevent them from taking care of themselves financially. Most men and women know what they should do to be better savers and to spend less. But until they understand how their attitudes toward money, called money mindsets, impact their financial habits, it is hard to change. It is fun to be able to help individuals and the professionals who serve them learn more about the behavioral side of money and investing, and be able to witness and be part of a real change in the industry that positively impacts so many clients.
What are some differences that you see in the way finances are handled by men and by women?
On average, men tend to view wealth and the accumulation of wealth as a way to gain power, status, and control, whereas women typically view wealth accumulation as a way to provide for a secure future for themselves and their families. This different mindset influences how women make, manage, and invest money. For instance, women often don't put their financial needs ahead of others due to their desire to care for their loved ones or the people around them. This can be a real detriment, as women negotiate salary less (don't want to take more than they are owed, or they are worried about being perceived as greedy), defer saving for retirement until they have fully funded their children's college fund (there are no loans for retirement, but there are student loans), and often will put their partner's career ahead of their own. While these are all individual choices, the collective result is women earn less, save less, and are at more risk for not being financially prepared to manage money alone should their partner die first.
On a positive note, research shows that women are better long-term investors than men. They take a long time to make a decision to invest, but once they do, they tend to hold onto the investment over the long term. Men typically chase returns and move in and out of the market more often. The end result is over the long term women investors have better returns than men. Sometimes slow and steady prevails over winning the short-term race.
Women-owned businesses are on the rise. How do your services help women business owners convey the importance of financial planning and responsibility to their teams and into their businesses?
I have been an entrepreneur for over two decades and firmly believe for women-owned businesses to be successful, they need to pay attention to the financial part of their enterprise. Sometimes women have mixed feelings about being profit motivated and making hard financial decisions in business. This is due to how women are socialized to put others first and how they are judged, unfairly, by our society if they are aggressive business people. I use the word "aggressive" on purpose, as men are allowed and encouraged to be aggressive, profit motivated, and competitive. Whereas women are criticized for the same traits. I think my work with female business owners and the financial advisors that work with them help both parties understand this dilemma for women. My hope is through my own success I can role model to women that you can be both feminine and a good strategic business person. While I love what I do, I am in business, and I don't apologize if I have to make sure my fees are commiserate with my value. My writing, training, and consulting services are all aimed at breaking down these barriers and helping women take better care of themselves financially.
You also work with couples. What are some key needs you see here for good financial responsibility?
Couples really need to learn how to communicate openly about money. Unfortunately our society has a taboo when it comes to open and honest financial conversations. Some studies state that 80% of spouses have lied to their partners about a financial purchase. What this tells me is couples need a roadmap for having these conversations, and my books and writing are aimed at doing just that. Ideally, when couples get into serious relationships, they should share with each other their thoughts and beliefs about money, the income, their debt, their financial successes, and their financial challenges. However, if a couple has not done that and they have been married or together for a number of years, it is not too late.
I designed Wealth Conversation Cards to help couples talk more openly about money. These cards ask simple questions such as "If you had to teach your children one financial lesson, what would it be and why?" or "What are three words to describe your money personality?" The goal of the cards is to help couples have fun talking about money and to take the time to learn more about each other's money history and values. It sounds so simple, but for many couples it is very challenging, and this is where I think a skilled couple-friendly advisor can help. My book, How to Give Financial Advice to Couples, teaches advisors about couples dynamics around money and how they can help partners at this basic level. The first step is encouraging couples to meet with their financial advisor together. Unfortunately, only 38% of couples meet jointly with their advisors, and the partner that is meeting with the advisor individually is overwhelmingly male. This leads women in a precarious place should her male partner become ill, die, or leave her.
Are there some financial mistakes women make more than men?
Women tend to put others' financial needs ahead of their own and can put themselves at risk by not saving enough money for their needs later in life. This is especially true for mothers who want to provide for their children's education, activities, and well-being. It is hard but important for women to sit down and look at how they can balance their needs with their children's and partners. Men are just better at taking care of themselves in this way and often don't have the guilty feelings women do about it.
Women also wait too long to educate themselves on the basics of finance. I hope that this is changing with the younger generation, but for now, many older Baby Boomers and traditionalists are often ill-prepared to manage the family finances if a crisis such as a death or divorce occurs in their lives. The move to educate more women about money is positive, as more women are talking more openly about money and finding fun ways to learn about it, such as women and wealth groups, book clubs focused on financial books, or simply attending a workshop with a friend.
What about the smart things women do financially - are there some key differences here between women and men?
As mentioned above, women make good long-term investors because we tend to be less likely to trade on a hot stock tip or try to beat the market. I also find that women are very good at planning for the future and are more realistic about the fact that they will not live forever. While women may not have their retirement accounts as highly funded as men (due to time out of the work force, the gender pay gap, etc.), they are often the member of the couple that pushes for meeting with an advisor to discuss planning for their retirement years.
What is some very basic but very smart financial advice you can share with us?
It is important to identify your money mindset. This is your thoughts and beliefs about money that impact your saving, spending, investing, and gifting every day. These thoughts and beliefs often reside in our unconscious mind because we are not encouraged to talk openly about money with others. However, if you start to wonder why you buy brand-name clothing or why you cut coupons, you will learn more about how your financial attitudes impact your financial health. Once you are able to understand what feelings and attitudes contribute to your current financial habits, then you are in a great position to decide which ones you want to keep and which ones you want to change. While this seems basic to me as a wealth psychology expert, it is often eye-opening for clients and advisors who have not been exposed to these concepts. Real financial change and health comes from this self-awareness.