Women and Money: Conquering Financial Challenges

Hey Ladies! It is International Women’s Day! Today, we celebrate the vast achievements of women and promote the acceleration of women’s equality in all realms of life: social, economic, political, cultural, and here at FSG, financial!

It is no secret that women traditionally had little to do with family finances or retirement planning. Over time, women have come a long way, especially as their presence in the workforce expanded and income increased. But even with some significant advances, women still face unique gender-specific challenges when it comes to finances:

Women make less than men

The well-known “gender pay gap” undoubtedly has decreased over time. Women have made huge strides over recent years in narrowing this gap and it is considered a huge accomplishment for women’s financial freedom. However, the gender pay gap is still incredibly significant. Recent data from the U.S. Census Bureau indicates a 30% pay gap in workers age 35-44, and that increased with age. The U.S. Bureau of Labor Statistics 2020 data showed women's annual earnings were 82.3% of men's, and that number only widened with age or for minorities. Education is not making an impact, as many studies show women with postgraduate degrees are STILL earning less than white men in the same position that only hold a bachelor's degree.

Women live longer

The average lifespan is about 5 years longer for a woman than a man in the U.S. In other countries, it is even longer. This poses some unique challenges for women to face. First, retirement will most likely cost more money. On average, there are going to be more years of retirement to fund. This doesn't just include basic living expenses. If you live longer, you will be paying more over time for healthcare and out of pocket medical expenses, which can add up drastically in elderly years. Also, since many husbands precede their wives in death, women are far more likely to live alone later in life, and therefore need assistance. The AARP estimates that women are 50% more likely to enter a nursing home and have a whole host of other increased long term care expenses.

Women are more likely to bring in less money and spend more on others

Women tend to spend less time in the workforce when compared to men. This has to do with the caregiving roles that many women take over time. Whether it is tending to your own children, or taking care of an elderly relative, females are much more likely to take time out of the workforce to handle family responsibilities. This means there is less income coming in and, most noteworthy here, less money to save. This can also be coupled with extra spending, as supporting children and often elderly relatives requires money. Clearly, this can be a double-edged sword that can destroy a woman’s financial security if she is not careful.

Special COVID challenges

COVID definitely changed the world in an unprecedented number of ways for all. But, women undeniably have taken significant financial blows during this time. The number of women who either left the workforce or took drastic pay cuts as a result of school closings, quarantines, and lack of childcare options is undeniably catastrophic. Many women are left with no other choice besides extending retirement dates or shifting their picture drastically to match their financial situation.

What can we do to overcome these hurdles, ladies? Although not all of these things are in our control, there are a few key takeaways. Confidence and involvement are key, and it all begins with financial literacy. Educate yourself on financial topics, to the point at which you are confident in taking an active seat in your family’s budgeting and retirement planning. There is an infinite amount of information out there to assist you. Read through female finance blogs such as Clever Girl Finance (www.clevergirlfinance.com/blog) and The Women’s Institute for Financial Education (www.WIFE.org). There are numerous podcasts out there as well if you are more of a listener. Financial Feminist and So Money are a couple of great podcasts to start with.

It is also key for you to start saving and investing early to accumulate more funds for retirement. Attempt to save more during the years you are more actively working, and keep in mind, things come up. It is completely possible that at some point during your career you will be out of the workforce, even if you think otherwise. Life is unpredictable, and preparing for the unknown is important.

Last, ladies…. It is NOT easy to navigate the financial waters. Luckily, there are financial advisors to help! Consider consulting an advisor if you need assistance or clarification on any financial matters. Advisors can help establish your financial goals and develop a plan to keep you on track to achieve them. Feel free to reach out to us here at FSG if we can help you!

Best in planning!

This commentary on this website reflects the personal opinions, viewpoints, and analyses of the Financial Strategies Group, Inc employees providing such comments, and should not be regarded as a description of advisory services provided by Financial Strategies Group, Inc or performance returns of any Financial Strategies Group, Inc Investments client. The views reflected in the commentary are subject to change at any time without notice. Nothing on this website constitutes investment advice, performance data, or any recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Financial Strategies Group, Inc manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Investments in securities involve the risk of loss. Past performance is no guarantee of future results.

Written by: Kristin Prieur