Women tend to think of others before themselves when it comes to finances.
4 February 2016: They sacrifice advances in their careers to care for their families and assume the role of caregiver far more than men do. Women settle for lower-paying jobs then they’re qualified for and generally put off their ambitions to address the needs of others.
As a result, women earn less, save less, invest less, and carry more credit card debt. Women’s longer life expectancy means they need to have more money saved to cover both living costs and long term health care.
There’s a large financial gap between men and women and it’s creating a situation that should concern all women. For the divorcing woman facing sole responsibility for her own financial well-being, the financial wellness gap is even greater.
The most recent Gender Gap in Financial Wellness report highlighted the large gap in the retirement savings between men and women. The report showed:
- A gap between men and women's retirement savings of 26% and it also showed that women aged around 45 dipped into their retirement savings to cover 70% of their pre-retirement income.
- Due to the additional savings that is needed in later life such as housing and food, the gap climbed to an astonishing 95%.
- There's a "confidence gap" between the different genders concerning investment and money management.
Divorcees are especially vulnerable to the dangers of the financial wellness gender gap. According to the latest data from the Australian Bureau of Statistics (ABS), the number of divorces has decreased in Australia since 2012.
The ABS data shows nearly half of all divorces in Australia include children. What this means for the single mothers is extraordinary. Living costs and retirement savings will decrease significantly because the mother will have to look after her kids as well as herself.
If there is such a financial gap between the genders, what’s the solution to this problem?
How to combat the financial wellness gender gap
Here are a few tips to help women close the financial wellness gender gap:
Prepare for retirement. Are you on track?
People that fail to plan, are planning to fail. You need to work out when you are planning to retire and if you’ll have enough money to comfortably retire at the desired age. Many women have no set plans about retiring. According to a MetLife study, 54% of the first wave of Baby Boomers retire or quit working before they planned, so have a backup plan firmly in place. Take up a part-time job, or do something you love so you can earn the extra money you need to help your retirement. You can use a retirement calculator to help keep your retirement funds under control.
Create a budget
Forming a budget can help relieve the stress of money for many women. In order to create a budget, you will need to work out your net income by managing your expenses and income. Doing a spending plan may seem overwhelming but once you get a handle on it, it will make your life easier. You can track your month-to-month spending with apps.
Have an emergency fund
If you don’t have an emergency fund, you need to set one up, especially if you’re planning to take time off for maternity leave or to care for a loved one. Unexpected bills and payments can come at any time and people stress because of this. Having money in place for the unexpected can give people peace of mind. Ideally have three to six months worth of expenses in an emergency fund.
Get educated about finance
Learning about your personal finances will help you close the confidence gap women have in the area of investing. You can learn more about your finances by hiring a finance professional to teach you about the intricacies of finance.