Women need to get smarter about their money says Nicole Pederson Mckinnon editor of Smart Investor Magazine.

Should couple share financial responsibility?

According to the survey, 9% of women reported feeling “overwhelming financial stress,” compared to just 3% of men. And at the opposite end of the spectrum, 17% of men claim to be living a carefree life with no financial stress at all, compared to 10% of women.

The report notes, however, that just because respondents checked off the “no financial stress” box doesn’t mean they’re not in financial danger. A Financial Wellness Assessment of survey respondents found that, in some cases, these stress-free respondents actually were engaging in risky behavior such as failing to save enough for retirement or not adequately protecting their wealth. In essense, some of the “no financial stress” folks were oblivious to their overall situations, and should be more stressed than they are.

On the family front, people with children average substantially higher financial stress levels, as one would expect, given that they face additional costs that can range from braces to college tuition. In the report, 21% of people surveyed with children said they had a high financial stress level, compared with 12% for those without children.

Parents, however, can take some comfort in knowing that when it comes to feelings of overwhelming financial stress, people without children aren’t too far behind them. The survey found 6% of parents said they were experiencing overwhelming financial stress, while 5% of nonparents said they had those feelings.

More Worrying, Less Fixing

Interestingly, while women tend to worry more than men when it comes to finances, a 2007 study found they’re apt to do less than men to resolve their financial concerns, like establishing a financial plan of action.

In addition to gender, age and income play a significant role in the worrywart syndrome.

According to the report, 26% of men and women surveyed between the ages of 30 to 44 years old faced high or overwhelming financial stress, which mirrors Americans’ prime child raising years. Meanwhile, the percentage of people in the high or overwhelming worry group shrinks to only 12% once they reach the 55- to 64-year-old range, at or near retirement age.

As for income levels, 34% of women and men who are earning between $35,000 to $59,999 say their financial stress level is high to overwhelming. And, as one would expect, it dramatically drops off as people earn more money. Only 9% of survey participants earning $200,000 or more say they face high to overwhelming financial stress.

Before you turn over your down payment on an investment property or write a check for $2,000 in stocks, it’s a good idea to know what exactly you’re investing for. It surprises me how many people, many of whom have already purchased investments, don’t understand this one basic concept of investing. If you learn this single fundamental, you’ll be ahead of the game.

Two Things Count
With any investment, there are generally two things you invest for: capital gains or cash flow.

Capital gains is the profit you make on the sale of an investment. For example, you buy a house for $100,000. You put a little money into fixing up the property. You then sell the property for $150,000. Your profit on that sale is called capital gains. The same applies to stocks. You purchase shares of a stock at $25 per share. The stock price goes to $35 per share. Your profit when you sell is your capital gains. A capital gain is only realized when you actually sell the investment. Of course, if you sell the investment and lose money, you have a capital loss.

Cash flow is money that comes in on a regular basis from an investment you hold on to. Let’s go back to that $100,000 house. Instead of fixing it up and selling it, you fix it up and rent it out for $1,000 per month. Each month you collect your rent and pay the expenses, such as repairs, taxes and insurance, and the mortgage. If you’ve managed the property well, at the end of each month you’ll have a profit–or positive cash flow–that goes into your pocket. Some stocks deliver cash flow in the form of dividends. Or maybe you’ve invested in a friend’s startup and she agrees to pay you 12 percent per year on the money you invested with her. That’s also cash flow.

A simple way to remember the two concepts and the difference between them is a gain is a one-time event or sale; cash flow is continual, or flowing.

Which Strategy Is Best?
Why is knowing the difference important? It depends on what your investment goals and interests are. One strategy isn’t better than the other, just different.

In 1989 when I bought my first rental property, my husband, Robert, and I had a goal: to be financially free. Our definition of financial freedom was having more money coming in every month from our investments than was going out each month for living expenses. Not rocket science. Yet by defining that goal, our focus went immediately to cash flow.

To have money flow in every month, our plan was to buy, hold and rent our properties. We accomplished our goal of financial freedom in 1994. We had $10,000 coming in each month from our apartment buildings and a few single-family homes. The beauty of this formula was that our living expenses were only $3,000 per month. At that point, we were free. We no longer had to work for money because our money was working for us. That, to me, is the beauty of cash flow: It’s not about the amount of money you accumulate, it’s about the freedom it brings you.

That certainly doesn’t mean that investing for capital gains doesn’t have merit. It’s just not my primary strategy. Ideally, I look for investments that have cash flow and future capital gains, also known as appreciation. I want every investment I make to appreciate over time. The difference is I don’t invest with just one strategy, hoping and praying that the property appreciates quickly so I can sell it and make a profit.

TPOF caught up with Rai, 37, at the Cannes Film Festival on Friday to discuss money. After some gentle encouragement, Rai revealed that the most important financial advice she has learned is to adapt her expectations for each project, from low-budget to blockbuster. “You have to take each film for what it is, rather than having a rule book,” she said. “That’s what we actors do.”

Rai, on the Croisette to promote her new movie, Heroine, operates in a different economic stratosphere than most of us. Her fortune, already considerable when she was a single woman, is even greater now that she’s married to Bollywood hero Abhishek Bachchan, from India’s premier acting family. Still, TPOF couldn’t resist asking whether she was a saver or a splurger.

“I’m realistic and I’m practical,” Rai replied.

