As the gender pay gap widens and the cost of living continues to shoot up, it is important now more than ever for women to earn their own money, be financially stable and literate. This not only helps them build a secure financial future for themselves and their families, but also for the future generations
Compared to the 1900s when life expectancy in the U.S. was 47 years, in 2021 it was reported to have risen to just over 76. When we live longer, we spend more of our lives caring for ourselves and others and all of this can negatively affect our financial situation. With the high cost of living and inflation today, women require more financial security as compared to their male partners.
“No matter how much women prefer to lean, to be protected and supported, nor how much men prefer to have them do so, they must make the voyage of life alone, and for safety in an emergency they must know something of the laws of navigation.” Elizabeth Cady Stanton, 1892
These words were uttered by one of America’s most prominent women’s rights leaders almost 130 years ago. Yet they are just as appropriate in 2023 as they were during the late 19th century. Lack of financial tools and knowledge can put women at a substantial disadvantage in navigating both everyday financial decisions and occasional big ones.
However, all is not lost as there are many resources that women can utilize to reach their financial goals. One key step that women can take to improve their financial position is working with a financial advisor. By doing so, women can gain the knowledge and skills in order to gain more financial independence. To get in touch with one of our certified advisors, schedule an appointment with Denise here.
The contents of this article are for educational purposes only. They are not intended to be a source of professional financial advice. You will find experts on financial planning, financial management, and real estate here. More on disclaimers here.
According to a Pew Research Center analysis of median hourly earnings of both full and part time workers, the gender gap in pay has remained relatively stable in the U.S. over the past 20 years or so. In 2022, women earned an average of 82% of what men earned. These numbers haven't changed much from 2002, when women earned 80% as much as men.
Statistics also tell us that it is only a matter of time before most women experience being on their own financially. That is because some will never get married, some will see their marriages end in divorce and many may end up outliving their husbands.
Women have specific financial needs for the following reasons:
Though a 2 percent pay gap does not sound like a big deal, it is. Invested at a 7 percent return over a career, it can add up to almost $200,000.
When COVID-19 hit, it exacerbated gender pay gaps, as women were more likely to work in affected industries and to care for children who were remote-schooling. As we have seen, people’s work lives and home lives are intertwined.
A key takeaway from the NGPF webinar was the need to teach women how to negotiate a starting salary and promote themselves.
Otherwise, they will be forever behind because future percentage raises (e.g., 4 percent) will be based on a lower initial starting point. The following three tips were suggested for women to overcome pay gaps:
There are several money and financial challenges that women face which can create a pay gap. These challenges include:
Despite efforts to eliminate gender discrimination, women still face discrimination in the workplace, which can result in lower salaries and fewer opportunities for career advancement.
Women are often paid less than men for the same job. According to data from the U.S. Census Bureau, women earn 82 cents for every dollar earned by men.
Women are less likely to negotiate their salaries and benefits than men, which can result in them being offered lower salaries and fewer benefits.
Women are more likely to take time off from work to care for children or other family members, which can result in them earning less over their lifetimes.
Limited access to financial education
Women may not have access to the same financial education and resources as men, which can result in them being less knowledgeable about managing their finances and investing.
Limited Access to Funding
Women entrepreneurs may face difficulty accessing funding for their businesses due to gender bias in the venture capital industry.
Addressing these challenges requires a combination of policy changes, employer initiatives, and individual action. Employers can take steps to eliminate gender bias and ensure pay equity, while individuals can work to improve their negotiation skills and financial literacy. Public policy can also play a role in addressing these issues by providing support for affordable child care and family leave policies, promoting equal pay laws, and supporting women-owned businesses.
It is important for women to be financially stable for several reasons:
Financial stability gives women the independence to make their own choices and live life on their own terms, without being dependent on anyone else. This can help them reach their goals faster and attain financial independence.
Women who are financially stable can pursue career opportunities without worrying about the financial consequences of job changes or taking time off for family responsibilities.
Women tend to live longer than men, so it's essential that they have retirement savings that will enable them to be financially stable in retirement to support themselves for a longer period.
Women often play a critical role in providing financial support for their families. Being financially stable can help women provide for their families' needs and ensure their children's future.
Financial stability can provide the foundation for starting a business or pursuing entrepreneurial ventures, which can lead to greater financial success and independence.
Saving and investing are great places to start your financial journey, but more women need to have a financial strategy that will enable them to attain financial freedom. Here are some steps that can help in that journey.
Discuss salaries, jobs, and money with co-workers in a casual, general way. As you get more comfortable talking about finances, consider asking peers, especially males, what they make, even if it makes you uncomfortable.
Avoid sounding too direct and off-putting by asking people to divulge their exact salary amount. Instead, ask questions like “Do you make over $X?” or “Do you make under $Y?”
Develop and rehearse a “script” that focuses on your education, skills, and recent accomplishments. Emphasize how you can add value to an employer and help it to accomplish its mission. Role-play negotiations with family or friends to practice making proposals and counter proposals.
The earlier you start saving, the more time your money has to grow. Begin by setting up a budget and saving a percentage of your income each month.
Set aside 3-6 months' worth of expenses in an emergency savings account for unexpected expenses or job loss.
Open and contribute to your retirement accounts, such as a 401(k) or IRA, as soon as possible. Consider increasing your contribution over time.
Working with a financial advisor can provide women with valuable guidance and support in managing their finances. A financial advisor can help women develop a personalized financial plan, set financial goals, and make informed decisions about investments and savings. They can also provide education and resources on financial topics such as budgeting, debt management, retirement planning, and estate planning.
By working with a financial advisor, women can gain the knowledge and skills they need to improve their financial position and achieve their long-term financial goals.
Pay off high-interest debt and credit card debt first and avoid taking on too much debt in the future.
Whether it's a home or a car, plan and save for major purchases in advance.
Learn about different types of investments, such as stocks and bonds, and consider working with a financial advisor.
Consider getting insurance to protect against unexpected events, such as disability, illness, or death.
Create a will, designate beneficiaries and consider estate planning.
A more contemporary twist on Stanton’s quote is the saying “If it is to be, it is up to me.” Today is the first day of the rest of your financial life. Make the most of it. All women should learn one new thing every day about personal finance and never consider your financial education finished.
If you're looking to get started on your financial journey and would like to work with one of our certified advisors, schedule an appointment with Denise here.
Bay Street Capital Holdings is an independent investment advisory, wealth management, and financial planning firm headquartered in Palo Alto, CA. They manage portfolios with the goal of maintaining and increasing total assets and income with a high priority on managing total risk and volatility.
The firm was founded by William Huston after 13 years of supporting the United States' largest retirement plan ($650B) Thrift Savings Plan. In Scottsdale Arizona, Ekenna Anya-Gafu CFP, AAMS is recognized among the Best Financial Advisors for his responsiveness, friendliness, helpfulness, and detail. Bay Street was founded to advocate for diverse and emerging fund managers and entrepreneurs.
https://www.cnbc.com/select/financial-steps-for-women/
https://www.schwab.com/learn/story/women-and-money-why-its-important-to-take-control-your-finances
https://www.cnbc.com/2022/06/28/most-women-see-money-as-a-tool-to-effect-change-survey-shows-.html
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