Women continue to push and exceed boundaries once set in the professional world often referred to as the "glass ceiling." Even as women continue to outperform men when it comes to investing, they often lean to the safety of cash savings leaving them on a slower pace to increase their wealth and keeping the gap wide between male and female wealth. Women's shyness from Wall Street has often been reinforced in movies and media with women portrayed as less interested in investments and portrayals of Wall Street as a good old boys club.
When it comes to a generational standpoint, millennial women have become the most vulnerable financially with the wage gap being the primary credit for this great divide. With fewer wages to invest, the gap becomes larger creating a significantly wider gap in the future. Since money is necessary to accomplish the goals you want in your life, women having less wealth, in general, can lead them to stay in jobs they don't want and relationships that are not ideal.
How Big is the Wealth Gap?
You may wonder, exactly how big is the wealth gap that it can so greatly affect women's futures. On average a single man will have a net worth of three times more than the average single woman. The main factors that affect this wide gap are:
- Pay inequality still exists
- Women are more likely to put a career on hold to raise children
- Women are more likely to take extended periods off work to care for elderly or ill parents.
But these are not the only reasons that women end up with less wealth throughout their life. According to the Acorns Equal Pay Day Report 57 percent of women surveyed invested nothing in 2017 as opposed to males whose percentage was 44 percent.1 When also asked what they would do if handed $1,000, men were 2 ½ times more likely to say they would put the money back in stocks.
How Women Can Begin to Close the Gap
While the gap may be apparent as women begin to demand equality in the professional world it is time to begin taking steps to close the gap and increase wealth for the female gender. So what can women do to lessen the gap?
Learn about Investing
The first step for women to begin closing the gap is to stop shying away from Wall Street and learn how to invest in the market which can be one of the quickest ways to raise their wealth. Unfortunately, Wall Street marketing fails to entice women investors. As most people have seen by ads such as ETrade, the marketing is geared towards their male counterparts who they entice with dreams of sailing on a yacht with a bunch of bikini-clad young women. This type of marketing will often not attract women and most times turn them off. While Wall Street may not be making any attempts to target the female investment market, the more women begin to put their money in stocks the more they will have to stand up and take notice.
Don't Fear Taking Risks
When it comes to investing, many women are focused on saving money to purchase a home, car, and provide for their needs and their family they currently have or expect to have. Because women tend to not want to risk any of these future goals, they tend to play it conservative with more cash safe investments that will get them to their final goal. When it comes to investing, men tend to invest more in the market and invest more aggressively. While women have been shown to exhibit more confidence than men when it comes to paying bills and setting budgets, they have less confidence when it comes to managing their portfolios. The first guess as to why this occurs is that women are afraid to take a greater risk. But the truth may be that women understand risks and portfolio management less. By becoming more educated and knowledgeable about investing and risk assessment, women may gain more confidence and begin to take higher risks that can bring them greater rewards.
Don't Fall Prey to Cultural Messaging
As much as most people don't want to admit it, cultural messaging plays an important role in influencing how people live their daily lives. Unfortunately, the media portrayals and marketing strategies all push one thing for women, and that is spending instead of saving. Magazines and style blogs geared toward women talk about investing in pieces of jewelry or clothing and staying on top of trends are keys to success. These items are often not necessary, overly costly, and far from what would be considered any kind of a good investment. Conversely, marketing geared toward male audiences, promotes investing and growing wealth as keys to success. What women need to do is look past these unhelpful messages and see them for what they are which are attempts at influencing purchases to increase the advertising company's bottom line.
Create More Conversations About Money
Only a few decades ago, girls were encouraged from a young age to not talk about money as it often was a taboo subject between parents and young girls. As these girls have grown into women, that avoidance to have a frank and open discussion about money stays with them. Women are more likely to internalize money concerns instead of discussing it with their peers and even financial advisors. The more discussions women have, the greater their knowledge about wealth and investing will be, providing them with the tools they need to increase their wealth portfolio.
By following the tips above to close the gender wealth gap for women, more financial role models will emerge to guide the rest of the female gender to take control of their future by following the path to greater wealth.
Angela Dorsey is the founder and financial advisor at Dorsey Wealth Management, a fee-only financial planning firm based in Torrance, California, helping women prepare for retirement. Angela earned a BS in computer science from Loyola Marymount University, an MBA from UCLA Anderson School of Management, and spent 20 years as a Senior Compensation Specialist in large corporations before becoming a CERTIFIED FINANCIAL PLANNER™ professional and a Registered Investment Advisor (RIA). That background gave her the tools to couple with her passion for empowering women to make the best financial decisions possible. Angela lives in Torrance, California, with her husband. She enjoys spending time at the beach or surrounded by nature. To learn more about Angela, connect with her on LinkedIn.
This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.