Why Financial Education and Confidence Matter for Women 

November 4, 2024

By cdarmody on November 4, 2024
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October 28, 2024 marked the 50th anniversary of the Equal Credit Opportunity Act, which outlawed discrimination in access to credit on the basis of sex. Despite great strides in women’s access to financial resources in recent decades, an equity gap still persists – equity in financial education, representation in the industry, and effective planning for women.  

As more women step into roles as primary financial decision-makers in their households, the need for financial education and empowerment is greater than ever. Over the past five years, the number of married women taking the lead on household finances has surged by 30%, with women now managing one-third of total U.S. household financial assets.2 Yet, despite these milestones, women still face unique financial challenges that underscore the importance of confidence and education in financial planning.  

The Challenges Women Face in Financial Planning and Investing  

Despite their growing role in financial management, women encounter specific challenges that can affect their long-term financial security:  

  1. The Investment Gap: Women contribute 30% less to their retirement accounts than men, partly due to the pay gap and career breaks.13 Yet, women who do invest tend to outperform their male counterparts by adopting a disciplined, long-term approach. They trade 27% less than men but often utilize a buy-and-hold strategy that helps secure more consistent returns.8  
  2. The Pay Gap: The pay disparity still exists, with women earning 82% of what men earn, a figure that has remained stagnant since 2002.3 This gap affects every aspect of a woman's financial journey, from starting salaries to peak earning potential, which is capped $35,000 lower on average than men’s. Over a 40-year career, a woman can expect to earn $407,760 less than a man in the same role, impacting retirement savings and lifetime financial security.4  
  3. Social Security Disparity: As a result of the pay gap, women receive 20% less in Social Security benefits compared to men.13 This difference can significantly affect women, particularly in their later years when they are likely to rely on this income for support.  
  4. Career Breaks for Caregiving: Women are far more likely to take career breaks, with caregiving being the top reason.14 These breaks affect women’s earning potential, retirement contributions, and Social Security benefits, and they create unique needs for tailored financial planning.  
  5. Longer Life Expectancy: In the U.S., women tend to live five years longer than men. In opposite-sex marriages, women also often marry slightly older partners, meaning they could live up to seven years alone after a partner's passing.2 Women’s longer lifespans necessitate additional financial planning to cover healthcare and living expenses in later years.  

Why Financial Education and Confidence Matter for Women  

Building confidence in financial decision-making is crucial, as studies show only 25% of affluent women feel comfortable managing investments, compared to 40% of men. Half of female decision-makers feel unprepared to reach their financial goals, even when working with financial advisors.2 Addressing these feelings of insecurity is critical, as people with a financial plan are 3.7 times more likely to feel confident about reaching their goals.6 Financial confidence can inspire proactive investment choices, which are essential to securing a stable future.  

Increasing women’s financial confidence is also about creating a positive impact on families and communities. Studies show that women make or influence 85% of affluent household charitable giving decisions, and companies with higher female representation often see greater financial performance.10, 11 When women are empowered with financial knowledge and confidence, they don’t just benefit themselves—they drive economic growth and contribute to a more equitable society.  

Steps Toward Financial Empowerment  

Curi RMB Capital believes in the importance of empowering women to navigate their unique financial journeys. In the year to come, we especially look forward to providing educational resources tailored to the challenges women face and encourage a collaborative approach to financial planning. This focus on partnership fosters an environment where our clients can feel supported in making informed decisions, building confidence with each financial milestone. I hope you’ll join us on this journey and expand your own knowledge base, while also helping us spread financial education to the women and others in your life.  

