Lazy EszterThe social and political oppression of women is hardly a new concept for modern feminists. But with a range of pressing issues such as reproductive rights, domestic violence, rape culture, or (the lack of) women’s representation in government, we often forget about another area in dire need of feminist attention: money. Of course, many people are aware of the gender pay gap, but did you know there is also a huge investing gap, resulting in a wealth gap between men and women?
What exactly is the problem?
So, you’ve heard of the pay gap: that on average, white women make 80 cents on every dollar a man makes – and the numbers are considerably bleaker when talking about women from minority backgrounds (Economic Policy Institute). As big of a problem as that is, the financial insecurity of women doesn’t stop there. There are myriad aspects of money where women face disadvantages, leading to increased vulnerability to poverty.
For example, there is a female funding gap: women in the UK launch businesses with 53% less capital on average than men. Female founders have a much harder time securing venture capital to grow their companies: in Europe, of all the VC financing of tech companies, 93% went to all-male founding teams, 5% of the capital went to mixed teams, and only 2% to all-female founding teams. The funding gap could be explained by fewer women launching large scale businesses needing venture capital, female founders not knowing as much about financing opportunities as men (talk about a failure of the education system!), having a smaller social network that is often crucial to getting your project off the ground, and – undeniably – a gender bias in the venture capital process (Credit Suisse).
Of course, not everyone can and will be an entrepreneur. However, another area where women’s financial participation lags behind is investing.
Research from 2018 shows that the value of investments held by women aged between 21 and 53 is just half that of men in the same age group. Last year, Forbes reported that since Covid-19 hit, investment in the stock market is overall up in the US, but we should also look at who’s driving this post-pandemic boom: men (23%) are investing in the stock market more compared to only 10% of women.
These differences are often written off as natural: women are more cautious and risk-averse, men are more likely to take risks and are naturally better with money. However, I’d steer clear of such tiresome gender stereotypes. In truth, the culture and the language around money and investments are incredibly patriarchal and macho (just think of the “finance bro” archetype), including overly masculine marketing of investment platforms and apps that don’t exactly make it enticing for women to take part. Add to that centuries of financial exclusion (it wasn’t that long ago that women were not allowed bank accounts or couldn’t own property, in fact, multiple countries still actively restrict women’s right to own and administer assets); lower disposable income due to lower pay; girls’ dissuasion from pursuing maths, and thus indirectly from maths-heavy degrees such as finance; and the fact that women are time-poor from carrying out 2-3.4 times as many hours of unpaid work than men (such as cooking, cleaning, and caring for children and the elderly), making it difficult for them to self-study and improve their financial literacy.
It is quite clear that the financial inequality of women is systemic and the blame cannot be put on personal responsibility.
The consequences of the investment gap are rather dire, too: savings interest rates are low and often outpaced by inflation, making money stored in cash (meaning in a current or savings bank account) lose value in the long term.
The investment gap leads to a wealth gap between men and women since the latter don’t benefit from greater returns on their investment. Women may earn around 80 cents to a man’s dollar, but they only own 32 cents (once again that drops to mere pennies in the case of women of colour). The wealth gap limits women’s autonomy and financial independence impacts their quality of life, and puts them at risk of financial fragility, especially in times of crisis such as Covid-19 or the climate crisis (both of which affect women disproportionately). They also lag behind men in pension planning, while on average, women also live longer than men. This means that their smaller savings will need to be spread over more years of retirement, putting 75% of women between 35-50 years old at risk of poverty in old age, according to an estimate from Germany.
Financial feminism to the rescue
Those numbers are quite depressing, aren’t they? The goal of financial feminism is to address the gender financial inclusion gap and educate and encourage women to take control of their personal finances, while also raising awareness of the above issues and urging systemic, policy-level changes.
Thankfully, there are committed activists and money influencers working to make a change, however slow that change may come. Younger women are starting to become more conscious of personal finance and there are multiple finance blogs and podcasts aimed at women now that are trying to improve investment confidence. Here are a few ideas on how you can also get involved:
- Talk about money. While talking alone won’t erase financial inequality, staying silent is definitely maintaining the status quo. Money can be such a taboo subject or considered impolite to discuss, but it shouldn’t be this way. Bringing it up in conversation with friends, family, or partners can lead to knowledge-sharing or a better understanding of the options available to you. Talking about money can also just make you feel better: according to Ellevest’s (an investment and financial literacy platform by women, for women) 2021 Financial Wellness Survey, nearly half of women (45%) reported that talking about money helps them feel more supported, reduces stress (41%), and makes them feel more informed about their own financial decisions (39%).
- Speak up for yourself and others. Firstly, you need to practice self-advocacy in the workplace, so you are paid what you are worth. Secondly, if you are in a position to do so, you can speak up for others: advocate for equal pay or a financial wellness program at your workplace – for example, you can suggest financial literacy training for employees. Ask your school or local council what plans – if any – they have to improve financial literacy, inform yourself and raise awareness of any such opportunities. You can always email or call your representatives to draw their attention to these issues. Elections are also your chance to vote with women’s issues in mind.
- Educate yourself. The issues discussed in this article are undoubtedly institutional and systemic, which is why it’s important to advocate for others and achieve change on a systemic level, so all women can benefit. At the same time, you can have a direct impact on your own personal finances today. You might find budgeting, stocks, bonds, shares, or NFTs confusing and boring (I’m absolutely guilty of this), but remember the statistics from earlier? You need to get over the fear and/or boredom to take control of your finances. Not only is it a feminist act, it’s also an important part of self-care.
- Invest for change. Usually, the aim of investments is to earn financial returns (in simpler terms, make money). However, “impact investment” is a way to do that while putting your money towards good causes that will have an intentional and measurable positive societal or environmental effect. A subset of that is “gender-lens” investing, where your investment goes directly to female founders, companies that advance women’s causes, or offer products or services that directly impact women’s lives. Investing in women can be good for your returns, good for business, and good for society too – so once you’ve overcome step 3. look into impact investments next!
LazyWomen financial feminist recommendations
If all of the above still feel intimidating, here are some recommendations – influencers, podcasts, books – to get started thinking about personal finance:
- Tori Dunlap, HerFirst100K: not only does Tori make fun and useful finance videos for her TikTok (to 2M+ followers, no less), but she also has a website with amazing free resources to get you started on a saving and investment journey. She is also the host of the Financial Feminist podcast, if you prefer audio content!
- Viv aka Your Rich BFF: another must follow on TikTok is Vivian, or @yourrichbff, Wall Street Trader turned finance creator who shares budgeting, debt management, home buying, and other personal finance wisdom in easy-to-consume, bitesize video format.
- So Money podcast with Farnoosh Torabi: So Money podcast brings you candid conversations about money with the world’s top business minds, authors and influencers. The host Farnoosh is an award-winning financial correspondent and best-selling author, who became a renowned expert on personal finance after climbing out of 30 000 dollars of debt herself and realizing there was not any effective and digestible advice out there for young people.
- Girls That Invest: another podcast recommendation is Girls That Invest. Join Sim and Sonya, two millennial investors who are extremely passionate about all things investing and personal finance as they break down the intimidating and not-so-well-taught world of investing and growing wealth, minus the jargon.
- Financial Feminism: A Woman’s Guide to Investing for a Sustainable Future by Jessica Robinson: if you liked the idea of impact investments, this is the book for you. Robinson demystifies the financial services industry and urges readers to use their financial power to invest in a sustainable future and build the kind of world they want to live in.
Written by Eszter Sólyom. Find her most recent pieces here!