Business, Investment planning, Protecting, Retirement

Why women can afford to be more confident with their money

13 March 2023

Although we like to think of ourselves as a modernised society, most of the financial hardship in this country is still faced by women. Although the pay gap has shrunk to 5% for women in the 20’s, this number rises back to it’s previous level of 9% once women hit their 30’s. This is mostly down to motherhood and the perceptions around it. Of course, employers won’t ask you if you’re planning on having any kids, but it does seem to be in the back of their minds when it comes to selecting employees and paying them. However, there are plenty of steps you can take to secure your finances – even if you don’t plan on starting a family.

Nearly 75% of women don’t know how much they need to save in order to retire, despite the fact women typically outlive men. Only 36% have ever sought out professional financial advice despite women holding a higher percentage of the country’s wealth than ever, according to the Centre for Economics and Business Research. To make matters worse, Women across the western world own a disproportionate amount of debt1 (including and especially student debt), are being charged higher interest rates, and receiving lower-quality financial advice, according to the World Economics Forum. 

Pay more into your pension earlier. Statistically, the gender pay gap doesn’t appear until women reach their 30’s, so maximise your pension early. If you are in your 30’s, remember that even increasing your contributions by one percent can make a massive impact in the long run. As a someone in their 30’s, retirement may seem a long way away but taking these steps early in life will allow you more flexibility with your in planning out your career, life and potential family.

Studies show that women are not confident investors – although statistics show that women consistently post better investing returns than men, experts suggest that women tend to be more ‘risk-averse’ and could be posting even greater numbers. In fact, Fidelity reported that only 33% of woman consider themselves confident enough to be investors, whilst only 9% consider themselves as better investors than men – despite the numbers suggesting otherwise.

Confidence typically comes with age in terms of female-investment, with 46% of millennial women feeling confident enough to make an investment compared to 54% of boomer women. This should probably be in reverse, considering the younger you are, the more time you have to ride out the ups and downs of the stock market. Of course, there’s nothing wrong with being risk-averse to an extent and it’s perhaps understandable considering this is the first generation of women to have accumulated the wealth that they have. No one should be forced to invest unless they really want to – and studies suggest many women do, but lack the confidence. It’s worth considering whether being too risk-averse is doing more harm than good, especially when experts suggest that you may have more rope than you realise.

The important thing is not to be pigeonholed. General financial tips for women (perhaps even this one) tend to make certain assumptions about woman’s career paths or life goals, typically around having children or taking career breaks. No two women are the same – both in personality and in finance-wise. A lot of high-earning women, from a financial point of view, may have more in common with some high-earning men, so therefore seeking out personalised advice for yourself is always a much better option.

If you are in a couple looking for a financial advisor, make sure you are receiving shared financial advice together, especially if you have children and are the primary carer. Remote appointments are a great way of ensuring you can do this. Taking a career break to raise a child is a big personal sacrifice and could effect what is paid into your pension too, so both your partner and advisor should be aware of this – otherwise, you may be relying on your partners pension when you retire.

If you are single, consider speaking to a financial advisor anyway. You may not think it’s necessary, especially if you’re young, but the chances are that you have far more to be aware of than you even realise. It’s never too early to plan for your future, but there’s a point where it can be too late. Secure your finances, explore your options and take the necessary steps for you by speaking to a financial advisor.

1 The Gender Pay Gap Report by The House of Commons (November 2023)

2 Gender Pay Gap by TUC (February 2023)

The value of an investment with St. James’s Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested.

The levels and bases of taxation, and reliefs from taxation, can change at any time and are generally dependent on individual circumstances.

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