Maybe her middle-class upbringing is still an influence. Rai had no inkling that she wanted to be part of show business as a child. She was on track to receive an architectural degree until she entered the Miss World Pageant on a whim at age 21 and won. Film and modeling offers poured in, and she rapidly rose to become the most recognizable face of Indian cinema. She has appeared in 44 films, according to IMDB. Rai is best known stateside as the face of L’Oreal cosmetics and for her role in 2009′s The Pink Panther 2 and 2004′s Bride and Prejudice. In Heroine, she will play close to type as an Indian cinema icon who endures ups and downs. But she insists the movie is not autobiographical.

While the fun and glitz of Cannes help create a “cinema village” built on the love of movies, she said, she never forgets why she’s here. “This an industry.”

Apparently, though, when women make the momentous move from self-help to seeking professional advice about investing and retirement, things go rapidly downhill. A recent study by the Boston Consulting Group revealed that women perceived themselves as receiving wealth management services at a level of quality that is inferior to that received by their male counterparts.

According to the study, women are the key decision-makers when it comes to 27% of the wealth worldwide: that’s $20 trillion! But despite the massive chunk of power they wield, 55% of the women surveyed in the study said they felt their wealth manager could do a better job of advising them. Almost a quarter of the respondents said private banks needed “significant improvement” in the services they offer to women.

“The dissatisfaction stems from the unshakable perception that men get more attention, better advice, and sometimes even better terms and deals,” according to study co-author Peter Damisch. “We heard this sense of subordination time and time again in our interviews.”

This perceived disparity in service arose from several key disconnects in the relationships and communications between women and their financial advisers. Manisha Thakor, Chartered Financial Analyst and women’s financial literacy advocate, offers some steps savvy female investors can take to avoid being under-served by their wealth managers and investment advisers:

1. Find your adviser and get your financial education from women-run resources.

The financial services industry is dominated by males and therefore the “DNA is structured around the male experience,” Thakor explains, adding that she sees many firms making an effort to change this. Most financial advisers are men, who may not inherently understand the whole-life nature of the average woman’s financial plans and needs. They also may have very different communication styles than their women clients.

Thakor recommends women use women-created resources like LearnVest and DailyWorth to educate themselves in order to avoid the intimidation factor when talking about investment products with their advisers. She also encourages women to consult Garrett Planning Network, founded by Certified Financial Planner Sheryl Garrett, to locate a local certified financial planner who works on an hourly-fee-only basis. Taking these steps, Thakor explains, may alleviate the concern expressed by many women in the BCG study that they were not being taken seriously or talked to on the same level as male clients by their financial advisers.

2. Expressly state your ideal career trajectory, then ask how you should alter your investment plans accordingly.

In the BCG study, women stated that their investment advisers fundamentally misunderstood what was actually important to them, and recommended a too-narrow range of inappropriate investment vehicles as a result. Many said their advisers assumed they had a lower risk tolerance than they actually did, or that their advisers focused on short-term results and disregarded their long-term goals, which often included time out to care for a child or parent.

Thakor offers women a script of sorts to remedy this communication disconnect. “Go in and say: “I want to be a mom and I may take X amount of time out of the work force,” she advises. Then ask, “How do we adjust how much I need to save and how I should invest to compensate for this?”

1.) Start saving as early as possible. We can never be too young to start saving for our future. Mom started when she was 18. I, on the other hand, started at 17. Two things can happen when we start early: We can have a bigger retirement fund or we can retire earlier. Both are definitely advantageous. Whenever possible, I always tell the youth to start saving and investing as early as possible.

2.) Invest wisely. Mom’s portfolio consisted of real and liquid assets. She bought two pieces of property in the late 1990s and flipped them a decade later, earning her substantial profits. She invested in two pension plans from a defunct preneed company and received the maturity benefit just months before the company ceased operations.

She was able to take advantage of the high interest rates being offered during the 1990s and has had several double-your-money placements. She was able to ride the bull run of this century and went offshore to take advantage of the global growth.

Knowing that illnesses may eat into her savings, she bought a health-care plan and several life-insurance policies. She managed to maintain a balanced portfolio at any given time.

3.) Practice frugality at all times. I learned frugality by example. She not only stressed it, she lived it! She has this uncanny memory—she could remember how much we spent for household expenses. This resulted in a much-disciplined budget management. She doesn’t jot everything down but she knows when to cut down on unnecessary costs.

She once told me that she never regretted being very frugal throughout her life. She practiced delayed gratification and this practice made her appreciate and enjoy her wealth now.

4.) Failure must not stop you. Mom lost her entire life savings when the business she and my dad put up failed. But she was undeterred. It wasn’t the best of times but they managed to pull through. The failure just motivated her even more to build a better future for her and her family.

5.) Get a health insurance. As I mentioned, this is one of my mom’s proudest investments. Mom got herself and my dad health insurance early. Thus, they were able to maximize the benefit limits when the needs presented themselves—ovarian cyst, stroke and kidney stones. It also included all the blood tests and medical examinations that can reach several tens of thousands a year. Not having one would surely have put a big dent in her savings.

My mother is not a business-minded person. She never considered the small tutorial place she runs a business. Nothing glamorous in it but being self-employed managed to make her financially independent. I am proud of her for all her financial achievements. It does put quite a pressure on me to emulate what she has accomplished.

In time, I wish to impart money-management lessons to my children as my mom did to me. I hope to be a financial success like my mom someday; it would be the greatest repayment I can think of.