Women’s Wealth – Unfortunately, due to certain gender gaps, women are often behind men, financially.
The Effect of the Pandemic
During the past three years, things changed for everyone, and in different ways. When it came to finances, this period disproportionately affected women in the work force, worsening the gender wealth gap.
During the first major wave of the pandemic in early 2020 a multitude of schools and day centres were forced to close. In many cases, women were the ones left to undertake childcare duties, causing the labour participation rate for women to rise from 3.3% to 54.6%.
The Gender Gap in Financial Health report found that women shoulder an unequal amount of caregiving responsibilities which was accelerated during the pandemic. This resulted in a higher rate of income loss as they reduce hours or take time out of the workforce to fulfil these responsibilities.
Life has since returned to a rather different level of normalcy post-pandemic, however there are still not as many women in the workforce as there were pre-pandemic.
A huge amount of the population took a hit financially during the pandemic, with many struggling to stay afloat. For women, having taken time out of the workplace their savings have consequently suffered. A 2022 survey found that almost 80% of women say these events have negatively impacted their retirement plans. Time out of work has also pushed them further behind financially.
Women typically dominate the educational services, leisure and hospitality, health care, and social assistance industries. However, they can be unrepresented in managerial roles where there continues to be pay gaps between men and women who work the same roles.
Women and men alike have a different outlook on finances. According to survey from January 2023, even in early life as teenagers, girls are more likely to feel stress than boys are when it comes to money. A theme that continues into adulthood as “stress” is the word most used by women to describe how they feel about money while men most often use the word “hopeful.”
The Gender Pay Gap
In 2023, there continues to be a gender pay gap, and a significant one at that. In the US, according to the Department of Labour, women who work full time are on average only paid 83.7% as much as men. This means that women must work 15 months to earn the same as men do in 12 months. An astounding example that clearly shows why there is a wealth gap between men and women.
These lower incomes make it more difficult for women to save and plan for retirement. Considering women outlive men by an average of four years it is essential that women be armed with retirement resources as statistically speaking they may well need more wealth.
Closing the Wealth Gap
Experts claim not all hope is lost and that savings rates are picking up as the majority of women have taken steps to strengthen their finances or at least plan to in the coming months. This happens by adjusting spending habits, paying off debt and improving credit scores, among other things.
Research also shows that women want to support and be supported by other women when it comes to their finances, and that they are now able to engage in conversations about financial planning.
How Can Women Plan to Build Wealth?
Act! It sounds an obvious answer to give, but putting a financial plan in place will help you get to where you want to be.
Plan for the Unforeseen
Every now and then life has its challenges and unexpected bumps in the road. Life insurance can help if you are suddenly taken ill, or inheritance planning can provide protection and peace of mind for your loved ones if anything were to happen to you.
Start as soon as you can and then leave those savings alone. Unexpected circumstances can make you want to dip into that pot, but it can be difficult to get back to where you were before. Look to other options for some extra cash rather than using your savings fund as a first resort. Boost savings before taking a break from jobs to keep you going without taking too much from your life savings.
Generally speaking, women tend to be more on the cautious side, as they tend to have less wealth – therefore, it is only natural to want to protect what you have. By realistically assessing what you have you can find a balance between taking a risk and staying safe.
At Private Client Consultancy, our Wealth Managers can assess your situation and present the best options available to you. Whether that be for financial protection, retirement planning or starting an investment portfolio. Speak with one of our Wealth Managers now for information tailored to your own personal circumstances.