At first, I didn't get it. Shouldn't women and men be seeking parity in everything? If so, why do financial advisors like Suze Orman write books called "Women & Money," and why are women opening brokerage houses catering to women? I spoke to financial expert Manisha Thakor, one of the rising voices in the financial-advice-geared-towards-women set to get some answers.
As Manisha put it to me: In the new economy, where many financial decisions formally made by employers (particularly with regards to pensions and healthcare) are now squarely in our hands, a solid knowledge of personal finance is important for both men and women. That said, financial knowledge is extra important for women -- because the place that women are ending up right now is a financially ugly one. For two thirds of women over age 65, meager Social Security payments are the primary source of income. In plain English this means they are literally choosing between food an essential medicines. Acting on some basic advice earlier in their lives could change this statistic.
Women (and those who raise them, employ them, live with, and love them) need to understand these financial realities:
1. Women earn less. Three out of five working women earn less than $30,000 a year. Part of this may be due to career choices, but a key component is clearly the wage gap with women earning only $0.78 on the male dollar.
2. Women engage in paid work for fewer years. Women take more time out of the workforce than men, typically to raise children or care for elderly parents. On average WISER reports that women women spend 12 years less than men in the paid workforce. This dramatically impacts women's ability to save for retirement. Leslie Bennetts stirred up a lot of emotions with her exploration of this factor in her book The Feminine Mistake.
3. Women live longer. Women in the U.S. have an average life expectancy of 80 years versus 75 for men. This means that women have to fund more years of retirement, after having worked for less money for fewer years than men. To add insult to injury, those last years are often lived alone. According to AARP, women over age 65 are twice as likely as men to be widowed, divorced, or never married -- thus carrying that financial burden all by themselves.
4. Women still grapple with the "a man is a financial plan" mindset. As Laura Vanderkam observed in a recent Op-Ed in USA Today entitled The Princess Problem, "a growing proportion of young women entering the workforce will need to support their whole families at some point. Yet there's evidence that young women don't think about this as they plan their careers - because, hey, someday that prince might come." Shows like "Mad Men" have triggered an awakening as women are reminded of what the work world used to be like.
5. Women are not encouraged to negotiate their true worth. With articles like "11 Powerful Women that Make Other Men (and Women) Squirm," is it any wonder that women often feel uncomfortable speaking up for themselves in the workforce? This is unfortunate, because women have a solid track record of financial competence when they do engage with money. Women have generated higher levels of returns in microlending programs and in managing portfolios.
What do you think of all this? Do you think women and men need different financial advice?
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