My Innovating Advice: Develop Women’s Financial Confidence

My Innovating Advice: Develop Women’s Financial Confidence

I was fortunate enough be invited as guest speaker on Kate Holmes’ Innovating Advice podcast. I got to talk about my advocacy for financial confidence and the risks women face in wealth and finance. 

My advocacy on gender and pay equality came to be when I realised that women face a lot of long term financial risks due to their specific life circumstance. On one of my previous blog posts, I discussed the inherent risks of being a woman. 

A simulation of women’s wealth accumulation over a lifetime showed shocking numbers. A pay gap of only 10% ( all else equal) could lead to a wealth gap of approximately 40% between a man and a woman! 

To give you an idea of pay gaps in the EU, here are the numbers:

  • The country with the lowest pay gap as of 2019 is Romania at 3.5%.

  • The country with the highest pay gap as of 2019 is Estonia at 25.6%.

  • The EU average as of 2019 is at 16.0%.    

If you'd like to read more about this. You can access the fact sheet from the European Commission here.

Women sell themselves short

Further research shows that 8 out of 10 women believe their financial capabilities and knowledge are lower than their partners'. 6 in 10 women shy away from long term financial responsibility due to lack of financial confidence. In short, Women underestimate themselves and their capabilities.

My reaction to his research is simple: unless your partner would have a degree in finance, there is little reason to believe that they are inherently more savvy in long term financial matters. This is a perception gap that we really have to close.

Women are perfectly capable of managing short term financial matters, monthly budgets and household expenses. Trust me when I say this part of finance is far more time and energy consuming than long term financial planning. So if you’re already doing the hard part, why would you not be good enough to do the easy part, too?

To this I would also add a (potentially controversial) comment: if long term financial planning had been a boring chore, I am sure that historically, men would have found reasons to delegate it to the women in the first place. So rest assured that it is the more fun and engaging part of managing money!

Empower Women and Encourage Them To Step Up

If we want to reduce gender inequality, we have to empower fellow women to step up. We have to encourage them to learn and take responsibility when it comes to long term finances. We have to encourage and educate women about how we should perceive our worth, value our time, and plan for our financial futures. Women need to develop confidence so that they can fully take control of their finances. 

The first step I recommend:

IGNORE THE INTIMIDATING FINANCIAL JARGON and the fact that you feel it is too complex to understand. Finance is complex, but the good news is: you don’t need to be an expert to put a robust, long term financial plan in place.

To make an analogy with the medical world: you don’t expect to be knowlegeable yourself in anatomy and medicine before seeking out a cardiologist if you have a heart problem. So why would you expect to have to be knowledgeable in finance before seeing out a trustworthy financial advisory?

All YOU need to focus on is: clarifying your short term, mid term and long term goals. Translating that into a robust financial plan is not so hard once you have found the right advisor. The latter is probably the bigger challenge, especially for many women. How can I find an advisor I can trust, who is not just pushing products at me or charging me for “financial wellness” coaching that I don’t really need to pay for at all? If you’d like to discuss that topic in depth, direct mail me and I’ll be happy to address it in a future newsletter.

Women Are Not "Just A Segment"

Too many banks, financial advisors and event online platforms still tend to treat women simply as a segment to market to.  We women are about 50% of the population and we cannot accept to be an afterthought in their sales processes, designed to meet the needs and expectations of men. We have the right to expect a value proposition that is tailored to our needs: to the language we feel comfortable with, to the level of information we seek, to the life circumstances we face, and to the time management challenges we face juggling families and carreers.

From the start, businesses and sales processes need to be developed with women in mind. Whenever they create something -- product, service, platform, etc. - financial services providers need to become more inclusive and ask "Will this appeal to women as much as it will appeal to men?"

On our side, we women need to learn to be more confident in speaking out our needs and wants. We need to put our foot down and know our worth - and if we don’t feel comfortable talking about finances with an advisor who throws jargon at us, WE ARE NOT THE PROBLEM: it is the advisor who needs to adapt to our needs, and not vice versa. Women are the clients. Women don’t need fixing. The system needs fixing, to fully embrace women’s needs and meet their expectations.

Start Early: Empower Girls...And Boys!

As the saying goes: prevention is better than cure.

With that in mind, I encourage that you start teaching your kids about pay equality and financial confidence. It does not matter if they're a boy or a girl! What's important is that you open up these topics and teach them while they are young.

If they grow up aware and practising equality, then they can also become a positive force of change amongst their friendship circles and later on as professionals. After all, it only takes one to start a movement. If you also couple it with a lot of positive reinforcement and examples, then they're sure to grow up fighting for equality!

Once again, fellow parents, this is why I wrote A Smart Way To Start. I realised that only fighting for gender equality in the professional world is not going to be enough. We need to eliminate biases our children unintentionally grow up with. So I tried to break down all those concepts in a way that's easy to understand and to remember -- through rhymes and illustrations.

I do hope you found this helpful as you journey on through parenthood. If you'd like to learn more and read more tips, please subscribe to my Monthly Money Tips newsletter!

Mara Harvey

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