Equality for women has been a hot topic for decades. The gender pay gap is part of that and has been a subject of much discussion in recent years. In a capitalist society, money = power. The world’s most powerful nations are those with the most wealth. I believe that without monetary equality, it’s going to be very difficult for women to be true equals.
For a long time, money and wealth has been considered more of a masculine concept. The financial services industry is male dominated, and women have been left behind in the conversation. In fact, according to a study, 61% of women would rather talk about their own death than about their finances. Why is that? And why is it so important to change that?
Love it or hate it, money is something we simply cannot live without. It’s as important to our survival as the air we breathe! It impacts our lives every single day. Therefore, we need to understand it. We need to understand how to get it, how to manage it, how to spend it, how to save it, how to invest it.
It’s a stereotype, but often managing the finances or investing is considered a male task or that they are somehow better at it. We have been fed subconscious messages that women are not good with money. That’s just not true. However, since around 50% of marriages end in divorce and 80% of men die leaving a widow behind, the reality is that at some point in their lives, women will likely be on their own. And whether single or in a relationship, here’s why I believe it’s so important for women to be financially savvy and know how manage money. Freedom.
Unfortunately, women are at a disadvantage right out of the gate, when it comes to money. It’s widely understood that here in the US, women earn 80 cents on the dollar compared to men. For women of color that number is even less. Women often take career breaks to have a family and then when they re-enter the workforce, they lose traction and it’s then harder catch up to their male counterparts. They must also contend with the Maternal Wall: the bias that women are not committed to their careers if they are a mother, resulting in being passed over for promotions and general advancement in the workplace. On top of this, women have largely excluded from discussions about finance and money.
What if, from the start of their career, women started planning for a potential career break to have a family. Or had an investing tool that took that into account. Yes, there is no question the wage gap needs to be addressed, but it’s going to take a long time for that to be fixed. So we need to take action now, while we are working to change that. Even if the wage gap is fixed, we are still going to be financially penalized if we choose to take a career break for motherhood, unless there is universal maternity pay. Given the current lack of federally mandated maternity leave in the US, most women are limited to how much time they can take to spend with their newborn child. Some planning, saving and investing would give women the financial means take time out of work. Granted, at the moment, that might mean you lose your job until we get to a point where there is more protection for mothers, but at least it could be an option if spending the first several months with your child is more important to you. If you have to go back to work after a couple of months because you can’t afford not to, that’s essentially a lack of freedom. Of course, not all women want to have children. This is just one example; there are plenty of other reasons why it’s important to be financially independent.
Money gives you the power and freedom to do whatever you choose. If you really hate your job, with savings, you can quit. And even if you don’t quit, just by having that money saved, psychologically you will no longer feel that you are trapped in that job, because you are safe in the knowledge that you have to means to leave if you choose at any point. If you are in a bad relationship, quite often a lack of financial independence prevents women from leaving. Money would give them that freedom. More and more women are choosing to start their own businesses because of the lack of flexibility that a traditional 9-5 job provides, as well as frustration with the continued bias towards women in the workplace. Having a healthy savings account would give those women some capital to start their dream business (it’s been shown that women tend to receive less venture capital funding than men unfortunately).
Money gives you the freedom to do the things you love. Maybe it’s traveling the world. Or being able to donate a meaningful amount to your favorite animal rescue center. Going to a yoga retreat for a long weekend. Whatever it is that you love to do, money is a tool to help you do those things.
For women who are in a happy relationship, it’s important that there is an equal understanding of the household finances and sources of income. Money is one of the leading causes of disagreements and stress in a marriage. Even worse, it’s actually one of the leading causes of divorce. A completely transparent and healthy discussion around money on a regular basis could potentially help mitigate that. I’ll take it one step further: discussing money and your values around it is critical before you even get married. If you have very different money values to your partner, it’s going to be a source of tension.
The truth is, however, that women haven’t really been part of the financial conversation. Neither men nor women are taught personal finance basics in school. After school and upon entering the workforce, it’s not a topic women discuss freely. It’s still a taboo. I don’t talk about how much I make with my friends. I don’t know why. Maybe if we did it might help close the gender pay gap. So, I encourage you to start talking about it more. Magazines for women still focus on beauty and style, and not so much on money and investing. While I’ve noticed a greater focus on career in magazines in recent years, there still needs to be a greater discussion around money. We also tend to under-estimate our worth and are not encouraged to negotiate. This is reflected in our pay checks. Women who do negotiate are perceived or classified as aggressive. That shouldn’t stop us. The more we stand up for ourselves, the more we shape our collective futures.
Thankfully there are some companies that are now recognizing this and doing something to change the conversation for women. Ellevest is a digital investing platform for women, founded by Sallie Krawcheck, former CEO of Merrill Lynch Wealth Management and Smith Barney. Krawcheck understands the challenges faced by women and has created a product tailored to their unique needs, including the fact that many will take a career break at some point. Arlan Hamilton founded Backstage Capital when she realized that women and minorities find much greater difficulty getting funding for their businesses than white heterosexual men.
I started Her Financial Wellness because I am so incredibly passionate about women thriving, succeeding and living out their dreams. Money is a tool that can help them get there. When you hear the phrase, “money doesn’t bring happiness”, to me what that really means is material possessions do not bring happiness. Money alone does not guarantee happiness but having the financial resources at your disposal to be free and make important life decisions is priceless.
I was someone that was once in debt with no savings. I felt trapped and scared, largely because I did not have the financial means to make choices or plan for the future. It also gave me tremendous anxiety. I managed to turn that around to transform into someone who is in control of their finances and has built some wealth. I now have the freedom to make choices that impact my future and that enables me to pursue my dreams. I did not have that freedom when I was in debt. I worked hard to get to this point. It did not happen easily. I believe that everyone can improve their financial situation, wherever they are, with the right tools and confidence.
It’s going to take time and work for us to be truly equal, but in the meantime it’s important that we start talking more about what is arguably the most powerful tool there is. Money.
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