Mind the Gaps

“M​arry a plumber”. This was the response my mom got when she asked my grandpa about college. He was born in rural Ireland in 1928 and his firstborn child, my mom Ann, was born in 1959. He was a tradesman and to be fair, in his mind, it was sound advice at the time. Plumbers would always be needed and thus able to earn a stable income. She wasn’t able to go to college, and she didn’t marry a plumber. She married an accountant turned entrepreneur, but she didn’t let that keep her from being an equal part in our family’s financial planning or establishing a career of her own.

Gender Wage Gap Fact: D​espite the fact that women now earn the majority of college degrees, the wage gap persists.

Growing up I had no idea what my parents’ salaries were (still don’t). In my mind, they both worked hard and must have earned about the same. I never heard my Dad downplay my mom’s job or career as second-rate or tell her how she could spend money.

G​ender Wage Gap Fact: Payscale.com cites the Uncontrolled Gender Pay Gap is $0.79 and the Controlled Gender Pay Gap is $0.98 in 2019. The Controlled Gender Pay Gap measures median salary for men and women with the same job and qualifications.

O​k. I might have gotten her in a bit of trouble after telling Dad “the man in the brown (UPS) truck brings mom presents every day”. She also hid an antique furniture piece in the garage and then strategically placed it in the living room we rarely used before telling Dad it’s “old” with a laugh and wry smile when he noticed it. But, I also remember them often sitting down together with their financial adviser (Hey Kjersten!) to track their financial plan and goals. This undoubtedly provided my mom with the confidence she now needs to manage the finances after my dad’s brain tumor surgery. They still make decisions together and meet with their adviser, but a lot of responsibility has shifted to her out of necessity.

Gender Saving Gap Fact: According to Prudential’s 2018 Financial Wellness Census, women have saved an average of $115,000 compared to $203,000 for men and nearly half of women say they have no retirement savings.

There’s a noticeable change from my grandmothers’ generation to my own with financial independence and equity, but statistics show gender gaps in pay and savings still exist. Today is Equal Pay Day, or the day that highlights how far into the year women would have to work to earn the same as men in the previous year. Three solid months! The gap increases for African American and Latina women. It should come as no surprise that there’s also a gender gap in financial literacy. The issues are interlinked. Women are more likely to take breaks in their careers to be the main caregiver. This translates to lost earnings and lost time to contribute to an employer sponsored 401k. As a mom of two toddlers my days revolve around work, playing, a lot of snacks (how ARE you still hungry?), never ending laundry, children’s books and TV shows. There’s minimal time, if any, to start learning about stocks and investments, the difference between a traditional or ROTH IRA, a mutual fund vs. ETF, term v. whole life insurance. The list goes on and on just like the laundry. Who has the time? You may also be thinking, I’m not making any money to invest right now anyway (because even if you are working it’s going towards paying for Pre-k and bills).

Gender Financial Literacy Gap Fact: The U.S. Department of Education reports that 3.8 million adult women possess literacy skills below a “basic” level.

C​losing the gap in financial literacy is important because we might be forced to learn about finance like it or not. My grandmother was forced to take on a more active financial role when her husband suffered from a stroke at a young age. Both of my grandmothers outlived their husbands. They’ve been “on their own” for years now. My great-grandmother lost her husband at a young age to cancer and then lived to be over 90. Yes, they had family to help them navigate through these times and important financial decisions, but I think we should all have knowledge to help us be comfortable and confident making decisions about money and our lives.

Closing the financial literacy gap would help close the pay and savings gap as well. I didn’t do all the research I normally would (because toddlers), but there’s logic behind this claim. I include career research as part of the Personal Finance curriculum I teach at our local high school. It’s important for students to see what jobs will afford them the lifestyle they want or even a comfortable living. We talk about which jobs are in demand and earning the highest salaries along with the educational requirements and student loans that go with it. We talk about choosing a career that aligns with your interests and skills, as well as, which ones will help you pay the bills and build wealth. I highlight how medical emergencies and divorce are two of the biggest drivers for financial instability. They know what a 401k is and why it’s important to start investing, even small amounts, right away. They know what disability insurance is and why it’s needed right away. All students should take Personal Finance, so they can make smart, informed decisions when they enter the real world. It’s also important for them to make these decisions with their partners as they move through later stages in life.

One company working to lower the gender gap in savings and financial literacy is Ellevest. Sallie Krawcheck served as CEO of Merrill Lynch Wealth Management and Smith Barney. She noticed that women weren’t getting the same results from “gender-neutral” investment strategies. Enter Ellevest. The company’s motto – “Invest like a Woman“. Krawcheck recognized the gender pay gap and that women will likely outlive their partners. So, Ellevest tailors investment strategies to women’s needs, financial goals, and social goals.

We suggest how much you should contribute based on your financial profile, a gender-specific salary curve & your goal targets – Ellevest.com

Ellevest funds invest in companies with women leadership. Funds also invest in companies working to meet higher standards, and businesses that offer community services.

More to love: There’s no minimum balance, penalty for withdrawing funds, or account fees for clients’ emergency funds. See the pricing page for other account details and fees.

Want to learn more about saving and investing? April is Financial Literacy Month, so I’ll be focusing my posts on the financial side of “wealth building”. Also, be sure to check out Ellevest Magazine. Scroll to the bottom and sign up to receive their weekly newsletter “What the Elle“. For my fellow toddler moms, you can read it between episodes of Muppet Babies and Daniel Tiger =)