Why have women a more complicated life cycle planning and why are they therefore less wealthy?
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Why have women a more complicated life cycle planning and why are they therefore less wealthy?
Karen Wendt, SFTL President & expert in responsible, impact and sustainable investing
https://swissfintechladies.ch/sftl-authors/
Why have women a more complicated life cycle planning and why are they therefore less wealthy?
Women have to consider a number of life-changing events when planning their financial wealth. Whereas it is still typical that men go to work for their entire lives, women get pregnant, get kits, work part time, care for their sick parents, and may even get divorced. As the Wisconsin Longitudinal Study shows, a lifetime of lower earnings for women translates into greatly reduced wealth accumulation. Okay, this makes sense, but this is not the whole story.
We also know that women are educated about money by their mothers, whereas men are educated about financial literacy by their fathers. This leads to the following situation: Women are really good at saving money; the household book is the godfather for this education, whereas men are educated in a more risk-taking manner.
So the first thing women have to revisit when we talk about money is their money mindset, their financial literacy capabilities, and their investment personality.
When it comes to understanding and coping with finances, statistics show that women lag behind men by a depressingly large margin. A survey by investing app Moneybox last year revealed that seven out of 10 millenial women say they have never been taught to manage money. When you compare this to 42% of men, it’s pretty bleak.
Women also have unhealthy beliefs. They still believe they can make money by being dependently employed, and they just need to step up the career ladder. The inconvenient truth is that you cannot get rich by applying this strategy. You cannot become financially independent by applying this strategy. The reason is simple. Your salary will only grow to its maximum with the growth rate of the economy. If the economy or your industry grows 2%, you may get a pay raise of 1%. If macroeconomics and geopolitics come into play too, your pay raise might be melted away by inflation or unforeseen issues. So ladies, this is not a strategy to grow rich!
A shocking study from the US is lifting a further secret: There is a secret out there—a painful, well-kept secret: At midlife, between a third and a half of all successful career women in the United States do not have children. In fact, 33% of such women (business executives, doctors, lawyers, academics, and the like) in the 41–55 age bracket are childless. So having children and an ambitious career still seem not to go together too well. The findings are summarised in the study Creating a Life: Professional Women and the Quest for Children. It is startling and troubling. The study makes it clear that, for many women, the brutal demands of ambitious careers, the asymmetries of male-female relationships, and the difficulties of bearing children late in life conspire to crowd out the possibility of having children.
So what do we do now? It seems it's not so easy to have it all. Well, one alternative can be to learn to invest and to create a return rate that is above the economic growth rate. That, in a nutshell, is the secrecy. Your investments have to grow faster than the economy. Then you might not necessarily work your ass off and remain childless. Then you might be able to have it all.
What it requires: courage, stopping thinking in the old mind models, and learning enough about financial literacy and investment so you can create your own growth rate that exceeds the economic growth rate. It also requires budgeting, lifecycle planning, and understanding your money personality. And the most important thing it requires is to start today. Our free financial literacy trainings might be a good starting point. Look around the market and start with a low-cost program. . Whoever wants more should come to our angel training; it is open to women and men, of course.
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Karen Wendt
President of SwissFinTechLadies