Throughout history, the barriers to financial independence for women have been especially tough – if not impossible. For example, it was technically legal for banks to refuse credit and loans to unmarried women – and to require married women to get their husband’s permission for credit and loans – until 1974, when the Equal Credit Opportunity Act was passed.
Fortunately, things are improving. But there are still obstacles to overcome–including the struggle for equality in finances. For example, the latest earnings comparisons available from the U.S. Bureau of Labor Statistics reveal that full-time female workers earn only 82 percent of what their male counterparts earn.1
Other obstacles to financial independence for women include:
• Motherhood. Women are more likely than men to take time away from work or reduce their work hours because of caregiving responsibilities The American Association of University Women (AAUW) contends that this creates “the Motherhood Penalty,” causing mothers to make “only 58 cents for every dollar paid to fathers.2
• Financial literacy. Men are twice as likely to take courses that lead to careers in finance.
• Life expectancy. According to the U.S. Centers for Disease Control, the average lifespan for an American male is 76, while the average woman in America will live to be 81.
How women define financial independence
Bank of America surveyed more than 3,500 women ages 22 and older about their thoughts on financial independence. The top three indicators of financial independence, based on that survey, included:
• Being debt-free: Paying down debt provides more financial flexibility.
• Having an emergency fund: Being able to access savings when you’re in dire need provides peace of mind.
• The ability to support yourself without any financial help: Inflation, stagnating wages, and debt can make it tough to keep up with everyday expenses. It’s important to cut back on spending, rather than asking family members or friends to help.
Nevertheless, she persisted
Despite the obstacles women have faced – or maybe because of them – the number of women investors is growing rapidly and doing well! Based on a 2021 study by Fidelity, 67 percent of women are now investing outside of their retirement accounts, compared to 44 percent in 2019. To top it off, Fidelity’s analysis of more than 5 million customers showed that women outperformed men by an average of 40 basis points annually – or 0.4 percent – over the past ten years.3
In its article about women and investing, Bankrate said that women hold incredible potential, and shared the following predictions:3
• By 2030, women in America are expected to control much of the $30 trillion in financial assets that baby boomers possess today.
• A 2021 study by BNY Mellon showed there would be an extra $3.22 trillion of assets under management from private individuals if women invested at the same rate as men.
• The same BNY Mellon study also found that women are more likely to make investments that have positive impacts on society and the environment. This would tack on an extra $1.87 trillion of additional inflows into socially responsible investments if women invested at the same rate as men.
• The number of female investors is surging. A 2022 global survey from social trading and investment company eToro found that of the 9,500 female investors surveyed, 48 percent of them were new to markets over the past two years.
Based on these predictions, women and their quest for financial independence could be one of the best investments we make!
For guidance with your investments, please reach out to Lloyd Worth at Worth Wealth Management, (303) 558-0214.
1 U.S. Bureau of Labor Statistics, posted September 2021: Highlights of women’s earnings in 2020
2 AAUW: The Motherhood Penalty
3 Bankrate: Women and investing in 2023: Here’s Everything you need to know