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6 Wealth Challenges Faced by Women (And How We Can Change Them)

Updated: Feb 1

In the dizzying world of personal finance, women often find themselves navigating a unique set of challenges. From confronting the gender wage gap to the Pink Tax, these obstacles have been historically overlooked, yet are integral to how women strategize their financial futures.


Our article aims to shine a light on the most common financial hurdles women face, along with offering practical, actionable advice on how to get passed them.


In recognizing these issues, we want women to take decisive steps toward securing their prosperous future.


Facing the Wage Gap Head-On: Women's income has been perennially affected by the gender wage gap. Pew Research confirms that in 2022, women earned just 82% of what men did. This discrepancy leaves women with fewer funds to allot towards their retirement savings, ultimately affecting their quality of life in the retirement years.


Solution: The impact of the wage gap is far-reaching, affecting not just day-to-day living but the security and comfort of women's golden years. This raises the stakes for women, necessitating a dedicated strategy for retirement planning. By starting early and focusing on regular contributions, women can leverage the power of compound interest to help close the retirement savings gap.


Procrastination in Retirement Savings: Regrettably, many women delay the start of their retirement savings. One study found that Canadian women invest 25% less than their male spouses. Moreover, 16% of women feel less confident in retiring than men. The reasons vary, from the lingering impact of the wage gap to family responsibilities like maternity leave or elder care, which often cause interruptions in women's careers.


Solution: Despite these challenges, the importance of early and consistent retirement savings cannot be overstressed. The potential of compounding growth over time is powerful, and every year counts. Therefore, it's crucial for women to explore all avenues for retirement savings, from employer-sponsored plans to personal retirement accounts.


Investing with Caution… But Not Too Much: Women tend to outperform men in long-term investing due to their patient, less reactive approach. Yet, this natural advantage is often counterbalanced by overly cautious investing. Only 26% of American women invest in stocks, according to a S&P Global survey, with the majority favoring cash equivalents such as bonds, CDs, and money market accounts.


Solution: While these safer investment options bring less risk, they also yield lower returns compared to stocks. Women need to strike a balance, cultivating a diversified portfolio that can generate robust growth without unnecessary risk. Investing should never be a gamble, but too much caution can also be an impediment to growth.


Understanding the 'Pink Tax': An often overlooked financial burden faced by women is the 'Pink Tax'. This gender-based price discrimination means women frequently over 50% more for nearly identical products. The cost difference over a year can be over $1,300 - a significant sum that could be better used towards savings or investments.


Solution: Becoming aware of the Pink Tax is the first step in combating it. Women can consider opting for gender-neutral products or those marketed to men, which are usually priced lower. Advocacy for fair pricing and making informed purchasing decisions can go a long way in fighting against this form of gender inequality.


Navigating Career Interruptions: Career breaks for family responsibilities often fall to women, impacting their earnings and hindering financial growth. According to a recent Bank of America study, 58% of women who took time away did so to focus on caregiving, compared to 34% of men. This has historically hindered professional development and job growth for women in the professional field. Solution: Job opportunities with flexible schedules, remote working, and long leave policies can help mitigate this. Additionally, continuous learning and upskilling during these breaks can enhance future employability and earning potential.


Addressing Longevity Risk: In Canada there are 1.7 women for every man over the age of 85. And while women generally outlive men, their retirement savings usually are less contributed to and planned for.


Solution: Increasing financial literacy, developing a budget, and creating a comprehensive “big picture” view of their financial situation is pivotal. This perspective integrates all aspects of your financial life – income, expenses, savings, investments, insurance, and taxes – into one overarching strategy


Conclusion


At DO Wealth, we understand that the financial landscape can be challenging, but we believe in turning those challenges into opportunities. We are dedicated to working with you, helping you leverage your strengths, and guiding you through informed decisions to build a secure financial future.


Remember, financial independence is about freedom – the freedom to live the life you envision. And every woman deserves that. As your partner in this financial journey, we're here to assure you that with the right knowledge and tools, you're empowered to navigate your financial future with confidence. Together, let's step into a future of financial independence and wealth creation.



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