In a world where financial independence remains a pivotal aspect of empowerment, women are being urged to break free from the constraints of gender-based financial inequality. Recent studies reveal that despite being diligent savers, women are significantly lagging behind men in terms of investment and pension savings. This disparity arises amidst longstanding perceptions that investing is predominantly a man's domain. As financial domestic abuse continues to be underreported, experts and advocates are calling for a change in narrative. They stress the importance of women taking charge of their financial futures to avoid being trapped in financially dependent situations.
A glaring disparity exists between men and women when it comes to investment, with only 17% of women holding a stocks and shares Individual Savings Account (Isa) compared to 30% of men. The majority of women who are actively managing their finances prefer using regular savings accounts, accounting for 61%. Moreover, 35% of women choose to invest in cash Isas. While these figures indicate a positive inclination towards saving, Sarah Miller highlights a critical concern: women are predominantly saving in cash, which might not offer the same long-term benefits as investments in stocks and shares.
"Women are saving more: the problem is they are saving in cash," – Gina Miller
The issue extends beyond mere saving habits. According to the Scottish Widows Women and Retirement report, there is a "very real risk that we won’t see pension parity for many generations to come." Supporting this assertion, MoneyShe research reveals that 75% of women lack confidence in affording a comfortable retirement. Furthermore, the average woman retires with £69,000 in pension savings, a stark contrast to the £205,000 average for men.
"You want the £1,000 today to be worth the same when you retire in 25 years. No other asset class, be it property, gold or cash, will get you there. Only stocks and shares will." – Gina Miller
Compounding these challenges is the perception that investing is a male-dominated arena. This view is further entrenched by the male-centric nature of the wealth management industry. As per MoneyShe research, 37% of women do not invest, compared to 24% of men. This gap highlights an urgent need for change in how women perceive and engage with investment opportunities.
Financial domestic abuse remains a critical and underreported issue. Gina Miller recounts her own experience with financial domestic abuse, stressing the insidious nature of coercive financial control.
“Financial domestic abuse is chronically unreported; it is a form of coercive control,” – Gina Miller
Her experience underscores the broader issue of women's financial vulnerability within relationships. One in three women feels trapped in a relationship due to a lack of financial independence. Additionally, women's income decreases by 33% post-divorce compared to an 18% decrease for men.
“It was a series of behaviours which led me to rely on him to look after our finances,” – Gina Miller
Efforts to bridge this financial divide include encouraging women to view investments as a path to financial freedom. Gina Miller urges women to think of investments as their "freedom fund," emphasizing that starting with manageable stakes can make the process less daunting.
“Think of it as your freedom fund.” – Gina Miller
Sarah Coles echoes this sentiment by suggesting practical steps for women to ease into investing.
“If you start with relatively low stakes, it can feel easier to tackle,” – Sarah Coles
Coles advises women to incorporate financial literacy into their daily routines. She recommends checking investment portfolios monthly or engaging with one piece of financial content regularly—be it an article, video, or podcast.
“Just make sure you check in once a month, read one article about investing, watch one video, or put a podcast on in the background.” – Sarah Coles
These suggestions aim to demystify investing and encourage women to take proactive steps towards securing their financial future.
The gender pay gap also plays a significant role in women's investment hesitancy. Lower-income earners often prioritize building emergency funds over investments, which disproportionately affects women due to wage disparities.
“Those on lower incomes tend to be busy building an emergency fund instead, so the gender pay gap plays a part here,” – Sarah Coles
Understanding these barriers is crucial for addressing them effectively. Advocates emphasize the importance of joint financial planning within relationships while cautioning against reliance on one partner for all financial matters.
“It makes perfect sense for couples to plan their finances together, but it’s vital not to fall into the habit of one of you looking after a single area of your finances.” – Sarah Coles