Sources
  1. Fry, Richard, et al. “In a Growing Share of U.S. Marriages, Husbands and Wives Earn about the Same.” Pew Research Center, Pew Research Center, 13 Apr. 2023, www.pewresearch.org/social-trends/2023/04/13/in-a-growing-share-of-u-s-marriages-husbands-and-wives-earn-about-the-same/#:~:text=Women%20are%20contributing%20an%20ever,with%202%25%2050%20years%20earlier.  
  2. Baghai, Pooneh, et al. “Women as the next Wave of Growth in US Wealth Management.” McKinsey & Company, McKinsey & Company, 29 July 2020, www.mckinsey.com/industries/financial-services/our-insights/women-as-the-next-wave-of-growth-in-us-wealth-management.   
  3. Aragão, Carolina. “Gender Pay Gap in U.S. Hasn’t Changed Much in Two Decades.” Pew Research Center, Pew Research Center, 1 Mar. 2023, www.pewresearch.org/short-reads/2023/03/01/gender-pay-gap-facts/.  
  4. Gilchrist, Karen. “Women Reach Their Earnings Peak 11 Years before Men and Are Paid $35,000 Less, Survey Shows.” CNBC, CNBC, 11 June 2019, www.cnbc.com/2019/06/11/gender-pay-gap-womens-earnings-peak-11-years-before-mens-payscale.html.  
  5. “Finance Advisor Demographics and Statistics [2024]: Number of Finance Advisors in the US.” Finance Advisor Demographics and Statistics [2024]: Number Of Finance Advisors In The US, 5 Apr. 2024, www.zippia.com/finance-advisor-jobs/demographics/.  
  6. Schwab.com. “Want to Achieve Your Financial Dreams?” Schwab Brokerage, www.schwab.com/financial-planning-collection/want-to-achieve-your-financial-dreams. Accessed 9 Oct. 2024.   
  7. Taylor, Kelley R. “Pink Tax: What Does Price Discrimination Cost Women?” Kiplinger.Com, Kiplinger, 8 Mar. 2023, www.kiplinger.com/taxes/pink-tax-womens-products-price-discrimination#:~:text=Other%20data%20show%20that%20women,consumers%20of%20around%20%2480%20million.  
  8. Cheng, Marguerita. “Women and Investing: Statistics Show Progress, Not Parity | Financial Advisors | U.S. News.” Women and Investing: Statistics Show Progress, Not Parity, money.usnews.com/financial-advisors/articles/women-and-investing-statistics-show-progress-not-parity. Accessed 9 Oct. 2024.  
  9. “Fidelity Investments Study: Women Tapping into Their Financial Superpowers .” Fidelity Investments Sponsor, Fidelity, https://preview.thenewsmarket.com/Previews/FINP/DocumentAssets/651505.pdf.  
  10. “Affluent Charitable Giving Trends and Statistics in 2022.” Bank of America Private Bank, www.privatebank.bankofamerica.com/articles/2023-bank-of-america-study-of-philanthropy.html. Accessed 9 Oct. 2024.   
  11. Dixon-Fyle, Sundiatu, et al. “Diversity Matters Even More: The Case for Holistic Impact.” McKinsey & Company, McKinsey & Company, 5 Dec. 2023, www.mckinsey.com/featured-insights/diversity-and-inclusion/diversity-matters-even-more-the-case-for-holistic-impact.  
  12. Kochhar, Rakesh. “The Enduring Grip of the Gender Pay Gap.” Pew Research Center, Pew Research Center, 1 Mar. 2023, www.pewresearch.org/social-trends/2023/03/01/the-enduring-grip-of-the-gender-pay-gap/.   
  13. Katherine Haan. “Gender Pay Gap Statistics in 2024.” Forbes, Forbes Magazine, 22 Apr. 2024, www.forbes.com/advisor/business/gender-pay-gap-statistics/.  
  14. Borden, Taylor. “Career Breaks Are Different for Women - Here’s What Happens When They Come Back.” Parental Leave Is Different for Women, 11 Mar. 2024, www.linkedin.com/pulse/career-breaks-different-women-heres-what-happens-when-taylor-borden-25oye/. 

Disclaimers

The opinions and analyses expressed in the article are based on Curi RMB Capital, LLC's research and professional experience. The information and data in this article do not constitute legal, tax, accounting, investment or other professional advice. Investors should consult with their trusted professionals prior to taking any action.

Certified Financial Planner Board of Standards, Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™ and federally registered CFP (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.

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