Girls Just Want to Have Funds
On April 2nd Twitter and Instagram will blow up in recognition of Equal Pay Day.
The day symbolizes the gender pay gap by measuring how far into the new year women must work in the US to earn the same salary as men did the previous year.
This year the day lands on April 2nd (it varies each year). Women had to work 67 additional business days in 2019 to reach what men made in 2018. If nothing changes, that means a woman might need to work an additional 7 years (over the course of a 40-year career) after a man retires at age 62!
Another important day, but one that is overlooked, is Equal Investing Day.
The reason it isn’t recognized is, well - it doesn’t exist.
But as a female planning for my future, I believe it should! Along with pay inequality, disparities in investing behaviors between men and women contribute to the gender wealth gap.
Gender Investing Gap
The gender investing gap creates additional financial hurdles and has a significant long term impact on financial growth. Women investing at lower rates than men means missed opportunities (though performance is never guaranteed) to benefit from compound interest.
Financial Feminist and businesswoman, Sallie Krawcheck, has estimated that this could cost women almost $1 million dollars over a 35-year career span.
While the gender investing and pay gaps won’t disappear overnight, I believe we can slowly chip away at them by educating ourselves about personal finance. In honor of Equal Pay Day (and my Equal Investing Day), I explored options to improve my personal finances and start to invest more.
1) Pay down debt
Women carry more debt than men and on average pay higher interest rates on credit card debt.
I’ve focused on paying down my debt and refinancing debt held at higher interest rates. By scrutinizing the roster of credit cards in my wallet, I’ve made sure that the ones I’m swiping have reward and points programs and don’t create a larger pool of debt with high interest.
Less debt can also help free up money to invest!
2) In case of emergency…
As important as paying down debt and investing is, I need a healthy emergency fund.
An emergency fund means that you hopefully won’t dip into your fun money or make major changes to budgeting to pay for home or auto repairs.
As a homeowner, I’ve learned that when it rains it pours. As soon as the patio was repaired, our garage door stopped opening, and then our washing machine started to leak…and so forth! Having cash set aside for these sorts of expenses has saved me a lot of stress.
3) Understanding retirement options
Women fall behind men in contributions to their employer sponsored defined contribution plans.
A PNC Investments poll found that 57% of male millennial respondents contributed at least 6% to their retirement plans, as compared to 46% of the females who participated. Contributing at lower rates leads to less retirement savings.
One of the most important things I did was familiarize myself with my employer sponsored retirement plan and increase my pre-tax retirement contributions.
Many employers offer matching contributions in 401(k) plans. I made sure to take advantage of employee matching, which was essentially “free money.” This extra savings is on top of what I’m already contributing – a no-brainer!
Each employer has its own rules on the level and qualification of employee matching, the types of investments one can make, and other factors.
I’ve also elected to increase my contributions by just 1%. The increase did not really move the dial much in terms of my take-home pay. But the extra contribution put to work in my retirement account boosted my future savings.
4) You have to be in it to win it – consider investing more
Over the course of a lifetime, allowing money to sit in savings versus investing in markets can result in missed opportunities for compounded interest on investment performance (though performance is never guaranteed).
If you can afford to put away money for long periods and have an emergency fund, then you might want to consider investing. Markets can be volatile, but over longer periods there’s a better chance that the ups and downs can be smoothed out.
Most likely, if you participate in a defined contribution or defined benefit plan through your employer, your money is already invested.
But there are also other investing options, such as an Individual Retirement Account (IRA). This is another sort of retirement planning account and, depending on the type and if you have a retirement plan through your employer, there are a variety of tax benefits.
We cannot provide investment or pension advice; please speak to an independent adviser should you be uncertain what is appropriate for you.