Women and Money: Where Do You Stand?

by Miranda Marquit

As a female and a personal finance writer, I find it interesting when reports looking at women and money are released. Recently, a report called “Women in America: Indicators of Social and Economic Well-Being” was released by the White House. It offers some interesting information about how women make money these days, a considers the trends associated with women and money.

The bottom line from the report, as far as women’s overall financial health is concerned, is that women live longer than men, on average, but they also tend to earn less (in spite of financial progress over the years) over their lifetimes. The result is that women have fewer financial resources as they age — and they live longer in those circumstances.

Why Do Women Earn Less Over Time?

women and moneyThe reasons that women earn less over time has a lot to do with the careers they choose, as well as the roles they fill in society. According to the report, women are less likely to work outside the home than men are. Additionally, those women who do work outside the home are more likely to work part-time than men — and more likely to take time off to care for children and elderly dependents.

In most cases, this means that there aren’t many opportunities for women to earn enough to last them in retirement. (I’m in more fortunate circumstances; I don’t work outside the home, but I’m still the primary breadwinner with my freelancing business.) Some of this disparity could be overcome with a spousal IRA, in which working spouse makes contributions to an IRA set up for a non-working spouse. The fact that women miss out on earning money due to their roles can cause problems later in life if her partner isn’t properly insured, or if there are issues associated with transferring assets.

And, of course, if a marriage or other partnership arrangement dissolves, that can cause even more problems for a woman who has spent most of her time working part-time, or taking care of the home. I’m not saying that it’s a bad thing to stay home and raise your children; however, you do need to look at the realities of the situation, and realize that it puts you at more financial risk. You need to take steps, whether it’s with some sort of financial agreement to protect you in divorce, or whether you have your own money set aside and adequate life insurance for your partner, to ensure that your financial future is safe when the time comes.

Another interesting point is that of education. The report points out that more women are obtaining degrees than men now. However, fewer women than men earn degrees in higher-paying fields like engineering. One of the reasons that women, overall, only make 80% (in 2009) of what men, overall, make is due to the fact that women are in careers that offer lower compensation. As you consider your career path, it might be worth it to look into higher-paying options. You will earn more over your lifetime, and be more financial sound.

What do you think? Do women need to do more to improve their financial stability?

Photo credit: meddygarnet

Published or updated January 30, 2012.
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{ 5 comments… read them below or add one }

1 Krantcents

I think it is up to everyone to take steps to do more for themselves. Whether it is a woman or man, it is up to that individual to do more. Women gravitate to cetain professions that may or may not pay well. Teachers are paid the same no matter what gender, but it is not a well paying field. Nursing is equal for both genders, but you top out unless you are willing to become a supervisor. Engineering and computers are well paying fields, but do not attract as many women as others.


2 Adam

Saying sex, race, age, religion, etc are a disadvantage, is more of an excuse in my mind. Basic financial principles apply to everyone. Spend less than you earn, save for emergencies, avoid debt, etc. You do bring up some good points, with some common known facts, but it is important to remember that things in life are a choice. Deciding where to go to school, what degree to get, where you will work, etc will all make an impact on your finances. To use teaching as an example, the job is more secure than most, you receive a pension, there is known pay schedule for raises, and you get a spring break, winter break, and summer break. It is a choice if you become a teacher, whether you teach science or gym, if you use your extra free time to make money teaching ACT prep or sit in front of the TV.

If you want A you need to do B if you want Y you need to do Z. You need to make financial decisions that are aligned with your life goals. At the end of the day, one needs to say to them self: This is my current situation, I want to be financially secure, and I am going to learn and do what it takes to make it happen. This is America and with freedom comes responsibility. It’s up to the individual to decide what to do regardless if you have an X or Y chromosome.


3 Ginger @ Girls Just Wanna Have Funds

I just wrote about this subject on my blog earlier this week. Women are the default partners who volunteer to take care of children when they are sick or just by default of having a child. They decide to stay at home which can have detrimental effects on their career when getting back into the workplace.

Sadly, the longer a woman stays out of work, the harder it is to get back into her field of choice. When deciding to have children, these are the issues that should be discussed ahead of time such that the proper planning is put in place to avoid issues when deciding to return to work.

We live longer, but those of us who stay at home with children to raise them ourselves also have the burden of sacrificing the time in our life during our highest earning potential. I often wonder why so many women choose to stay at home with no plan B. The answer my mom gave me is that women often work hard at teaching their children the art of being independent while abdicating that responsibility to themselves.

Sometimes I think Stay At Home Moms hate my “message” because I do challenge them to have a plan in any event. It’s an uncomfortable subject, yes, but we should be prepared for anything.


4 Miranda

I agree that, no matter what you do, you should have a Plan B. I’ve seen too many women end up out in the cold. The most heart-rending, though, was a mother of 5 whose husband died. She had never learned about finances, letting her husband do it all. He didn’t have much life insurance, she hadn’t any marketable skills, and she had no clue about the family’s finances. You never know what will happen. If you are going to stay at home — and that’s your choice — you need to know the consequences. And you need to do everything in your power to have a Plan B.


5 Ryan

This is a heart-wrenching story, and something men need to be aware of as well. If families choose to have one parent be a stay at home parent, then they need to have adequate life insurance and have a backup plan in place (this goes for SAHM or SAHD).

My wife is a stay at home mom and we have a lot of life insurance on me, so that if I were to die, she shouldn’t have any immediate financial problems. My wife also has marketable skills and is good with money. So I feel confident that if I were to die, my wife and family would be taken care of. Even though I wouldn’t be around to see that, I can rest easy at night knowing that I wouldn’t be leaving my family in a bind (financially) if I were to die.


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