How couples can become a financial superpower

On this episode of The long view, CNET editor, personal finance expert and author Farnoosh Torabi shares his thoughts on budgeting, inflation, conscious spending, women and relationships with money. Here are some excerpts from Torabi’s conversation with Morningstar’s Christine Benz and Jeff Ptak:

Package: We also wanted to ask you about women and money. You wrote a book about when women earn more than their spouses. As you pointed out, this is an increasingly common scenario, but it can also introduce problems into some relationships. Can you describe some of these issues?

Torabi: Sure. I’ve been the breadwinner in my marriage from the start, and I wrote this book because I wanted to help a lot of women who came to me with questions about how to grow in their relationship as they earned more from him. The reality is, more and more women are in this role, playing this role, single mothers and women in relationships. But we don’t necessarily grow up expecting this, and society certainly doesn’t expect this or look at it for us. If you look at Pew Research, a majority of men and women say it’s better for the man to be the breadwinner.

And we can spend another hour talking about it. But to answer your question of what some of the issues are, one is that your money is often something that couples don’t talk about. Where they are financially, who makes what money, the bottom line is that money is usually a very taboo subject in relationships. But then you add a layer of complexity and nuance to that, which is she does more than he does, which is culturally unexpected and not necessarily supported, and then there’s a communication breakdown, and there’s a lot of assumptions couples can make about, well, who holds the power now in the relationship. Do we feel that if money equals power, then does one person have more power than the other? Does the wife have more power than the husband? I mean, there’s a lot of unspoken assumptions that can be made, because maybe we come to the relationship with all these different understandings and expectations about the role of money in marriage.

And there is also the complexity of the ego. I’ve interviewed a lot of men for this book, and what they would tell me quite honestly is that they were groomed and raised to feel like a true contributor in a marriage, as a provider in a marriage, you must. It just wasn’t such a pleasure to have. Like, it was the need – the man has to provide financially. It was how he had kind of earned his title as a good husband, a good father, and it was an exclusive thing he thought for himself. It wasn’t something his wife should or should do. But if that wasn’t the role he ended up in in the marriage, it could lead to a lot of confusion and loss of ego and wondering what my role is, what my role is as a provider. And again, this can lead to a breakdown in communication, fights for who knows what reason and struggles. I mean, I found out that when women earn more in a relationship, there’s a higher chance of divorce. Money is, again, a major cause of divorce as it stands. But then you add that layer of challenge, and you don’t have to be a scientist to figure out why this is happening.

And so, sometimes there are a lot of emotional challenges in relationships where she earns more. But the book goes on to explain how to level the playing field where each person feels like an important contributor in the relationship, seeing money as just a tool, a shared tool in the relationship. I would say that the first half of the book only deals with some of these emotional challenges that arise in these types of relationships. Then it largely comes down to understanding your system – how are we going to afford things. But these issues, I don’t think, are exclusive to relationships where she does more. It could just be in relationships where there is an income disparity.

How women can negotiate a better salary

Benz: Thus, data shows that women tend to earn less than men over their lifetime. They accumulate less wealth over their lifetime and they are also more likely to be poor in retirement. So part of that seems structural. Women earn less than men on average, and they are also much more likely to take care of children, certainly, or their parents. But the data also suggests that women tend to negotiate salaries less aggressively than men. What advice do you have for women on this, how to improve their financial means, how to negotiate for themselves a higher salary?

Torabi: Just do it. Do not doubt yourself. I can totally understand why women don’t feel empowered to negotiate and demand more. It’s because we haven’t been invited into this circle for a long time. And I’m talking about the financial circle, the career circle. Money and work is – work where you get paid – is something relatively newer for women than for men and that’s because the laws didn’t even allow us to have a credit card without that a man co-sign for us until the 70s. So we’re way behind not because we want to but because it’s, again, in your opinion, structurally, systemically, it’s as it was set up for us. And so, it’s going to take us a while to feel the same level of confidence, maybe, that men naturally have. But we know that now, don’t we? We know what fate we face, and we know the cost of not asking for more and investing sooner rather than later. And so, we just have to do it.

And I know there’s a lot of studies out there that say there’s a penalty for asking. And my thesis, my theory, is that the sanction exists because we don’t do it enough. When you’re the only woman in a men’s office asking for a raise, yes, you’re the outlier, and yes, you may be viewed more negatively than your male colleagues because it’s a numbers factor. But as soon as more women are hired – so it has to happen – but then when we collectively do it, and we will do it at all costs, and we’re going to ask for it, and we’re not going to feel it – we’re going to know that it there may be a penalty, but we’ll do it anyway. But more of us are doing it, I feel like we are becoming a force to be reckoned with. And we are not there yet. We’re not that force to be reckoned with where sometimes as the only woman in the office doing it and then we try to encourage others to step up and speak up and ask for more. And the more we can stick together, the more we can frame each other, the more we can be each other’s advocates when we’re not even in the room. There’s mentorship, and then there’s real advocacy for someone you want to grow in your office, in your company who isn’t even there, but you’re speaking on their behalf. I think men can do it too.

And so, this advice is not just for women. It’s also up to men to – it’s not just something that women need to focus on, that only women can’t solve. We need everyone to recognize that when women are paid fairly and earn more, everyone wins, everyone wins, households win, businesses win. She is more likely to stay at work. And by the way, women are excellent employees. I had a friend of mine who runs a newsroom. He said my favorite person to hire is a mom, because she knows how to prioritize her time, she’s super productive, and if I pay her well and keep her happy, she’ll be with me for the long haul, and it is an added value to my team and to our company.

And not that it’s all about the money, but sometimes you have to speak the love language of the capitalists, and that’s that women will make you money, but you have to learn how to pay them right and how to pay fairly and not just provide them with money but with the benefits they need. And if we know that more men are employers, that’s a message to men. So my advice is, ask anyway, ask in numbers, keep the community of women and female mentors and male mentors tight, don’t just be a mentor, be an advocate. And message to men – when women earn more, the world becomes a better place. It’s as much your game as a woman’s.

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