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Women and the Financial Frontier


Addressing the financial challenges facing women, with tips men can use too.

Women are centre stage in 2019. They’re speaking out across social media and demanding change – and there are signs they’re well positioned to get it.

The federal government has a gender‑balanced cabinet for the first time in history. Globally, female empowerment, workplace equality and the issues women face are the subjects of daily headlines. And in February, Maclean’s magazine printed two versions of its cover – offering the issue at $6.99 for women and $8.81 for men to draw attention to pay equity and how far we still have to go to achieve it.

Financial empowerment is an important frontier for women. They have a lot going for them already. More and more Canadian women are taking their places in university classrooms and corporate boardrooms, suggesting strong earning potential. The wage gap in this country has narrowed as women’s median annual earnings have more than doubled over the past half century.

Furthermore, women have a track record of outperformance in investing. One U.S. study found that women achieve a 0.93 per cent return advantage because they don’t trade in and out of investments as frequently as men do (and therefore don’t lose as much to commissions and fees). Another found that women have a 0.4 per cent performance edge annually, and boost their balances further by setting aside an average of 9.0 per cent (compared to men’s 8.6 per cent) of their paycheques in workplace retirement accounts.However, as the Maclean’s covers pointed out, a significant wage gap persists.

Recent data from Statistics Canada shows that women working full‑time in Canada earn, on average, $0.74 for every $1.00 their male counterparts make. The hourly wage rate, which takes into account that men often work longer hours than women, shows women earn $0.88 for every $1.00 men earn. So, women may set aside more of their paycheques, but if those paycheques are smaller the dollar amount they save won’t be as high. And while women may get slightly higher investment returns, if those higher returns apply to a smaller asset balance they’ll likely still end up with less. That’s a problem because women often need more savings than men.

Supporting time off work

Why do women need more savings? One of the biggest reasons is that women tend to experience more time away from work throughout their lives, whether they’re raising children, caring for relatives or enjoying a longer retirement thanks to greater longevity.

Mothers tend to take significantly more time off than fathers after the arrival of a baby, using an average of 31.7 weeks of employment insurance parental benefits compared to the 16.1 weeks used by fathers.8 And, among families with one or more children under age 16, 16.2 per cent have a mother who stays home, while just 2.0 per cent have a father who stays home.9 The loss of income during the period a woman spends at home is compounded by the opportunity costs. Women who are out of the workforce may miss out on raises and promotions, as well as educational and networking opportunities.

As a result, they may not advance as quickly or reach the highest (and best‑paid) levels in their careers. In addition, more women than men are among the 28 per cent of Canadians who are helping someone with a chronic health problem – and caregiving can turn into a full‑time job. For example, seven per cent of people caring for a parent spend 30 or more hours a week doing so.10 Overall, women caring for ailing family members lost an estimated $221 million in wages every year from 2003 to 2008 because they had to miss work, reduce work hours or leave their jobs.

Then there’s life expectancy. Women’s savings often have to stretch over more years in retirement. For example, women born between 2007 and 2009 can expect to live to 83, while men born in the same period have a life expectancy of 79.12 That average extra four years will clearly cost more and require additional savings.

Forging ahead

There are many approaches individual women can take to maximize their earning potential and strengthen their financial position – and they work for men too!

1. Negotiate

Negotiate your salary when starting a new job. Employers often have an acceptable range in mind, and starting with a higher number provides a higher base to build on with future raises. Once you’re in a job, lay the groundwork for a salary increase by proactively asking managers for recommendations that will help you do your job better and position you for a raise or promotion.

2. Communicate

Clearly communicate accomplishments as they occur. They’ll help you make the case when the time comes to ask for that raise or promotion – and the case will be stronger if you can put numbers on it. So, if an initiative you spearheaded increased sales, attracted clients or boosted efficiency, find out by how much and share the information widely.