Many Americans are just a paycheck or two away from dire financial straits. But in general, women face greater hardships in regards to achieving financial stability than their male counterparts. In fact, women hold the majority of student loan debt, are 80% more likely to be impoverished in retirement than men, and are therefore much less likely to invest their money than men are. And while Google knows how much its parent company is worth — $286.25 billion, at last count — many women probably don’t know how much they have saved or whether they’re on track financially; nearly half of women find it challenging to talk to others about their finances and the financial literacy gap is well-noted and pervasive.
But even though we know that this gap needs to be closed, the process of actually closing it might prove more challenging than you’d think.
Major strides in gender equality are being made, but age-old biases continue to hold many women back. Despite the fact that women live longer than men and that they’re poised to possess two-thirds of the nation’s wealth by 2030, economic equality still proves elusive. And because financial literacy isn’t often prioritized equally, many women find themselves in a bind later on in life — often when their partner is no longer around. Whether theirs is one of the 40% to 50% of marriages that end in divorce or they become widowed later in life, a lack of financial knowledge can become a major problem for these women who suddenly find themselves on their own.
For example, data from the London School of Economics shows that women who worked before, during, and after their marriages actually saw a 20% decrease in income as their partnerships fell apart — compared to men who experienced a 30% increase in income after their divorces. The poverty rate among divorced women is startlingly high, as well — 27%, which is nearly three times that of the poverty rate among divorced men. And even for women who have never been married, financial security may be hard to come by, considering that women make 80.7 cents for every dollar a man earns. Figures from the U.S. Census Bureau reveal that women’s median earnings are $9,909 less than men’s, meaning that women have fewer financial resources to begin with and lack the knowledge to safeguard what they have.
Although the Red Cross reports that 10 people die each day from unintentional drowning, even more Americans experience the horrible feeling of drowning in debt. Women, in particular, need to plan ahead to avoid that scenario and ensure they won’t face an undue economic burden. But how do you go about it?
Develop a Budget
If you want to gain control of your finances, you’ll first need to take a brutal look at your spending to ensure you’re not living beyond your means. Although 94% of Americans will take advantage of an exclusive brand offer not typically offered to the general public, you’ll want to be a lot stricter with your purchasing decisions from here on out. To create a solid budget, you’ll need to know your take-home monthly income and your monthly expenses, as well as any liabilities like student loan debt, mortgages, and auto loans. You’ll then need to look at your existing records of expenditures (like credit card and bank statements) and compare those numbers to what’s coming in. More than likely, you’ll be at least a little surprised by what you find. But it’s better to be surprised now than to realize too late that you’ve overspent. A recent Schwab study found that women with written financial plans were significantly more confident in (and less likely to lose sleep over) their finances than women without these kinds of plans. It may not be fun, but figuring out where you can cut back while you’re still in the workforce — and how you could feasibly put more money away for later in life — is one of the best steps you can take.
Start Saving For Retirement
Speaking of putting more money away for later in life, the time to start saving for retirement is now. Experts recommend that women and men in their 20s should set aside 10% to 15% of their income for retirement — which is a tall order if you’re dealing with student loan debts and low wages already. But keep in mind that those who wait to start saving until they’re in their 40s will need to save around 30% of their salaries just to get by in retirement. You shouldn’t count on a partner or another family member to provide for you when that time comes, either. Not only do nearly half of all women aged 75 and above live alone, but roughly 86% of life insurance policies lapse without any benefits being paid. You’ll need a solid nest egg for retirement that doesn’t hinge on your spouse’s contributions or on your ability to work well into your 70s.
Meet With an Advisor
Of course, all of this sounds positively daunting. Figuring out your finances on your own is a massive undertaking — and the mere thought of it might make you want to hide from your account statements forever. That’s why it pays (literally) to work with an expert. There are plenty of financial advisors and coaches who can specifically help women gain control of their monetary situation and feel comfortable with where they’re heading. Don’t feel pressured to know everything before meeting with your advisor, either. It’s hard to ask for help and many women fear looking uneducated about financial matters. But remember that your advisor will walk you through the process and ensure you feel confident about your plans.
There’s no doubt that money can be intimidating and complicated. But if gender equality is something we ever want to achieve, it’s vital for women to take control of their economic situations. By being proactive, the playing field might slowly (but surely) become more even in time.