Tackling savings inequity
This week, the 8th of March, marked International Women’s Day – a chance to celebrate women's social, economic and political achievements worldwide. The day is also an opportunity to reflect on areas where more progress is needed and a call to action to drive gender parity.
One area that stands out is the gender savings gap.
Despite the strides that have been made towards equal opportunities in recent years, the fact remains that women feel less able to save each month; the gender pay gap reached 8.3% in 2022 and the resulting savings gap is as stark as ever. According to recent research, women in the UK are still saving over a third less than men – this hinders their financial freedom, limits their ability to save for important milestones and even fund their retirement.
At Chetwood Financial, we believe that equitable financial services are an important part of the puzzle when it comes to closing the savings gap and paving the way for true inclusion.
Here, we delve into the root causes contributing to this disparity and the steps that can be taken to level the playing field.
Where does the problem lie?
Despite the fact that a savings gap exists, women are just as likely to hold savings accounts as men – according to a survey from AJ Bell, 65% of women have a cash account compared to 66% of men. However, women tend to have significantly less money saved in these accounts.
Ultimately, the gender pay gap has a lot to answer for. Often, women are paid less than their male colleagues, whether this is due to discrimination at work such as lower wages for equal work, working part-time to fit around caregiving responsibilities, or simply being pushed into lower-paid work. Women are also more likely to take career breaks to start a family – according to research from AJ Bell, two-fifths of women say that taking a career break has negatively impacted their earnings prospects in the long term, compared to men.
Adding to these problems is a crisis of confidence. Some women may not be as confident investing their money or choosing the right savings product, while others may prefer to keep their money in cash or pay off debts and mortgages as a priority.
Tackling savings inequity
Combating these issues at the source is imperative – particularly under current conditions where the cost of living is high, and a recession looms large over the worldwide economy. It’s vital that women have the money they need to access new opportunities and safeguard their futures.
Beyond these systemic problems, we believe there’s more that banks and financial services companies can be doing to embrace equity. In many cases, banking services today are too generic to help level the playing field and creating more targeted savings products - products that take women’s lived experiences into account and make their lives easier - must be a priority on the road ahead. Acknowledging that women have different financial needs than men and responding with targeted products and advice is key.
Likewise, empowering women through financial education is a must when it comes to championing gender equity. Although it can be tempting to put off boring life admin or prioritise other goals when it comes to money, encouraging women to make the most of their money is essential to helping them build financial resilience, meet their goals and close the savings gap.
Thankfully, advances in technology mean that creating a personalised savings strategy and accessing market-leading products is easier than ever, so women must ensure that they are keeping their savings contributions regular where possible. Although this won’t solve the gender savings gap tomorrow, it is nonetheless an important step to ensure that women are well-set for the future.