The gender money gap

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It was only in the late 1970s that UK women were given the right to open a bank account in their name. Fast forward to 2020 and we are still experiencing the knock-on effects of a male dominated world, from money worries and limits instilled by the gender pay gap, to how the media talks to woman vs men.

While women wait for the gender pay gap to be fixed, there are still actions that we can take as individuals to reduce financial stress and start taking control of our financial futures.

What’s the issue?

In Neyber’s DNA of Financial Wellbeing 2019/2020 research we found (unsurprisingly) that 66% of woman are affected by money worries. Despite living longer and therefore needing more saved, women are not as prepared for their future:

Gender Infographic

This disparity in behaviour may also have something to do with how media speaks to men and women about money.

Starling Bank analysed articles from women’s and men’s magazines and found the language and advice differed depending on the audience:

Gender Money Word Cloud

The good news however, is that women have less debt. Women on average have £6,786 of unsecured debt compared to £8,358 for men. However, if we really want women to achieve financial equality, there are a few small changes women can make to create a more secure financial future.

So what should we do?

1. Take stock

We’ve all heard the term FOMO (fear of missing out) but, when it comes to money, many experience FOFO (fear of finding out). This can lead to a lot of anxiety and stress around your financial future often leading to decision paralysis. Take the time to sit down and set a few short, medium and long term financial goals so that you know what you’re working towards. For example if you’ve got debt looming over your head have a look at how you can reduce that, either by putting a plan in place to pay it down, or looking into a debt consolidation loan to reduce monthly repayments and using that saving to start building up a savings buffer. Once you have a plan you’ll feel more confident.

2. Break the Taboo

Talk about money! As a country, we’re pretty terrible about talking about something that, when you think about it, influences all the other choices we make. Talking about money is a great way for you to learn about the tips and tools your friends might be using to help keep themselves on track financially, or to have a sounding board for your own financial questions.

3. Don’t Put off Your Pension

Women are likely to live longer than men, so we need to have more money saved for retirement. Use our Pensions Calculator to work out how much you need to save, but as a general rule of thumb you want to try and save around 15% of your salary. Auto-enrolment at company pensions means you’ll be contributing 8% automatically (including a nice 3% from your employer). Take full advantage of any additional matching schemes you might have at work, otherwise you’re missing out on free money. Take the time to make sure that what your pension is invested in matches your goals - you probably don’t want to be in a default low-risk and low-return fund, if you’re not planning on using the money for many years.

If you’re taking time off work to raise children, consider still saving money for your retirement, either through an employer pension or other options like a LISA, which gives you a 25% boost from the government. This will reduce the financial impact of your career break on your retirement goals.

4. Start Investing

Women are saving, but men are investing, according to research from the Financial Conduct Authority. While it might feel safe to have your money in cash, it means that you miss out on valuable returns in the long term. Many savings products are not beating inflation, meaning you’ll actually end up being able to buy less in the future with your saved money than you can today.

Take the time to educate yourself - it’s not as complicated as it first sounds, and you don’t need to be uber-wealthy to start. The longer you can invest for, the more you minimise your risk of loss, so what better time to start than today? There are plenty of new apps that let you open investment products like a stocks and shares ISA, starting from as little as £10 a month. Cost-effective investment options can help ensure that your money grows and provide a nice nest egg for you in the long-term.

5. Get what you’re entitled to

Sometimes we worry about being a bother if we ask, but there are a whole range of benefits and services designed to support women, especially mothers. There could be something you’re entitled to without realising. Look into information about what government, your employer or non-governmental organisations might be providing - everything from Working Tax Credits, Universal Credit, maternity grants, childcare schemes, flexible working, free affordable salary-deducted loans or debt consolidation, or free government money through Help to Save or Help to Buy schemes. It’s worth having a search online to see if there’s anything you’re entitled to that could boost your income just a little more, and reduce financial stress.

Although women are at a disadvantage when it comes to pay, we can still create financial peace of mind by setting goals, taking action and working together to improve our finances.

If you found this interesting, remember to share with the women in your life, and if you log into the Financial Wellbeing Hub, you can see our quiz on this topic.