Research has demonstrated that there are differences in the way men and women manage their finances. Not only do women have a lot more to consider but they often face many challenges that have proven to have a negative impact on their long-term financial wellbeing if they are not addressed.
Nowadays, women have to focus on juggling between work, caring for kids and relatives, and managing the household budget, among other things. As a result, their financial position might get lost amongst all of this but just like anyone, women cannot afford to overlook their finances as this further supports the financial disparity between both genders.
So what exactly is different for women when it comes to their finances?
Saving and Investments
While time proves a challenge, the pay gap is still an issue for women as it has been found that they earn around 83% of what men earn*, putting them at a serious disadvantage. The reality is that women don’t challenge salaries in the way that men do and this can have a huge impact on their long-term ability to save.
Furthermore, women take career breaks to focus on caring for family and that also works against them. This means that they miss out on promotions and pay rises throughout this time. Therefore, they find themselves with the problem of earning less and consequently make “safer,” more conservative investment decisions.
Women also tend to live longer than men, so they have more to plan for and fund. However, with many of them earning less, they have to factor in how they can make their money do more. This can often find them in a cycle of making conservative investment decisions based on their earnings.
Balancing Work and Family
Many women find themselves progressing in the right direction but the desire to start a family can often force them to sacrifice themselves financially. Sure, there is the time off associated with maternity leave, with women having to balance how much time to take against how their earnings reduce over time. Along with this, some might choose to go part-time as childcare can often prove to be excessively expensive. With part-time work comes a drop in earnings and again, this means that women lose out.
When maternity leave, career breaks and even part-time work are all brought together, it can result in a significant loss of income. Along with this, women are often expected to finish work early to care for family and that again puts them at a disadvantage. However, women should seek the right financial advice to ensure proper financial planning is in place to minimise the impact of family and life decisions and help them reach their financial goals.
The Costs of Care
Many women dream of retiring early but often, the need to provide care to family and loved ones can often prove a stumbling block. The cost of care can increase significantly, not forgetting the time it requires and the need to either give up work or reduce hours. This can really affect a woman’s income who might have once been on the path to early retirement.
As mentioned, caregiving also entails looking after younger children. Childcare at an early age can amount to a significant figure each month and it can make sense for women to go part-time and lose earnings rather than pay out on childcare costs as this may be more cost-effective.
However, women should not let these challenges stand in their way when it comes to their financial goals. Of course, identifying and understanding the challenges is important but creating a clear plan can really play a significant role in helping them to make better financial decisions. Furthermore, with the right investment strategy in place, a financial planner could help women make investment decisions that work harder for them.
Financial Planning For Women In Hong Kong
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*Source: World Economic Forum