Most people tend to think that when it comes to managing money and building wealth, men and women face the same challenges. However, this just isn’t true – and there’s plenty of research out there to prove it.
Take the results of the Boston Consulting Group Global Inquiry into Women and Consumerism. Over 12,000 women from across the world shared their opinions on the financial services industry.
The bottom line?
Women are unhappy with the advice they receive. In fact, the Group’s report states that they are “more dissatisfied with the financial services industry than any other that affects their daily lives.”
Given that the industry is filled with products and services targeted at men, perhaps this shouldn’t come as a surprise.
Why Do Women Have Different Financial Needs From Men?
So why exactly do women have a different set of financial needs?
1. The Pay Gap
Quite simply, women have less money available to save, spend, and invest compared to men. As a society, we have yet to achieve true equality when it comes to pay.
On average, women earn just 82 pence for every pound earned by a man in the same job and for the same work.
The BBC recently came under fire for paying women significantly less than men, from its entry-level staff to highest-earning performers.
2. Women Have a Different Mind-set When It Comes To Risk
We are also more likely to aspire towards security and flexibility when compared to men, who tend to build wealth for its own sake.
In other words, we are in most cases, motivated by the drive to provide and care for others, whereas men are primarily driven by status and power.
3. Women Are Society’s Primary Caregivers
In a typical family, women are the ones expected to take time out from their careers to look after children, elderly relatives, and even their partners.
Although most working women are entitled to receive 90% of their usual salary each week whilst on maternity leave, this allowance drops to just £140.98 per week after six weeks.
Taking time off work to have children reduces the amount of money women have available to deposit into savings and investment accounts and pension schemes, which in turn has a knock-on effect on their long-term financial security.
4. Pension Discrimination
Statistics from the Trades Union Congress show that, on average, women have £7,500 in defined contribution scheme savings, whereas men have an average of £14,500.
Pension discrimination is a contributing factor – it is still legal for employers to contribute less to a woman’s occupational pension, on the basis that women tend to live longer than men.
This of course lowers a woman’s total amount of capital at retirement.
Related: The Pension Penalty for Motherhood
5. Women Live Longer Than Men
As of 2017, the Office of National Statistics (ONS) puts UK life expectancy at 79.1 years for men and 82.8 for women.
This means we need more money in their twilight years. We need to give more thought to our financial security and making sure that we will have enough money for healthcare or supported living.
6. Divorce and Separation Have Different Implications for Women
According to a report by the Chartered Insurance Institute (CII), the average woman does significantly worse post-divorce than her ex-husband.
The typical divorced woman has less than 33% of the pension wealth than that held by an average man who has split from a partner.
Obviously, not all women give up work to care for children, and the majority of women are at least somewhat involved in joint financial decisions.
However, all too often a woman will take a prolonged career break to fulfil her caregiving responsibilities. She might give up work entirely, supporting her husband’s career and basing her life around their children. Her husband might well take the lead on “sorting out the money.”
Unfortunately, if the relationship breaks down, she stands to lose not only half of their joint assets but to be thrown back into the working world – possibly with little experience and few relevant qualifications.
This type of situation can place a woman’s entire financial future in jeopardy.
7. Women Aren’t Well-Represented in The Finance Industry
Only 20% of senior positions in the finance industry are held by women. Although this is slowly changing, there is still a long way to go.
In the meantime, women are being advised and serviced by an industry that is both run by and targeted towards, men.
Therefore, women need to learn how to navigate the products and services on offer, bearing in mind that they have not been designed with their needs in mind.
Many women report that they find those working in the financial sector to be rather patronising, which does not encourage them to take charge of their money.
8. Poverty in Retirement Is a Female Issue
We should be aware that our gender puts us at increased risk of poverty in retirement, and that it’s important to start saving as early as possible.
Worryingly, only 37% of all women contribute to personal pensions. The state pension only amounts to £8,297 per year, which is hardly enough for most people to live on.
This means that a personal pension is essential.
To make matters worse, because an individual needs to have clocked up 35 years of National Insurance contributions to be eligible for the full rate – which usually equates to 30 years of employment – only around 50% of women will receive this amount.
9. Around The House, A Woman’s Work Is Never Done
Women carry out more housework than their spouses, and the home is still considered a female domain.
Even though men are gradually undertaking more chores around the home, the disparity is still significant.
Once a woman has been to work, cleaned the home, cared for the children, run errands, and spent time with her family, she often has little time or motivation to sit down and think about pensions, savings, and investments.
The ONS states that women undertake 26 hours of unpaid work around the home per week, compared with 16 hours each week for men.
10. Motherhood Comes at a Cost
Then there is the motherhood penalty – the drop in earnings a woman suffers as the result of having had children.
Overall, by the time they reach the age of 42, mothers who work full-time earn 11% less than childless women of the same age.
This may be explained by a number of factors, including time taken out of the workplace and discrimination at the hands of employers.
Some women report that they are not taken seriously at work simply because they took some time off to give birth and take care of their children.
Ten per cent even have to give up their jobs when becoming pregnant or going on maternity leave as the result of discrimination or bullying.
On the other hand, when a man becomes a father, his income is likely to get a boost! On average, a man with a full-time job and a child will earn 21% more than his childless male colleagues.
So what does all this mean?
- There is definitely a need for services that take a tailored approach to meeting women’s specific financial requirements.
- Financial advisors should take into account the average woman’s career path, lifestyle, and mind-set.
- Women don’t need to be patronised when it comes to finances – but, just like men, we do need help in understanding how we can plan for the future and make our money work for us.
Personally, I would like to work with a financial adviser or company who understands my needs and will help me achieve my financial goals without talking down to me just because I am a woman.
Over to You
How about you? Do women have different financial needs from men? And which of these issues most resonates with you? We love to hear from you in the comments below!
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