Women & Money

Building Wealth Is Key to Gender Equality


What does it take to create financial independence in an economy that squeezes women out of high-paying jobs, investment income, and other revenue streams that are key to building wealth?



Wealth is about more than a big paycheck or a fancy car; it creates access, influence, and political power—and it takes generations to build. So how can women disrupt an economic system set up to keep them out? In our ongoing series, “Women & Money,” DAME investigates the strides women have made, and the obstacles still in our way.

Years ago, in a crowded room of hungry personal finance journalists, an African-American business owner decreed: “Real wealth is the type of money that can cool for a generation or two.”

Then I better start creating real wealth, I surmised. My visceral reaction was a bit tongue-in-cheek, but the sentiment bore deep into my conscience.

My eternal optimist rallies, of course—women can build wealth through saving, investing, earning multiple streams of income, and owning something (anything) dammit!

As financial guru Suze Orman wrote in Women & Money: Owning the Power to Control Your Destiny, “Women can invest, save, and handle debt just as well and skillfully as any man. I still believe that—why would anyone think any differently?”

Well … it’s complicated. The corrosive impact of America’s wealth gap on women is maddening. Every time we leave the workforce whether by choice (to care for a baby or other loved ones) or by force (a layoff), it can add up to millions in lost wages, retirement benefits, and potential income growth over a lifetime.

Many of us have seen the latest Census Bureau data on the pay gap: Women earn, on average, just 80 cents for every dollar a man makes. For women of color, the wage gap is more like a chasm. For every dollar paid to a white male, African-American women earn just 67 cents, Native American women earn just 58 cents, and Latina women earn just 55 cents. It’s tough to get ahead if you’re constantly playing catch up. When President Obama signed the Lilly Ledbetter Fair Pay Act, it allowed individuals to sue companies for pay discrimination. These rights were hard won, and, for many women, they’ve had a lasting impact on their ability to create financial freedom.

The outlook for American women working in poverty is far worse. In 2017, 46.2 million people—the majority women—lived in poverty. Some studies cite numbers as high as 50 million.

All around the world, women tend to devote more time to unpaid care work at home than men, and women tend to be overrepresented in low-paying jobs where they have the needed flexibility to attend to these additional responsibilities.

In an article published in the American Economic Review, author Claudia Goldin discusses the link between the gender pay gap and job flexibility. Goldin shows that women seek jobs, including full-time jobs, that are compatible with childrearing. In other words, women, more so than men, are expected to have some flexibility in their jobs. “A woman forfeits up to four times her salary for every year out of the workforce,” says Kathryn Sollmann, author of Ambition Redefined: Why the Corner Office Doesn’t Work for Every Woman & What to Do Instead. “You may never fully recoup the money you lost, but even if you are able to save and invest modest earnings over time, you’ll build up a significant nest egg for retirement.”

Of course, women building their own wealth means consistently saving even a small percentage of earnings to grow a nest egg—and having the opportunity to save in the first place. Until the Senate passed the Equal Credit Opportunity Act in 1974, women had a difficult time applying for and receiving a credit without a male co-signer. In 1981, Kirchberg v. Feenstra upheld that a husband can’t unilaterally take out a second mortgage on property held jointly by his wife.

“Society tells women that managing money and building wealth isn’t their job, and that it’s tacky and evil to want wealth,” says Tori Dunlap, a millennial money and career expert. “The more we believe this narrative, the longer we’ll stay unequal.”

It’s patriarchal narratives like this that perpetuate a cycle of incredible women getting overlooked for promotions, kept out of career-elevating opportunities, and have us thinking we don’t deserve more. These systemic slights in the workplace not only stunt career growth, but also have a bottom-line impact on the amount of wealth we’re able to build.

According to “Women and Wealth,” a report commissioned by the Asset Funders Network, women receive much less income in retirement than men and are more likely to rely on Social Security benefits for the majority of their income. With the average woman living to age 81 versus 76 for a man, per the latest CDC figures, her money has to last longer, too.

Women of color are statistically worse off when it comes to attaining wealth, defined as assets minus liabilities. According to a study by Asset Funders Network the wealth inequality for single men and women across races is broad. Latinas have a median wealth of $100, Black women have a median wealth of $200, while white women have a median wealth of $15,640 and white men, many of whom have never left the workforce, have a median wealth of $28,900.

When Michelle Ngome, a 36-year-old marketing manager at a Texas law firm, decided to leave corporate America in 2013 to start a marketing company, she couldn’t stay afloat. “I’ve had various clients and projects over the years, but cashflow is the biggest challenge,” says Ngome, who could no longer afford the rent on her apartment, forcing her to move in 2014. Now, she works full-time while running her marketing business on the side. But money is tight. “In 2016, I got back on my feet with another apartment and a new car, but I had to cut cable and subscriptions, and attending conferences and traveling altogether.”

As for retirement? Not happening. At least not right now. She won’t qualify for her employer-sponsored retirement plan until 2020 or 2021 because eligibility is based on the year the retirement plan started and not the date of hire. Once it does start, she realizes she will have to invest aggressively to play catch up.

“Unlike our male counterparts, we women face some formidable challenges when it comes to our financial lives and planning for retirement,” says Lynn Toomey of Your Retirement Advisor in Lunenburg, Massachusetts. “We live longer. Make less. Invest less. Take career breaks. We’re primary decision makers for purchases, but less confident in financial decisions.”

