You may be familiar with the gender pay gap — the oft-cited statistic that
women earn 82 cents on average for every dollar that white men do. But are
you familiar with the gender wealth gap? This stat is cited less often,
but I’d argue it’s more meaningful: Women own only 32 cents for every
dollar a man has. And, for both of these stats, the numbers are far less
for women of color.
The difference between the pay and the wealth gap is driven by a number of
factors: for example, we take more career breaks than men do. We suffer
from the “pink tax.” We are charged higher interest rates on loans. It’s
also because historically, we haven’t put our money to work making money
for us: We haven’t invested as much as men have. For many of us, it’s
because investing has felt too unapproachable — we thought it was for rich
people, or the jargon has been off-putting.
There is a significant gap between men and women who invest in the stock
market, whether through individual stocks, funds, or exchange-traded funds
(ETFs). Since equities outperform all other asset classes over the long
term, by not investing in these assets, women are at a disadvantage.
If we want to close the wealth gap, we have to come at it from every
angle. We have to stop paying women 80 cents to a man’s dollar, we have to
start raising girls the way we raise boys and we have to free ourselves
from a society that has all different kinds of expectations about how
women should act and behave. We have always wrestled with what has been
expected of a woman versus what we expect of ourselves. The conflicting
messages of millennial womanhood: to be ambitious but never bossy, strong
but skinny, honest but polite, supportive of my fellow sisters’ success
while the culture gets off on girl fights.
“Wanting more money is not selfish or greedy or evil, it’s what will
allow us to do and be and have what we want. I want that for every
woman.” —Jennifer Barrett, chief education officer at Acorns
“Rich” is still a man’s word. And to change that we have to address
unhelpful stereotypes that lead women to think money is evil, not
desirable and most importantly not ladylike. Stereotypes such as: “Men
make money, and women spend it.” (Ugh.) That women are bad at managing
finances. That women don’t care as much as men do about their careers.
That women caring about money are greedy and self- centered.
When we overcome that barrier and encourage women to gain back control of
their finances and start investing we will find that women are often the
better investors. Several studies have shown that women’s portfolios
outperform their male counterparts because of the inherent qualities that
women possess by nature, that differentiates them from male investors in
their approach of investing. Women are usually more risk conscious,
willing to acknowledge and research what they don’t know and ‘slow and
steady wins the race’ broadly sums up their investment approach.
Women need to acknowledge that managing one’s own and the family’s
finances is not rocket science. It can be mastered with a little bit of
patience, effort and an open mind. Women should not shy away from
holding and operating bank accounts, trading accounts, demat accounts
and holding assets in their own name. If a woman is earning less or
thinks ‘she doesn’t possess the aptitude for investing, she can start
with a small systematic investment plan. In fact investing is one of the
best ways for women to ensure that they have the potential to accumulate
the same amount of wealth as men and thereby not only achieve financial
independence but eventually also financial freedom.
