The Power of the Prenup

This article originally in the New York Times on March 21, 2013. 

by Celeste Watkins-Hayes

While big money payouts in divorce and breakout settlements make news for the exceptionally wealthy, all women need a financial safety net, or at least a set of resources to buffer against the harsher circumstances of life. For the vast majority of women, their safety net does not come in the form of a prenuptial agreement. Although more than one-third of Americans agree that prenups make smart financial sense, and money experts like Suze Orman and Robin Young recommend them, fewer than 5 percent of couples actually have one.

This suggests that we need to think more broadly about financial protection for women -- before, during, after and in the absence of -- partner relationships. Single or committed, women tend to have significantly weaker safety nets than men because of large and persistent wealth gaps.

According to a study done by sociologist Mariko Chang, women have on average only 36 cents for every dollar of wealth generated by men. This is largely because women are more likely to have primary custody of children, making it more difficult to stay out of debt, sustain assets and hold onto cash for making investments. They are also less likely to have jobs that grow and protect their assets through fringe benefits like generous health care coverage and stock options. For black and Hispanic women in this study, the gender wealth gap is further compounded by race.

There is no doubt that women need to be savvy about protecting their assets and ensuring that their contributions and hard work are valued, even in marriage. But prenups can only protect a certain demographic. What is needed is a comprehensive strengthening of all women’s safety nets through access to jobs that build wealth, increased financial literacy and a better infrastructure for raising children with or without a significant other.

-Celeste Watkins-Hayes is an associate professor of sociology and African-American studies, as well as the chairwoman of the African-American Studies Department at Northwestern University.