The Single Ladies’ Guide to Wealth: How Being Unattached Grows Your Money
Being single seems like it would be an impediment to advancing in your career or to obtaining wealth. For instance, a significant other can halve your chores and expenses and provide advice and support – clear benefits. For me though, being single helped advance my career. It turns out that my experience is typical for highly educated women professionals. Here’s a single lady’s guide to wealth and how being unattached helps to grow your money.
[Note: in this article I’m going to be talking about heterosexual couples because I’m heterosexual and because there’s more data on these types of couples in the workplace. ]
A. Single Rich Women Avoid These Pitfalls That Hurt a Woman’s Career
In Opting Back In: What Really Happens When Mothers Go Back to Work, the authors say “the paradox of privilege”occurs when high-achieving women, say Harvard Law School graduates, marry high-achieving men, say their Harvard classmates, and then opt out of their careers as a result.
The story goes that both husband and wife start out in prestigious, lucrative careers, but then the woman’s career falters due to any number of factors including raising children, unequal housework burdens, burnout, emotional labor, sexism, desire for flexible work arrangements, etc. And because she married someone who makes a sufficient salary to support the whole family, she has the option to take a break from her job, and she does. She either continues to opt out of the workforce or finds it difficult to re-join it later at the level of work she desires.
Women without children, they’re less likely to drop out of the workforce because they don’t have an “excuse.” I remember a single male attorney telling me that he would love to reduce his hours but didn’t see any reason to do so.
Similarly, when I was thinking of quitting my job, I thought I needed to have a good reason. Having a family at home that I was neglecting? That would have been a good reason. Being single without kids? Well, that’s no reason at all.
Without a family, I felt like I couldn’t justify working fewer hours. So I continued to work at a job that required a lot of hours, and continued advance in my career.
In a couple, the man’s job takes precedence even when the women are highly accomplished. In a survey of Harvard Business School graduates, between 50-60% of male graduates were very or “extremely satisfied” with their experiences of meaningful work, professional accomplishments, opportunities for career growth, and compatibility of work and personal life, compared with 40-50% of women grads. Many of these couples consisted of husband and wife Harvard Business School graduates. The study found:
The vast majority of women anticipated that their careers would rank equally with their partners’. Many of them were disappointed.
Financial teamwork sounds like a good thing – and it is, unless it serves as a crutch to keep team members from learning skills needed to operate independently. One study finds that people generally develop expertise on a “need to know” basis. They learn what they think they need to know, when they think they need to know it. Further, that “need to know” is at least partly determined by one’s social relationships.
If you’re married, you have the option of relying on your spouse to take over your finances. Many women take this option. One study found that only 27% of married women manage financial and retirement planning. As a result, only 14% of widows were making financial decisions by themselves when they lost their spouse. Financial illiteracy is a huge problem for women.
So what does this lack of financial knowledge mean for a married woman’s career? Well, if you’re a woman planning out her own financial and retirement goals, you may stay in your job longer in order to reach them. Part of the reason, if not the main reason, people have jobs is to earn money. You get a confidence boost seeing the effects of growing your 401k or brokerage accounts. You see how your salary is contributing to your joint net worth. If women are left out of these calculations, they might not seek to raise their salaries, continue working, and/or negotiate their compensation packages. Also, if they find themselves single, they have a steep educational burden to overcome in a short time.
You’re more likely to become a better cook when you have to cook for yourself. You run faster when you’re being chased. And when you’re forced to put in the reps, it’s hard not to get better. But coupling means you might not have to put in your own financial reps.
Being coupled has certain financial advantages and disadvantages.
There is still a marriage penalty built into the tax code, even after the 2018 tax law changes. If two people with similar high or low incomes file their taxes jointly, they would have to pay more in taxes than if they were filing individual returns. If the couple were more lopsided in their finances – the traditional husband breadwinner and stay-at-home wife scenario, for instance – there would be a marriage bonus. This further encourages the wife to take a lower-paying job.
This provides another paradox of privilege – the option to opt out. And if one person in a couple is going to quit or downgrade their job, it’s typically the woman.
Finally, there are a lot of other costs that can come with being a couple. For instance, when I’m in a couple, I eat much fancier meals. I put some extra effort into how I look on a daily basis. I would have to have nicer furniture, a nicer apartment and I definitely would have to have a TV and a premium sports package.
A Pew study finds that 23% of people judge men for their financial success while only 8% judge women that way. The benefit of being single woman was that I didn’t have to impress anyone with my lifestyle. In fact, it encouraged me not to flaunt my wealth to potential suitors.
There are so many other ways to save from being single. For instance, I can crash on my friend’s couch when I visit a city, instead of splitting a hotel room. I don’t have to visit his family or go to his friend’s weddings.
y mom, when she was single, would only eat rice and soy sauce. Not falling too far from the tree, left to my own devices, I eat eggs and rice with soy sauce on the regular. This wouldn’t fly with someone else in the picture.
This is not to say that these costs would translate to the savings of shared housing. But there’s often a bit of a disconnect between what people expect in their relationships and what could actually happen. I have a very simple lifestyle because I live by myself and I have very simple desires.
