Out of acknowledgement for Women’s History Month, I find it necessary to spend some time on the topic of the women’s wealth gap. There’s no denying that women continue to push beyond those illusive boundaries of the past in almost every arena. We are shattering glass ceilings in dresses and heels, with briefcases, stethoscopes, and gavels in hand. When it comes to investing, statistics show that women outperform men, but tend to gravitate towards the safer options in saving. It is also reported that on average a single man will have a net worth of three times more than the average single woman.
Yes sis, even with all of the rhetoric and advertisement pervading our society that insinuates women are on a trajectory towards out earning men, I want to caution you to take a step back and process our reality.
How big is the gap?
Big. Huge. In my Julia Roberts, Pretty Woman voice.
Women earn only 80 cents on the dollar compared to men. For black and Latina women that gap is – well let’s not call it a gap, it’s more like a crater – 63 cents and 54 cents respectively. At the median, single women account for owning a mere 32 cents for every dollar owned by white men, while minority women own less than a penny.
What is contributing to our wealth gap?
Most of our conversation is centered on expanded equality when it comes to pay and workforce representation. While that puts more money in our purse in the short term it does not necessarily translate into an increase in wealth. Financially speaking, our wealth equals assets minus liabilities. It is what you will rely on to survive caring for a sick child, life after a divorce, the care of an elderly parent, loss of a job and security in retirement. An increase in income is not a magical translation into building a solid foundation for prosperity.
Where do we go from here?
Understand the systems in which you operate.
Investment advice – if you are in the position where you are seeking investment advice it is imperative that it is tailored towards your overall goals and objectives. Often times the advice given is based on male income probabilities and characteristics. For example, some calculations assume men who constantly work, and are not primary caregivers.
Benefits – Many may not know that when it comes to benefits such as social security the formula used to determine benefits counts time away from the workforce as “zero earning years”. This means that if you are taking time away to care for your children or an elderly parent, which women do more often than not, you could potentially retire with more years to live and fewer benefits.
Credit Scores – This tricky number plays a critical role in most of our capacity to build wealth. Not only do our credit scores determine our accessibility to lending for wealth building assets like homes and education, but our credit score also can be a determining factor for employment and access to services.
For women, marriage was once seen as the pathway to financial security. Today, single women account for nearly half of American households. By 2020 women are expected to hold $72 trillion, or 32% of total wealth. Navigating through this new territory require a shift in mindset and awareness.
Stay tuned for insights throughout the month on how to make sure that $72 trillion does not slip through our fingers.
Let’s keep doing the work.
Photo Source: Freepik