Improving the financial confidence of women
Why women feel less financially confident than men and how to bridge the gap
How people feel about their financial health — their financial confidence, per se — is heavily determined by perceptions of their own financial situation, including their personal debt, income and savings. People with a high level of financial confidence often feel as though they have control over their money and are in a strong position to reach their financial goals.
Turns out, men and women have different levels of confidence when it comes to money. According to our latest Wealth & Wellness Index research, women report a dramatically lower sense of financial confidence than men.1
But why is there such a discrepancy between the financial confidence of men and women? The reasons vary.
- Women are more stressed and less optimistic about their finances.
Financial confidence is just like self-confidence because it’s linked to how you feel about yourself or your situation. Our research shows women are more likely than men to have negative feelings related to their finances.
Why the high stress and low optimism? Many factors can play a role, but according to our research, it boils down to managing debt and being prepared for the unexpected. Only 45% of women consider their debt manageable, and less than half say they could handle a major unforeseen expense of $500 or more without worrying too much about it.1
- Women are more likely to downplay their financial well-being.
Far too often, women consistently rate themselves as less financially healthy than they actually are.
Surprisingly, only 11% of women reported their financial well-being as “thriving” – a state characterized by increased freedom and reduced stress when it comes to money. However, based on their actual Financial Wellness Score, a calculation based on more than 15 distinct questions, almost a third (30%) of women are actually “thriving.”1
In fact, 89% of the women we surveyed self-rated as either “stable” – they can meet planned and unplanned expenses as needed – or “surviving” – they can cover basic living expenses.
- Women have lower account balances.
Although women are on average saving at nearly the same rate as men (8% vs. 8.5%), their retirement account balances are significantly lower.2
It’s worth noting that women from higher income groups (>$60,000) save at a slightly higher rate than men. However, only about one in three savings plan participants earning more than $90,000 are women.2 These lagging income levels are likely contributing to the significant difference in retirement savings account balances.
The above data shows a clear opportunity to help women improve their overall financial health. Setting realistic goals and putting a plan in place can be an important first step to addressing financial challenges. Here are five ways to get started:
- Take control of your debt.
Debt can be a significant obstacle when achieving financial confidence. Making a realistic repayment plan to tackle credit card and student loan debt can help you get started on the path to improving your financial situation.
- Revisit your salary.
There’s no getting around it — the gender wage gap persists. According to 2020 data from the Bureau of Labor Statistics, women earn 82 cents for every dollar a man earns. Negotiating your salary and career advancement is an essential part of advocating for yourself — and securing your future.
- Build your emergency savings.
- Create a financial plan.
Having a plan in place is an important step in addressing your short- and long-term financial challenges because it creates a road map to address your goals. It can help reduce stress and anxiety, too. Start drafting your plan with our financial goals worksheet.
- Seek out advice.
Whether you want to get a better understanding of how your retirement savings plan works or get help with managing your money, a financial professional can help you reach your goals.
1 Empower, Wealth and Wellness Index data, November 2021.
Methodology: Data and insights included in this article are primarily derived from the Wealth and Wellness Index Survey conducted by The Harris Poll on behalf of Empower and Personal Capital. The survey was conducted in the fourth quarter of 2021 and included 2,006 U.S. citizens ages 18 and older. Additional research and surveys used in this study are sourced as they appear.
2 Empower recordkeeping platform data as of 12/31/2021.
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