When individuals affiliate with those of higher status than themselves, they elevate their own status. And when people affiliate with others in lower status positions than themselves, they may experience status anxiety or the fear of losing status, which can be both economically and personally threatening.
Married women can get prestige and social from their spouse’s job. When you’re married, you are a unit and successes and losses are shared. This is why women’s life satisfaction doesn’t recover even two years after her husband loses his job (although a husband recovers fully after a year if a wife loses her job). High-achieving women often seek prestige, but if they can get the social status from their husbands, then it makes it less likely they’ll stay at their jobs.
I didn’t think being an attorney would really affect me. But people treat you with a bit more respect. And I don’t think it affected my ego too much, but it’s hard not to have your self esteem impacted in a positive way. You learn to expect people to treat you better and you treat yourself better. And it makes it a little more likely to stay in a profession if you’re facing these positive effects, and would lose them if you left your job.
You’re all going to hit me with stories like “My husband LOVES that I earn more” or “My wife earns more than me and I’m NOTHING but proud of her.” And I’m happy for you.
The truth is, it’s hard to be a trailblazer. Women earn more than men in less than a quarter of couples; that means men earn more than women in three-quarters of couples – the vast majority. And it’s not that society wants to change this. According to a Pew research study, 71% of adults say it is very important for a man to be able to support a family financially to be a good husband or partner; as compared to only 32% for a woman.
Women are told they have “married down,” and face higher risks of husbands’ aggression, and divorce. Thus, when wives earn more than husbands, in society both parties try to minimize the gap. Women who outearned their husbands also compensated for the gap by seeking jobs beneath their potential and by doing significantly more housework and child care than their husbands — perhaps to make their husbands feel less threatened.
Further, there’s a difference in attitudes within the couple when the woman earns more. For instance, generally when a man is the breadwinner, all the money is considered jointly owned. When a woman is the breadwinner, the money is considered hers. Many women breadwinners parcel out closely-watched allowances to their husbands, further emasculating them.
If a man sees himself as the provider, there are plenty of women who want to be provided for. It would be easy for a man to find a woman who made less than him. In a way, I am happy that I learned while I was single that I would likely make more than my spouse so I could find someone who could cope with earning less.
And though this seems like a reason that my legal career may have helped with my relationships, it’s a virtuous cycle. Because I didn’t choose a partner that would hinder my career, I got to stay in my career longer.
What I’ve written about thus far are the pitfalls when a relationship flourishes. Of course, the dissolution of a relationship also has problems. Everyone knows that half of all U.S. marriages end in divorce. Divorce can be catastrophic for one’s finances, but also is a time-suck and an excruciating emotional experience. If you’re cohabiting and breakup, you have to find a place to move.
The other problem with breaking up is that it’s the culmination of all the previous problems together. Because the woman has been acting as a financial team member, she doesn’t know how to manage her finances, she may have quit her job to support her husband. Consequently, she is in a far worse position post-divorce than her husband: half of widows experience a household income decline of 50% or more after the death of a spouse
I’ve had a fair number of breakups in my time, but none were nearly as catastrophic as a divorce and none ever required me to move out. I’m of an age when my peers are getting divorced or have been divorced. I know that if I had had such an event, it would have seriously derailed my career plans while I dealt with my personal life.
Compared to married people, single people have more friends and bigger social networks. Single people socialize more and do more to maintain their friendships. Married people tend to be homebodies and let their friendships fade. Typically when a new lover enters the picture, one family member and one friend are pushed out of the person’s social circle in order to accommodate the newbie, reducing one’s inner circle of friends from an average of 5 to 4 (where the romantic partner makes up one of the displaced people).
And then there’s the age-old question of whether men or women can be friends. Well for married people, it’s much less likely that you’re going to take the chance. But if you’re single, opposite-sex friendships are much less threatening.
Sometimes I am a little jealous that as a single woman I don’t have a husband to call for problems. But if you have a network of friends, it’s more likely that someone will be free. With a network that has their own network, you have a wide variety of people who can be on the lookout for job and social opportunities for you. Friendships help you understand other perspectives and offer different relationship models and help you relieve some of the burden of emotional connection off your spouse.
Ideally you would have both a partner and a community, but in practice, having a partner crowds out the community. I feel fortunate that I was “forced” to have friends because I was single. In my younger years, I certainly neglected friendships when I was dating someone. But given the decades of work I’ve spent building and maintaining friendships, and what I know about the benefits of these relationships, I’m much more likely to have both in the future.
I’m not advocating marriage or singleness. Getting married isn’t a sure pathway to a great career and neither is being single.
It’s easy to find articles about saving money if you’re a couple and it often seems like this is the only path to financial greatness. But I don’t believe singledom is an obviously worse position from which to achieve financial stability. Rather there are many benefits to being a single woman, including potentially more money. Too often we see the positives of a relationship, without seeing all the other tradeoffs.
Of course, if there’s a lesson to any of this, it’s that we need to make careers and relationships easier for working women. Until then, working women will just have to ensure that they don’t let these typical pitfalls derail their careers.