How to close the gender gaps on earning saving and spending

For more than a decade I’ve spent my life thinking and writing about money. As a financial journalist, I’ve written hundreds of columns on the City, the stock market, the super-rich, pension funds and family budgets.

I don’t think money buys you happiness but I know it gives you freedom. Having enough money gives you choices about where you live, what you do for work and how you spend your free time.

Which is why what shocks me most, after all that time spent analysing money, is that women still have so much less of it than men. 

Freedom: Having enough money gives you choices about where you live, what you do for work and how you spend your free time

Money is the last area of gender inequality that has yet to be seriously tackled. And I believe it’s the most important.

In every part of our lives that touches on money, women are disadvantaged, from work to state benefits, savings to childcare and entrepreneurship. Essentially, it is accepted as natural that at all stages of life, women are poorer than men.

As I researched my new book Why Women Are Poorer Than Men And What We Can Do About It, each fact I uncovered fuelled my anger at this obvious injustice.

It’s not just the 18 per cent gender pay gap – which at the current rate will take 257 years to close – but the 40 per cent pension savings gap, which means when we talk about poverty in old age, we are really talking about women.

It’s the fact that just one penny in every pound of venture capital investment goes to start-up businesses led by women. 

That there are more men called Dave running the UK’s top 100 companies than there are women with any name; and that even those who reach the top are paid a fraction of what their male peers earn.

In August 2019, the six women leading FTSE 100 companies earned 4.2 per cent of the total pay awarded to all FTSE CEOs; and of the 1,000 wealthiest people in Britain, only 150 are female.

Pink and shrink

It is also far more expensive to live as a woman than as a man. Women spend more on underwear than men because we wear bras (spending about £2,700 on them over a lifetime) and tights, which cost more than socks (£3,000 over a lifetime).

Make-up, hair products and personal care all cost money — and while men shave their faces, women remove hair from larger areas (a lifetime of shaving costs a woman £6,500, or £23,000 for waxing).

Then there is the ‘pink premium’ added to anything from toiletries to stationery and toys marketed at women and girls, while identical products branded for men and boys cost much less.

Pink it, shrink it and raise the price: this has been the tactic of marketing teams, which have spent decades launching ‘female’ versions of ‘male’ products — and it is more expensive to dry-clean a blouse than a man’s shirt. A short-haired woman can still pay twice as much for a trim as a man does.

Tips to shut the gender cash divide 

The best thing women can do for their finances is to focus on the future, says Rebecca O’Connor of Interactive Investor.

They typically earn less than men and take more time out to care for children and relatives.

This can leave women short-changed in their pension pots.

Research shows women tend to oversee daily budgeting and short-term cash savings while men take on the investments and mortgage.

Women typically earn less than men and take more time out to care for children and relatives

Ms O’Connor encourages women to ‘engage with aspects of household finances they are not usually involved in, as long-term planning affects them, too’.

In the event of divorce or death, it’s difficult to get to grips with these finances at the worst possible time.

It pays to know where important documents are kept and accounts and passwords stored, should something happen.

It can be such a battle to get into online accounts, and this could be made much easier if couples kept each other informed about where money is held and what the account details are.

Financial planners Brewin Dolphin have founded a network called WealthiHer to help women take responsibility for their own finances and provide access to good planning and investment advice.

It helps to make realistic assumptions about what will happen to their income in the future.

For example, most women work part-time until their youngest child turns 11, according to ONS data — a huge drop in income during prime earning years.

Ms O’Connor recommends paying in more than the auto-enrolment minimum in the early years of your career to compensate for a gap in contributions later. Early investment gives your pot more time to grow.

If you have already taken time out of employment and have returned to work, then make up for lost time. An additional £25 a month for someone who takes ten years out of work at 31 and then resumes work at 41 would generate an extra £20,000 in retirement at age 68, according to Interactive Investor.

Sarah Coles of Hargreaves Lansdown points out that pension contributions don’t have to stop during maternity leave. She says: ‘If you stop before you go on leave, your employer can stop too. However, if you keep going, you may not have to pay anything in, as your income has fallen below the earnings trigger, but your employer has to keep up contributions.’

Women tend to keep more in cash, often with an eye on reserves needed for life events such as maternity leave. This can put them off long-term investment plans, according to Kirsty Stone of financial advisers The Private Office.

She works with her clients by encouraging them to work out exactly what their rainy-day fund needs to be so that they can put other savings towards riskier, long-term investments.

Small things make a difference, too. Female motorists are quoted hundreds of pounds more for car repairs, for example.

Research suggests this happens because women indicate they are poorly informed. Bluffing might get you a cheaper quote.

