Why we all need to talk about money more - especially women
I’ve always wondered why my male friends discuss money matters more openly and more frequently than my female friends.
Certainly in my third year of university, I could tell you the starting salary for most of my guy friends’new graduate jobs but none for those of my girl friends.
International Women’s Day seems an appropriate time to ponder – why don’t women talk about money more?
We are happy to share some of our most personal secrets with our best friends and give advice on every aspect of each other’s lives, but why won’t we discuss how to improve our financial future?
The exact reasons are difficult to pinpoint, but I suspect one factor is that men are more likely to study subjects like economics and maths, and go into careers in finance. If your job focuses on money, you will inevitably discuss this more and have greater access to and knowledge of relevant products.
The impact of women not having these conversations has been revealed by research. Holly Mackay, founder of financial advice website Boring Money, frequently discusses data quantifying the gender investment gap.
She’s said: “Women are typically paid less and are also less likely to engage with the investment products which could deliver better returns for long-term savings”.
Nearly three-quarters of financial assets controlled by women are just sitting in cash, likely not even keeping up with inflation let alone helping our assets growing further.
According to Boring Money’s 2019 Online Investing Report, 13% of women have stocks and shares Isas compared to 21% of men. Women have 29% of the total stocks and shares Isa wealth. If the same number of women invested the same amount as men, there would be £115bn more invested in the UK.
This disparity between the genders can have significant ramifications in the long run.
The UK’s pensions gap is twice the size of the gender pay gap. As Lucy Warwick-Ching said in the FT’s Women at the Start report yesterday: “The Prospect trade union has reported that the gender pension gap in 2016-17 was 39.5%, which equates to an approximate average shortfall of £7,000 – more than twice the level of the 18.4% gender pay gap in 2017.”
Obviously this will be partly due to career breaks, but not talking about money will exacerbate the issue.
Women live longer than men so are more likely to fall short of money in retirement.
Additionally when it comes to the 17.9% difference in earnings between women and men (according to Trades Union Congress analysis) these conversations can help women realise their value and help them ensure they are paid fairly for their work.
There has however been an improvement on previous generations.
My mum never would have dreamt of talking to her friends or anyone for that matter about money, it was considered taboo.
I think this perception lingers today and is what still prevents many people discussing their finances.
But we – millennials and probably Gen Z too – will be the first generation for decades (or centuries?) to be worse off than our parents, and as a result both women and men need to be more proactive and make our money work harder.
Talking to friends facing similar issues such as student loans and saving for a home can provide invaluable insights and help in sticking to achievable goals.
And as discussed in our article on the wonders of compound interest, ‘Why your first 10 years of saving could be more powerful than the next 40 combined’, if you start saving earlier it can make a sizeable difference in the long run.
However, these conversations are probably more important for women, because of the gender pay, pensions and investing gaps. The more we talk about it, the less awkward it will become and the more we can learn from each other.
So next time you’re out with one of your friends or whoever you feel comfortable with, ask them if they’ve thought much about their pension. It might well be the most useful conversation you could have over a glass of wine or cup of tea.
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