Closing the gender pay gap is only the start of financial wellness for women
According to the Financial Wellbeing Index, there’s also a significant financial wellbeing gap between men and women. The Index measures employees’ financial health, showing how financially fit people feel across eight categories: money worries, budgeting and planning, debt, protection, savings and investments, retirement, properties and mortgages, and tax.
Women lag behind men in terms of their overall financial wellbeing, with an overall score of 48.1, compared to 58.3 for men. They also have a lower score on every constituent index – except for debt, where their score is roughly comparable to that of men.
Saving for the long-term and making ends meet
The disparity between men and women is particularly noticeable when it comes to preparing for retirement. The Index found that 41% of women don’t feel confident that they’ll be able to retire at the age they want, compared to just 23% of men. And, just over a third of women say they’re not confident that they’ll meet their long-term financial goals – almost double the number of men.
Given these factors, it’s not surprising that just a 25% of women say that they feel well prepared for retirement. For men, the figure is 48%.
The ability to put money aside for the long-term is linked with employees’ ability to cope with everyday living costs – and women are more worried about surviving financially day-to-day than men. Twice as many women (16%) as men (7%) say that they worry about meeting living costs and 26% of women worry about making their finances last until pay day, compared to just 13% of men.
Even if women can save, many feel less well equipped to choose the best way to do so. Only 35% of women said that they feel confident choosing financial products for their long-term goals compared to 50% of men.
Getting to grips with the gap
There are many reasons why women’s financial wellbeing might fall behind that of men.
Recent data from HMRC shows that women’s median income before tax is lower than men’s in every single age group. The disparity is widest in the mid to late years of their careers, between the ages of 35 and 60. Women’s earnings peak earlier than men’s – between the ages of 35 and 39 for women, compared to between 45 and 49 for men.
According to government briefing paper Women and the Economy (March 2019), more than a third (6.3 million) of the 15.3 million working women in the UK in 2018 were part-time, and 28% of all female workers were on an hourly rate below that of the Living Wage, compared to 18% of male employees.
These figures could explain why some women find it harder to make ends meet on a day-to-day basis, and perhaps why they collectively feel less able to meet long-term savings goals than men.
However, financial wellbeing is about more than earnings. It’s also making sure all employees feel more in control of their finances and are able to plan for the future. In addition to making pay go further, financial education and access to appropriate products or financial planning tools help all employees, whether male or female, to improve their financial prospects for the future.
Although general demographic trends are a useful yardstick, everyone is an individual when it comes to their financial wellbeing. Most workforces will include highly paid women, men who work part-time, and employees who buck UK data trends in any number of other ways. A well-designed financial wellbeing strategy makes sure employees can access the support they need for their own personal situation, not that of a non-existent ‘average being’.
This article is provided by Close Brothers.
In partnership with Close Brothers
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