The Cost of Being a Women
July 31, 2023 Author: Tess Downing, MBA, CFP®, Complete View Financial
While women continue to make great strides toward being considered equal to men, there is a price to pay for being a woman. Society has progressed in how we view women’s capabilities and values; however, there is a long way to go before women are seen as equal to men.
Women should strive to correct these inequities and to do so, women need to understand what these inequities are. Staying informed can help minimize the impact of potential financial setbacks posed to women.
The first step toward change is understanding finances and creating goals to overcome inequities. A financial advisor can guide you through what’s essential and help you set goals that meet your lifestyle.
Did you know that a woman has to put aside nearly twice as much as she earns throughout her career to save for retirement than a man? The parenting penalty demonstrates that women work less because they stop to take care of their families, compounded by the gender pay gap where women make less than their male counterparts. With these two factors at work, it’s crucial to understand how much women need to save for retirement.
Did you know women tend to be more cautious when investing? This means that returns on investment may be lower than men; now, add that women have a higher life expectancy; it’s imperative to spread out these investments and create a long life span for their savings.
Let’s examine these principles to understand what women should consider when monitoring their finances:
The Parenting Penalty
The parenting penalty comes from the traditional views in which parenthood leads to women working less and being more distracted on the job. It does not come from women being less productive.
While there has been a shift in the workplace for working mothers, there is still work to be done around the stigma of women in the workforce. The reverse is true for men; it is seen as a positive for a man to be a father. Working fathers are perceived to be more dependable and stable in the workplace.
Women are sometimes passed up for job opportunities, benefits, and raises because they have family commitments. With the high childcare costs, women may decide to stay home to take care of their children to save money; this decreases the number of years women work. On average, women work nine years less than their male counterparts.
The Gender Pay Gap
It’s no secret that women continuously get paid less than their male coworkers for jobs of the same caliber. According to the U.S. Bureau of Labor Statistics & Department of Commerce, for every dollar a man earns, white women earn 77 cents, black women 65 cents, and Hispanic women 57 cents. https://equalmeansequal.com/the-gender-pay-gap/
Some attribute this gap to the jobs that women choose; however, even in nursing, a female-dominated industry, women make 10% less than their male counterparts.
Financial Literacy Penalty
Traditionally, men are taught more about finances than women growing up. Men typically have more education on finances and managing money, whether in school or at home.
This gap is getting smaller; however, when investing, women tend to be more risk-averse than their male counterparts, leading to lower rates of return. They miss out on the more risky, higher-return stocks.
The Life Expectancy Penalty
Women live longer than men. Consequently, the lifetime expenditure for women is higher than for men. With this difference in life expectancy comes a difference in the amount needed to be saved for retirement.
One optimism about the life expectancy difference is that more men have life insurance than women, and since women live longer, they are more likely to become a widow.
The Pink Tax
The pink tax, or gender tax, depends on and covers various costs, from consumer products to insurance.
Consumer Products
Products marketed to girls and women are priced higher even when made up of similar substances to other products. Also, because of the current culture and stereotypes, women are always expected to be well-groomed. Women will spend more on makeup, hair, hygiene, and fashion. This is because of the pressure women face to look their best 24/7.
Health Care and Insurance Costs
For women without insurance, costs such as birth control and menstrual products remain immensely high. Even with insurance, the co-pays for gynecology visits and reproductive care stay high and do not seem to decrease. In terms of insurance, women tend to file more claims. Therefore, companies began charging higher premiums for women compared to men.
Disability Insurance
Men pay less for disability insurance than women do. Women file more claims for disability due to pregnancy and mental health conditions and tend to be disabled for extended periods.
Investments and Borrowing
Regarding credit scores, student loans, car purchases, and more, women tend to be less of a risk and make less risky decisions. Women more confident in their findings may be charged higher interest rates because they are less likely to shop around. When paying back borrowed money, women may take longer because of the gender pay gap. Lastly, with repairs and changes, women tend to be charged more because they are viewed as less educated. These stereotypes and generalizations can lead to higher interest rates and upfront costs than men.
What’s the Total Cost?
The costs because of being a woman are endless. Knowing where to look for these extra costs, women can better prepare and understand how to make intelligent financial decisions. While times change, women still need to achieve full equality and respect compared to their male counterparts.