The year is 2021. In most countries women have equal rights, at least on paper. But, writes Magda Wierzycka, the battle for equality is far from won until women conquer the last outpost: financial equality.
The year is 2021. In most countries women have equal rights, at least on paper. But, writes Magda Wierzycka, the battle for equality is far from won until women conquer the last outpost: financial equality.
Women would rather talk about their own death than money.
This shocker from a Merrill Lynch study sums up what I believe is the biggest obstacle to women achieving financial equality: we don’t talk about money, because we’ve been led to believe we don’t know enough and therefore lack confidence.
This is largely because women are constantly fed a stream of lies about our ability to earn and manage money.
Ready for some hard truths?
SEX
When it comes to money our sex matters, a lot. The odds are stacked against women making money, keeping it, managing it and turning it into wealth.
The Yawning Gap
Women make up 45% of South Africa’s total labour force, yet they earn an average of 30% less than male workers, reports Stats SA.
And while South Africa ranks 19 among 149 countries on the Global Gender Gap Index, recent research from the University of Stellenbosch paints a different picture on the ground: “Around 38% of households are headed by women. Female-headed households are approximately 40% poorer than those headed by men.”
The research further noted that female-headed households support extended family twice as much as male-headed households.
Women also spend 2.5 times more time on unpaid care and domestic work (i.e. raising kids and maintaining the household) than men, which UN Women estimates would constitute 10 to 39% of GDP if assigned a monetary value.
Let that sink in: if women were paid for all their working time, like men are, those earnings would equate to a large percentage of a country’s GDP.
All these factors add up to this: South African women earn far less for the same amount of work; support more people on their income; and spend more working hours doing unpaid work. This results in women not being able to invest in their own financial security.
Financial ABCs
The most recent Standard & Poor’s Global Financial Literacy Survey paints a sobering picture: worldwide, only one in three adults are financially literate.
Women are around 5% less financially literate than men, but that gap increases as income decreases. So it’s fair to assume South African women, in general, fall short on financial literacy.
And financial literacy really is a big deal. Research shows that people who are financially illiterate do not benefit from compound interest, spend more on transaction fees, run up higher debts and incur higher interest.
In short: financial illiteracy means a vast number of South African women are always on the financial back-foot.
LIES
Now, onto the many lies women are told from the schoolyard to the workplace – lies that seep into our sub-conscious and make us believe we’re no good at money.
‘Women Can’t Budget/Spend Frivolously’
Ever felt like you’ve read tips like ‘just cut down on your latte each day and you’ll be financially secure’ hundreds of times in articles masquerading as real financial advice for women?
That’s because the majority of money-related articles aimed at women portray us as reckless spenders who, if only we didn’t get that new pair of shoes, would be financially secure.
Don’t believe me? A 2018 study by a UK bank found that 65% of money articles in women’s magazines focussed on how to cut down on splurging.
Here’s the kicker: according to a survey by CNBC, men tend to spend more on impulse buys than women!
And it’s not just avoiding impulse buys women are better at: a study by US investment firm Fidelity found that women save more of their salary in non-workplace accounts (Stokvel anyone?), albeit that the amounts are less because, well, the pay gap.
Locally, a recent Budget Insurance survey found that 54% of South African women save for emergencies or unexpected costs compared to 46% of men.
So women are not the reckless splurgers we’re made out to be; we’re actually more prudent with money than men.
‘Women Aren’t Good At Investing/Trading’
Women are hugely under-represented in the investment and trading space – that much is true. But it’s not because we’re ‘bad’ at it; rather it’s due to lower financial literacy, less experience and financial disempowerment teaming up to clobber women’s self-confidence.
A study from US investment giant BlackRock found that 68% of non-investing women thought their future would look better if they did invest, but did not do so because they believed themselves incapable.
The irony is that multiple studies show women are actually better investors, outperforming men by an average of 0.4 -1% per annum. It may seem small, but with compound interest over time this percentage is huge.
‘Women Are Too Afraid of Risk To Make Real Money’
It’s true that female investors statistically do not take as many investment risks as their male counterparts.
Some of that has to do with women’s lack of confidence, with a Merrill Lynch study finding that this changes the surer we become of our investment capability.
The more dominant reason women don’t take as many risks as men, however, is that we’re more judicious and spend more time researching investment choices. Or, as a recent Forbes article put it, “Women are simply more likely to take on appropriate levels of risk with their investments than men.”
Interestingly, female investors are also more discerning about what they invest in. “They’re more likely than men to invest in companies with a positive social impact and avoid harmful companies. They view investing as a way to actualise their values,” reports Forbes.
‘Women Don’t Save For Retirement’
A recent survey found that 53% of South African women have zero retirement plans, so
this statement would appear at first to be true.
That is until you consider that women are severely disadvantaged when it comes to
retirement savings.
For one, women earn less and spend more on taking care of their family, therefore they are unable to put aside more – or any – money for retirement.
Secondly, women lose much of their retirement contribution years to raising children, and are more likely to take part-time jobs that do not include retirement contributions in order to accommodate their caregiving responsibilities.
This is a huge factor, with female caregivers younger than 50 having 30% less retirement
wealth than non-caregivers, according to the US National Institute for Retirement Security.
So the trope of women not saving for retirement is not objectively accurate; the truth is either we simply cannot save, or it’s much harder for us to do so.
EMPOWERMENT
If the ‘Sex’ part of this tough talk made you despondent about the odds stacked against women, I trust the ‘Lies’ part made you realise women have far more financial savvy than we’re led to believe. And I hope this final part will make you realise just how much financial power women actually have.
Women in Business
Women are definitely stepping into their power in business, with Frost & Sullivan's Global Mega Trends to 2030 reporting that female-owned companies totalled more than 40% of registered businesses worldwide in 2020. Closer to home, a survey by SME South Africa found that 47% of SMEs are now led by women, a 6% increase from the previous year.
Funding and investment – a huge barrier to female-owned business – is also starting to turn in favour of women. This is unsurprisingly considering that female-owned business statistically present a lower risk to financiers.
The Future Is Female
Frost & Sullivan's The Global Mega Trends reported that global female income reached $24 trillion in 2020, up from $20 trillion in 2018, and that women now control $43 trillion of global consumer spending.
That’s right: the female economy is growing rapidly and is poised to outpace the economies of some of the biggest nations in the next five years.
And we’re just getting started: by 2030, there will be 100 million more women in the global labour force, and this is expected to close the gender gap in labour participation by 25%.
Speaking Truth To Power
Women are a long way off from financial equality, particularly in South Africa. But the tide is turning, and will continue to gain momentum if women realise their financial power, strengthen their financial literacy and own the confidence they deserve.
And that all starts by talking about money.