Why the gap in men and women’s finances?
We are told women are reluctant to discuss their finances or feel unconfident about managing money and investing it in stocks and shares.
My experience is that men and women lack financial education in equal measure. But, there is a very real gap in the health of men and women's personal finances. Not only do women earn less as a consequence of the gender pay divide, but also save, invest and prepare less for the future as a consequence of reduced earnings. In addition, they frequently feel excluded from the world of finance.
Life insurance for women?
Many financial products and services are marketed towards men, or not designed to take into account the reality and pattern of many women’s lives and finances.
Take life insurance. Too often when considering what would happen if your partner or a parent died, the paid work of the main income earner is taken into account first. But what is the cost of the loss of the labour involved in the work of a primary carer, bringing up children, looking after elderly relatives or looking after the house, which is so often unpaid but still predominately done by women?
Personal finance for the way we live now
Then there are the changing patterns in the way we work, and live. Half of all babies are now born into rented accommodation, according to research by Royal London, while the cost of borrowing a mortgage is often only viable if two salaries are taken into account.
Many women are choosing to become self-employed, or work flexibly in more part-time or zero hour roles. As freelancers, they cannot rely on financial support from an employer. And being self-employed, it’s unlikely, at least in the early years, that they’ll be unable to unlock some perks such as maternity pay or sick pay, from their business.
This is compounded by the fact it is a challenge to build up enough savings to protect a family if one parent was unable to work as a result of ill health or bereavement, with the high cost of housing, transport and living costs taking up a chunk of earnings.
We need new budgeting guidelines
While the old 50/30/20 rule used to seem a great guide to how to budget - 50 per cent on essentials, 30 per cent on discretionary spending, 20 per cent on saving - most face unavoidable bills eating up much more than half of family income, rendering it unrealistic.
Pink credit cards are not the answer to women’s finances
In a world where many of the decisions about how to design financial products, for example, insurance are still predominantly made by men, women’s experiences and the way that they want to manage their money are being overlooked.
The answer is not pink credit cards, but more of a recognition of the unpaid work, such as caring for children, that is still being picked up by women, and how that impacts on our short and long-term finances.
Rules on budgeting need to take into account that not everyone will be able to afford a home, or have generous perks from employers to rely on, or feel confident locking money away when we might need it urgently.
Ideas about how we buy or assess financial products like life insurance should take into account not just household income, but some of the invisible work involved in caring for children or elderly relatives.
Let's open up the money conversation to include all the diverse ways that women live and work in 2020 and beyond.