There are also great ideas online on how to spend less. Try reddit.com/r/UKPersonalFinance, moneysavingexpert.com and The Money Shed for top frugal tips.

[email protected]

Poverty trap

But women are poorer than men all their lives. Why? It is often said that it’s because they take career breaks when they have a family and are less ambitious when they return. 

But it strikes me as ludicrous to suggest that a woman should earn less than a man because she has taken 18 months of maternity leave during a 35-year career, or that she shouldn’t get promoted because she is a mother.

In fact, women are much more likely than men to carry on training and gaining skills at work (76 pc of adult learners are women), which surely scotches the myth of the ‘working woman who is so distracted by family duties that she can’t give her all in the office’.

Let’s face it, the real reason why women fail to earn as much as men all their lives, have fewer assets and can’t save as much, is because of sexist attitudes that automatically assume men ‘deserve’ to be paid more. Studies prove we have all internalised these false beliefs.

So what can we do about it? Changing these structural inequalities will take collective action, a toughening of equal pay law and a big shift in attitude.

But there are things we can do on a personal level, too.

Get resilient

Just as we look after our bodies by watching what we eat and exercising, our skin by following a cleansing routine or our minds by meditating, it’s time women cared properly for their bank balances. 

Every woman could benefit from adopting the mindset that nurturing your money is a vital part of self-care.

Let’s take one of the biggest buzzwords in wellness: resilience. It’s a concept you can equally apply to money.

Financial resilience is taking steps to ensure you have enough to pick yourself up if you get knocked down; it’s showing you care about your future self as well as your current self. 

And the first principle of financial resilience is to have enough cash saved — in an easy-access account — to cover between three and six months of expenses, including rent or mortgage payments, essential bills and food.

This is your cushion against potential bad times including job loss, divorce, a death in the family or serious illness.

I like to think of it in psychological terms too: as building a more solid foundation from which you can grow. Simply having savings builds confidence.

Often it is money, or rather the lack of it, that stands in the way of people achieving their dreams – so having some put aside allows you to dream as well as giving you ‘head space’ from worrying.

Saving is also about having money to enjoy life. So once you hit the target for a foundation fund, move on to a bigger goal. In a nod to the couch-to-5k running challenge, I call it the Zilch to 10k — but you can break it down into Zilch to 1k, 2k or go higher.

Every woman could benefit from adopting the mindset that nurturing your money is a vital part of self-care

Now be bold

At this point, don’t be put off the idea of investing your money rather than simply saving in cash accounts.

One of the most patronising and damaging myths around women and money is that we don’t like risk.

This mantra is repeated so often, not least by financial advisers and banks, it has become a self-reinforcing truism.

If women are continually told they don’t like risk, they are less likely to think they are good at taking it.

In fact, several studies have found that when women do play the stock market, they outperform men. One showed women investors beating male investors substantially, by making 1.94 per cent more than the FTSE 100 index each year to the men’s 0.14 pc.

Yes, culturally, with its baffling jargon, masculinity and elitism, finance has become a macho sport. It carries connotations of greed, gambling and one-upmanship. 

But investing is like the weights section at the gym: there is no reason why it should be exclusively male.

There are investment websites, known as ‘platforms’ or ‘investment supermarkets’, which allow people like you and me to invest our money in stock markets. In the UK, among the most popular are Hargreaves Lansdown, AJ Bell and Interactive Investor.

Do your research, read the City pages and watch stocks first, to get an idea of how prices change.

Over to you

Another vital part of financial self-care is to prioritise yourself.

Women always put their monetary needs at the bottom of the pile. Couples tend to pay for childcare out of the woman’s salary and save for their children’s future before their own – it’s incredible how often people admit they have money in a savings account in their child’s name but barely anything put away for themselves. Even the occasional £20 put into a pension pot adds up.

If your partner is the higher earner, make it their responsibility too – Financial self-care requires setting aside time to think about money. It takes only a couple of hours a month. What did you spend in the past four weeks? 

Did you have enough to last until payday? Is there anything you need to buy soon that needs planning for? Do you regret any purchases?

This kind of thinking gets you organised and puts you in the right frame of mind.

Then take action – swap utility providers once your contract is up and move your credit card balance to an interest-free card. 

Find out the passwords to your joint accounts if you don’t know them (too many of us don’t!) in case the worst happens.

Like other forms of wellness, financial resilience is a fantastic stress-buster.

It won’t solve the big economic inequalities that women face in society — that’s a campaign we must wage together – but it’s a start.

• Adapted by Louise Atkinson from Why Women Are Poorer Than Men And What We Can Do About It, by Annabelle Williams (£14.99, Michael Joseph), out now.

This post first appeared on Dailymail.co.uk