3 important ways the “gender gap” affects finances, and how women can tackle it

Woman standing under an umbrella next to a lake

It has been more than half a century since the Equal Pay Act was passed by parliament. While the gender pay gap is much smaller than it once was, it still hasn’t gone away.

According to the latest data from the Office for National Statistics (ONS) as of April 2021, women were still being paid 7.9% less than men.

As you can see, despite the great strides made in recent decades, financial inequality is still a serious issue in the UK. However, this phenomenon doesn’t just affect the amount women earn but also some other important aspects of their finances.

From investments to protection, the gender gap can have a noticeable impact on your financial wellbeing. Read on to find out the three main ways it could affect you and what you can do about it.

1. You may not be exposing your money to enough risk when investing

Whatever your financial goals are, from buying a home to saving for retirement, investing your wealth can help it to grow effectively.

It can also be especially important to preserve the buying power of your money during periods of high inflation. According to figures from the ONS, the Consumer Price Index rose by 6.2% in the year to January 2022.

Since inflation erodes the buying power of your cash over time, if your wealth doesn’t grow in line with it, you are losing money in real terms. This is where investing it can help you.

However, despite the benefits that this can have, research published in the Independent shows that women are half as likely to invest their wealth as men.

If you don’t, the impact of inflation on your money could mean that it’s harder for you to reach your financial goals.

For example, if your wealth is growing more slowly, you might have to delay the purchase of a new home. You may also not have enough in your pension fund when you come to retire (more about this below).

Investing can be a useful way to build your wealth, so if you want to get started then opening a Stocks and Shares ISA can be a great way to do so. This is a tax-efficient way to invest your money, as any returns are paid free from Capital Gains Tax (CGT) and so can grow more easily.

Despite this valuable benefit, research by Unbiased shows that only around 10% of women have this type of account.

If you want to know more about how to get started, seeking professional advice can be very useful. Working with a financial planner can help you to choose where to invest your money and decide how much risk is right for you.

2. You may not have the right protection for your needs

Without the help of a crystal ball, it can be very difficult to predict the future. Certainly, nobody in January 2020 could have predicted how the following two years would play out!

However stable your family’s finances might be now, it’s important to consider how quickly that can change. For example, if you fell ill and were unable to work, have you ever considered how that could affect your loved ones?

For many years, protection policies have typically been focused on men, who are usually regarded as the breadwinner of the family. According to FTAdviser, due to this harmful perception, there is a large gap in the level of cover that the two sexes tend to take out.

If you want to safeguard your family’s future against any unexpected problems, finding the right type of cover for your needs can be very beneficial.

If you want to find the types of protection that are right for you, working with a financial planner can really benefit you. They can thoroughly assess the needs of you and your family, giving you more peace of mind that you can overcome whatever the future may hold.

3. You may not be saving enough for your pension

Retirement is traditionally seen as a time to relax and do the things you were never able to do while you were working. You may have already considered how you’d like to spend this chapter of your life, whether that’s with long foreign holidays or simply spending more time with your loved ones.

Of course, if you want to be able to enjoy your retirement to the fullest, you’ll need to have enough wealth to pay for your desired lifestyle. This is especially important for women, as they typically live longer than men, so their pension will need to support them for a greater amount of time.

However, there is a large disparity between the two genders when it comes to retirement savings. According to research by Aviva, there is a massive 40.3% difference between the pension earnings of men and women.

This is due to several factors, such as the gender pay gap, as well as the fact that women are more likely to pause their careers to raise children. In fact, a study published by FTAdviser shows that a quarter of women over the age of 35 have no retirement savings at all!

If you want to ensure that you have enough to support the lifestyle you want, taking control of your long-term planning can be vital. In this important chapter of your life, concerns about money are the last thing you need.

To gain more peace of mind that you have enough to enjoy the retirement you want, seeking professional advice can really benefit you.

For example, using cashflow forecasting can be a useful tool to check if you’ll have enough for your desired lifestyle after you retire. If you aren’t on track, your planner can offer useful advice on how you can reach your goals, such as boosting your pension contributions.

Working with a planner can help you to know if you’re investing enough for your future, whether you have the right cover for your needs, and whether you’re on track to reach your long-term plans.

Get in touch

If you want professional and expert help to plan your perfect retirement, please get in touch. Email or call 01454 416 653.

Please note:

The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

A pension is a long-term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Your pension income could also be affected by the interest rates at the time you take your benefits. The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation and regulation, which are subject to change in the future.

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