By Molly Paras
As we all should know by now, it is imperative that we start saving and investing money early. For women, however, starting early is even more important. Due to the gender pay gap, women are already earning less money, so their money won’t earn as much interest or as big of a return if they put in the same percentage of their salary as men. You may be thinking that this is a problem of having less money than richer people, whether a woman or a man, but there is more to it than that. Yes, people with less money are at a disadvantage since they can’t save as much, but even if a woman and a man had the same starting salary, their salary curves (a projection of how their salary will increase throughout the next years) are much different.
Investing the same percentage of their salary would start out the same, but as they age the men would be putting more money into investments than women. Women are more likely to live longer, but their money is less likely to last as long since they have not invested as much. All the salary differences aside, women generally invest less than men. According to YouGov, 52% of women have never had an investment, whereas the same is true for only 37% of men. US News states that women, however, earn 0.4% higher returns than men by picking better investments on average. After putting in thousands of dollars each year and letting the money grow for a significant amount of time, that 0.4% difference could be worth hundreds of thousands of dollars. Women are clearly capable of investing well, so more of them need to start doing it to make up for all of the money they lose by being females in the workforce rather than males.
Dealing with money and finances has been thought of as the man’s job in the past, by both females and males. As shown in the graph above, this stereotype needs to be broken to close the gender wealth gap. Although the bar graph is based only on loan applicants, it is clear that the difference in net worth is mainly due to women purely not investing as much as men. The financial world may be geared towards men currently, but by discussing finances more often, women learning more and being open towards investing, and helping women invest early, we can start to close the gender wealth and investment gaps.
Works Cited
“How Much Money Do People Have?” Priceonomics, priceonomics.com/how-much-money-do-people-have/.PalframanDirector, Matt. “Over Half of Women Have Never Held an Investment Product.” YouGov, 12 Apr. 2018, yougov.co.uk/topics/politics/articles-reports/2018/04/12/over-half-women-have-never-held-investment-product.
Rachael Revesz @RachaelRevesz. “Opinion: The Urgent Reason Women Need to Learn up on Money.” The Independent, Independent Digital News and Media, 12 Sept. 2019, www.independent.co.uk/voices/money-women-financial-literacy-ftse-100-pensions-banking-a9102186.html.
“Why It Matters.” Ellevest, www.ellevest.com/personalized-portfolios.
“Women Can Close the Gender Wealth Gap by Investing.” U.S. News & World Report, U.S. News & World Report, money.usnews.com/investing/investing-101/articles/women-can-close-the-gender-wealth-gap-by-investing.
This is a sad reality that has taken way to long to fix. This problem existing in the gender pay gap has the same roots that plague so many other problems in society: greed. To add to that, there is also some resistance from older generations, like the Baby Boomers, because for years, society said that women were supposed to do certain jobs which often times held them back. All this combined has now created a situation where women have to be more proactive with their money which shouldn't be a reality but it is.
ReplyDeleteThis is such an awesome topic! We live in the age of instant gratification, so we tend to not think about how great our return on investment would be if we invest early, but you're right, fractions of percentages can turn out to be worth hundreds of thousands of dollars! Thankfully, the financial landscape is starting to change and hopefully level out, but you summed it up quite well when you stated that our financial world is geared toward men right now, automatically making it a more hostile venture for women than for men. Hopefully this creates more awareness on the subject so we become smart investors in our future early on. Thanks for sharing!
ReplyDeleteI am not very educated or aware of the gender pay gap, so I was interested to read your article and learn about this issue. I have never really thought much about the importance of investing and I wasn't aware that women would actually receive more in the long term. Now I know that this is something I will have to start thinking about in my future and could lead to a lot of returns on investment if I invest early.
ReplyDeleteI find it really interesting to know that men and women’s salaries peak at such different ages, it’s a very different time in your like when you’re 55 versus when you’re 40. Does this mean that women have less room for career advancement in their employment opportunities? The current and past financial world seems to be dominated by men making money choices. I’ve personally never given much thought to investment and how your salary growth can affect earnings over time, but it’s encouraging to know that women earn 0.4% higher returns on investments. It’s incredibly important for everyone, especially women, to learn about investments and take the time to make conscious choices about their money that can pay off big time in the long run. More women investing their money is definitely a step in the right direction towards closing the gender wealth gap.
ReplyDeleteI find it interesting also pretty sad how this has taken so long to be fixed and fully addressed. I feel like this problem has been enforced by past generations who had specific roles for their modern day women. For example, the Baby Boomers set up their society with women staying home cleaning, taking care of the children, and making sure food is prepared for the male when he returns from his day at work. Obviously this is not the case in our new society but women suffer in challenges like the wage gap.
