It is hard to believe now, but before 1974, most women could not obtain a credit card, auto loan or mortgage without a man to co-sign. This year, we celebrate the 50th anniversary of the Equal Credit Opportunity Act, a pivotal moment that changed the financial lives of women.
Growing up, our grandmothers talked about the days before equal rights legislation when financial independence for women was rare. Their stories could fill volumes, but the advice to “save for a rainy day” is universal and more than just a saying — it was the basis for survival.
Let’s revisit this simple advice and see if it remains relevant today.
It might come as a surprise, but 100 years ago, the 1920s were called the decade of the “New Woman.” Yet, at the time, only 20% of women worked outside the home.
It’s an uncomfortable truth that, until recently, almost all women relied on men for economic survival. With limited education and employment opportunities, if a husband died or left the family, his wife and children were often left destitute.
There are countless stories of mothers needing to leave their kids at orphanages or with family members until they were able to relocate and find affordable housing and gainful employment.
My great-grandmother was a war widow with four young children. A generation later, although my mom could support herself as a registered nurse, my grandmother still advised her to have only one child to improve her chances of finding another husband if something happened to my dad.
Even if women could keep or reunite with their children after a loss, their standard of living as single mothers was poor. There often was no money (or financing) to pay for things we take for granted, like insurance or a reliable car. The agency in California that administers child support was not created until 1975.
Women needed to devise clever ways to put some funds aside, “just in case.” This was not just for a new dress or vacation, but for their future subsistence.
My great-aunt would tell us stories of how, in her house, the electric bill was due more than once a month. She frequently asked Uncle Louie for the money and set aside the extra in a coffee can. She called it “running away” money, which also speaks to the life of some married women at the time.
Many women, even if at home, would have what we now refer to as a gig or side hustle that was not typically discussed or celebrated. My husband’s great-grandmother was a midwife and had a little store. My great-grandmother was a blue ribbon-winning baker. The popularity of Tupperware and Avon in the mid-20th century exemplifies how women found creative ways to have some of their own money.
While the money put aside was probably not enough to save the family farm, in many cases, it became the seed money to start over if everything went to hell.
If a woman didn’t have sufficient savings, insurance was an option. When I was first married, like many brides, I bought a hefty life insurance policy on my husband. My concern was that if something happened to him, I wanted to have enough so I would not have to move back in with my parents.
Of course, times have changed. Legislation, increased opportunity and cultural transformations produced phenomenal changes in women’s ability to support themselves. A Pew Research study found that men are now the sole or primary earners in just over half of American marriages, compared with 85% in 1972.
A Bank of America study found that 94% of women believe they will be solely responsible for their finances at some point in their adult life.
Financial independence for women is still evolving. According to an Allianz Life, nearly half of millennial women keep their finances separate from their spouse or partner, but only a third of Gen Xers and one-fifth of boomers said the same.
Yet, despite these incredible advances, we still start every financial plan with an emergency fund.
Some reasons for having some money set aside (and apart) are still relevant. Divorce is still a concern. Forbes reports that divorcing women ages 50 or older see their standard of living plummet by 45%, while men’s is reduced by only 21%.
The death of a spouse can also be financially challenging. According to the US Census, the average age for widowhood is 59 years. Based on average life expectancy, most widows would need to support themselves for another 20-plus years. In a report released this year by Thrivent, just over half of all widows report struggling to pay their bills.
Besides divorce and death, we are all at risk if there is a disaster, another pandemic, or a recession due to a lack of savings. According to Forbes, this year, 78% of Americans reported living paycheck to paycheck, meaning a family’s income barely covered essential living expenses. Most of those who reported living paycheck to paycheck had less than $2,000 in savings.
The lack of savings is probably why so many feel insecure about the economy, even though unemployment is historically low and the stock market is at its peak.
Saving for a rainy day also becomes a literal necessity in California, with the extreme weather, wildfires, and insurance companies leaving the state.
If the funds in your bank account (or coffee can) are low, my advice is to ask around and find a certified financial planner you feel comfortable working with. They can help you find the money in your budget to create an emergency fund and pay off high-interest credit card debt, and they’ll help you plan for a bright future.
So many fought for our economic rights. As we celebrate the extraordinary changes, it is crucial to remember that financial independence requires continuous effort.
Our mothers and grandmothers knew the importance of saving for a rainy day, and their wisdom remains relevant. By preparing for emergencies, we build on a legacy of resilience and foresight passed down through generations.
Michelle C. Herting is a CPA, accredited in business valuations, and an accredited estate planner specializing in succession planning and estate, gift, and trust taxes.
