Does Gender Determine Our Financial Challenges?

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But does it? Do men and women experience money differently? Are our financial challenges different depending on our gender?

The gender wage gap is closing, but women still don’t get equal pay. Therefore, of course, women are going to have different financial concerns than men do. Forbes has a comprehensive article on this issue, explaining important facts including that:

These facts infiltrate our psyches and impact us in ways we might not even fully understand. In a society that values money, what does it say about women’s value if they don’t earn as much as men? Women have to grapple with this, which presents unique psychological challenges around money.

In addition to earning less than men, women also frequently put fewer years into work during their lifetimes. As a result, women actually end up with a lot less money than men when retirement comes. It’s called the 77/11 effect because women earn 77% of a man’s income on average and tend to work approximately 11 years less than those men. That adds up to a big financial difference in the later years of life.

Women on average live 5-7 years longer than their male counterparts. As a result, they need their retirement income to last longer. Since heterosexual women are likely to outlive their partners, they may be more likely to end up in a pricey retirement home. Therefore, it’s critical for women to think about their long-term future when dealing with finances today.

According to personal finance expert Manisha Thakor, long-term financial planning suits women. Generally, women want to know what the big picture is when it comes to their money. In contrast, men tend to be “transactionally oriented.” So, the challenge for men is to learn how to look more at that big picture. A woman’s challenge is to use her long-term planning skills to think about retirement.

Generally speaking, women are less likely to take financial risks than men. There are pros and cons to this. On the one hand, women are less likely to gamble or lose money on risky investments. On the other hand, sometimes you have to take business risks to get big financial payoffs, and that’s where women might miss out. The challenge for women is to learn how to take appropriate risks with money to improve their financial position. In contrast, the challenge for men is to learn how to reign in risky money moves when appropriate.

Divorce is hard on everyone involved. In heterosexual marriages, the divorce is costly for both parties but tends to have a more challenging financial impact on women. The Atlantic reports that on average women who worked before, during, and after a divorce saw a 20% decline in their income after divorce whereas men saw a 30% increase in their post-divorce income. This means that women have to take their finances into consideration as an important factor when determining whether or not to divorce, which may lead some women to stay in unsatisfying relationships longer than they would prefer.

Of course, gender is just one factor. People of color and those living in lower classes also experience unique financial challenges.

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