ReplyDeleteThis is something that I had never really considered, of course it's difficult not to know about the wage gap but I never made the connection that that would affect investments too. I also thought it was very interesting that women are better investors than men, and I wonder why that is the case? I think it's very important to educate females on the importance of investing so that we can close that gap of the 52% that have never had an investment. Overall this was a very educational piece, thanks for sharing!
ReplyDeleteThis was a very interesting article. Everyone has heard about the fight for equal wages for both genders, but I don't think a lot of people realize how much of a difference it is. Like you said, there's already a pay gap, but if you look at the wages on top of the money they earn on investments, it's even greater. Women are making the smarter investments, but it doesn't make a difference at the end. We need to make a change so men and women's wages can be brought closer, allowing both men AND women to have a lot of money saved up for retirement and other expenses.
ReplyDeleteIt's really unfortunate that the pay-gap between male and female salaries is so significant... it's even more unfortunate that the pay-gap is demotivating females from investing. From your article, women are definitely capable of investing and earning great return, however, society has not been very encouraging towards women to do so for a long time. I agree with you that more women need to be educated on finances and investing to continue to grow into independent and successful in their future! I'm hopeful that the gender pay-gap will soon diminish because times are changing, but we'll see what happens!
ReplyDeleteThe gap between genders is honestly pretty upsetting and frustrating more than anything. Some women try and make the good decisions we're told to make, but still end up coming out on the bottom simply because of their gender. Not everything is fair in the world, but this is something I think we should all be capable of changing for the better. And I thought investing was important before, now I'm even more anxious about it. One of the more curious parts of this is that the peak of salaries happen at completely different time even when they start the same. It was perhaps not shocking, but disappointing and a little surprising. I definitely don't find it hard to believe, but it was also unexpected. I agree that we should all work towards trying to close the gap throughout financial habits, not just for ourselves, but for people in the future.
ReplyDeleteI've always understood that there is a gender pay gap, but I've never really taken the time or thought about why that is and what the net income consists of until now. It is surprising that women are investing so much less than men, but is also understandable considering they are making less money and presumably don't have as much to put into investing.
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ReplyDeleteThe bar graph you found was very insightful. The difference in investment is where the wealth gap comes from. As you mentioned in the beginning, the gender pay gap hinders women from being able to invest as much over their lifetime. You point out that women do make 0.4% more on investments than men do. Your suggestion is to invest more and smarter in order to close the gap. It is true that women need to invest more. The difference in returns between the genders is likely due to the fact that the average woman who invests is going to be better at investing than the average man who invests because there are fewer women who invest than men. On top of that, the small difference in return, even if women invest more, is not enough to close the gap. The pay gap is a true problem and is something that our generation should work to solve. However, motivating women to invest is still good.
ReplyDeleteThis is such as interesting topic to discuss because it’s been such as issue for so long and heavily debated among many. What can we do to get more women interested in investing in their future for the long term? Although I have hear about salaries specifically I haven’t though about investing much as a whole or personally.
ReplyDeleteI never really thought about the gender gap while investing. I don't think its that shocking that on the whole women invest way less of their money compared to men. Since lots of women have children and aren't working and are stay at home moms they probably don't have a lot of money to invest. Or maybe some are too dependant on their husbands for money. I agree, I think there should be more women in the workforce.
ReplyDeleteI already knew about the gender pay gap, and how it is a prevalent problem in our society today, but I hadn't even thought about the implications it would have on investing. That combined with us historically not dealing with finances sets us up for failure in today's world. The recent surge of financial education, especially in high schools, is already working to inform the young women of today about the importance of investing, but to truly solve this problem we need to work on its source: the pay gap.
ReplyDeleteI was aware of the gender pay gap before reading this article, but I had no idea about the long term impacts you mentioned. The graph you showed of the salary curves was especially shocking, since I had no idea how much more men's salaries increase than women's. I liked the point you brought up about women living longer as well, since it is ironic that women live longer will most likely end up with less money for retirement than men. This is a great and unique topic!
ReplyDeletePeople understood that there is a significant wage gap in society today. But I believe people didn't understand the severity of that gap till now. Being able to see the numbers between men wages and women wages puts into better perspective how this effects us. Also being able to see how women are less likely to save as much money as men puts into better perspective of what this can do to someones livelihood and how they will support themselves.
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