Women and men face different challenges in their lives, and those challenges can have financial consequences, say experts.
So when thinking about money, you might want to take your gender into account.
“You don’t plan your finances, you plan your life,” said Frances Woolley, professor of economics at Carleton University. “Your finances reflect what happens to you in your life.”
And women’s lives tend to look a little different from men’s, she said. To start with, women live longer, which means they will likely spend more years alone.
That means they need more retirement savings so they don’t outlive their money.
“If you’re unprepared and you’re going to live for another 10 years, it’s one thing,” said Karin Mizgala, CEO of Money Coaches Canada. “If you’re unprepared and you’re going to live for another 15-20 years, it’s even worse as far as the impact is concerned.”
Women often also have more caregiving responsibilities, said Woolley, taking care of children or elderly parents. “That both affects how much they earn and how much they can save out of what they earn.”
This often means that women move in and out of the workforce at various times in their lives, said Mizgala, which can have effects on their careers and earnings. And about those earnings – women still tend to earn less money than men. Although women may need to save more for retirement or to help cover periods where they’re not working, they have less money to put towards those goals.
There’s one bright side though, according to Woolley. “Nowadays the jobs with pensions are mostly in the public sector in areas where women dominate,” she said. “Jobs with pensions, like teacher, nurse, tend to be jobs where you find more women.”
Spending and saving
To deal with their unique challenges, women need to take an active interest in their own finances. It’s especially important for women to watch their spending, Mizgala and Woolley both said, as they need to make sure every dollar is put to good use.
“One thing that women have to be very careful about is succumbing to societal expectations about spending money,” said Woolley.
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She suggests making it as physically difficult as possible to spend money, especially with credit cards, by doing things like removing the “tap” feature of the card, lowering its balance and setting up automatic payments for the full balance every month.
Avoiding credit card debt is very helpful, she said. “That’s incredibly important, to know that if you’re carrying a balance on your credit card, you’re paying literally hundreds of dollars in interest every year.”
Of course, this kind of advice – watching your spending, paying down debt – is a good idea for both genders. It’s just that with the additional challenges women might face, it’s more critical for them to stick to it, said Mizgala.
“The stakes are higher for women.”
But beyond the day-to-day spending and bill planning, many women still feel intimidated by finance, she said. Only in the last 40 or 50 years have women started to become the stewards of their own money, she said. “And that in the historical context is actually not that long.”
“Instead of doing what we really should be doing to meet these challenges, we often dig our head in the sand and hope that either somebody else is going to take care of it or it’s just magically all going to work out in the future.”
Investments, in particular, can be tough for a lot of women, she said. She thinks that women who are uncertain of what to do need to seek out advice to make sure that they’re making the best choices with their savings.
Sharing responsibility
And of course, men don’t always have it easy either. “Men still feel responsible to be the provider,” said Mizgala. “And that can put pressures on men that can transfer into feeling like they have a lot of stress on them to bring money into the family and stay working on the grind their entire life.”
There’s also a much greater disparity in men’s incomes, said Woolley. Men are much more likely to be found in the boardroom of a massive corporation, but they’re also more likely to be in a homeless shelter, she said.
Having men and women share responsibility for the family’s finances can help to alleviate the stress of having one person make all the decisions. Mizgala said that men often suggest that their wives seek out financial advice. “They want their wife to be more engaged with the finances because they’re feeling like they have to carry the entire load of making the financial decisions and they’re also concerned that if something happens to them it’s going to put their spouse into an uncomfortable, vulnerable position.”
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Family financial planning needs to acknowledge the different realities of men and women, she said. “You need to make sure the plan is being done to acknowledge the fact that the woman may outlive her husband.” So, decisions about pensions and survivor benefits need to keep that in mind, she said, as well as account for one partner taking time off work for childcare or other such responsibilities.
Taking on a bigger load of financial decisions and being aware of the family’s assets and debts can also help a woman in the case of a divorce or widowhood, she said. It can be hugely stressful to figure out how to take care of your finances on top of the stress of losing your partner.
“Financial literacy isn’t the answer for everyone, but I think that you always have to make sure you know enough to take care of yourself,” said Woolley.
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