That said, all is not lost when it comes to women building wealth because we are an economic force. As a group, women are responsible for $5.1 trillion in personal investable assets, or 39 percent of the national total, and have decision-making power over twice that amount, according to findings from Andrea Turner Moffitt’s book, Harness the Power of the Purse: Winning Women Investors.

Building real wealth means placing our money into assets, not liabilities so that we can ensure our futures–and those of generations of women to come.

So where do we begin?

The simplest first step is to save for retirement through a 401(k) or 403(b),” says Todd Murphy, a financial advisor with Prime Financial Services in Wilton, Connecticut. “Start with whatever amount you can afford such as $10, $15, or $50 a paycheck.” Most private companies will match your contribution up to 3 percent of your salary, which Murphy says is like finding free money.

But many women still fear investing. According to an article from rebalance360.com, one of the biggest fears when it comes to financial matters is women do not feel smart enough. Part of the reason is a lack of education and exposure to key terminology. Murphy recommends reading Tony Robbins’s book, Money Master the Game: 7 Simple Steps to Financial Freedom. “It is one of the best introductions to money and how it works,” he says.

Investing for women is also viewed as taboo, and the lack of education around investing and saving adds to the stigma that it’s simply not an issue for women to be concerned about. “Building wealth is not intuitive,” says Tanya Menendez, co-founder and CEO at Snowball Wealth, a platform dedicated to helping people tackle debt and learn to invest. “The system is set up in a way that makes it easier to fail than to succeed. We often don’t have role models with smart habits for us to emulate, and often, our parents are barely figuring it out, too.”

For women barely making ends meet, investing is often out of the question. Alanda Carter, a married 55-year-old Houston designer, says she has always struggled with money. The biggest culprit: Student loan debt that’s lingering from her undergrad days.

“After ignoring my student loan payments when it became obvious we could not keep that up, I finally made arrangements to address it and have a lowish payment,” says Carter. “However, I have so much student loan debt I do not foresee it vanishing in the near future if ever.”

Fun stuff like mani-pedis, eating out, cable, and haircuts (except once a year) are no longer part of her budget. Neither is going to the doctor or dentist or buying unaffordable medication. At one point, she was making great money, but got laid off. “Now, I am working full time from home, but my salary is lower than my first instructional design position back in the early 2000s,” she says. When asked about her savings, she laughs, stating it’s a constant struggle just to pay bills.

“I have lived in this place before, and I can tell you: If you don’t have enough income to cover the bills, take care of your health, and put food on the table, you don’t have room to invest,” says Brynne Conroy, creator of Femme Frugality, a women’s finance blog. “However, if you’re eating out, splurging on small indulgences, or have other luxuries in your budget, you actually do have disposable income. You’re just choosing not to invest it in your own long-term well-being.”

For those who can afford to invest, but may have a situation or two that requires some quick cash, Conroy advises investing in Roth IRAs. “They are easily liquidated and contributions are made after taxes, so you can usually withdraw them without any penalty,” says Conroy. “The interest your contributions earn will have to stay in there, but in a real pinch, you can access your contributions to fund things like rent and insurance premiums should an income stream go dry.”

You may be able to tap your Roth IRA in a financial emergency, but most experts strongly advise against draining your retirement savings during your working years unless it’s absolutely necessary. Consider starting an emergency fund in an online bank account. Even if you save $25 per paycheck, you’ll have something to tap when you need it.

Women have historically been the primary caregivers so it’s no wonder why we put others before ourselves. While women were at home raising children and working for low pay, they were missing out on bonuses, pensions, stock options, and retirement accounts—and it’s these types of wealth escalators that create not just savings and security, but wealth.

With women representing more than 47 percent of U.S. workers, we have to take our rightful seat at the negotiating table—from leadership opportunities to promotions to bonuses and stretch assignments. That’s where sponsors rather than mentors can make a big impact. Sponsors are senior-level executives who use their personal brand equity and credibility to help you advance. To attract a sponsor, promote a big idea that solves a company issue, lead a team with superior results, and let your sponsor know how you are helping the company to thrive.

“Look for leaders who publicly praise subordinates, back them up on contentious issues, and offer challenging assignments to up-and-comers who have not yet proven themselves,” says Jo Miller, CEO of BeLeaderly.com, a digital business that offers career strategies to women on the rise. “Pay attention when colleagues speak highly of the boss who made a big difference in their career, or entrusted them with a high-profile assignment that broadened their capabilities.”

“Maybe you need an enhanced technology platform, better administrative support system, or a larger budget,” says Margaret A. Neale, author of Getting (More Of) What You Want: How the Secrets of Economics and Psychology Can Help You Negotiate Anything, in Business and in Life. “Always look at your compensation in terms of a package—not just salary.” For mothers, that might mean negotiating a flexible work schedule; for women looking to grow into more senior roles, ask about education reimbursement and opportunities for performance-based bonuses.

The old boys club told women to stay in the kitchen while the men went out and earned a living. Now, women are consistently earning higher returns than men. According to a study by Fidelity, women are beating men by 40 basis points on average and adding more to their account balances over time, 12.4 percent compared to 11.6 percent.

Before anyone can become an investing pro, start with understanding three things: How much money you have coming in, what your expenses are, and what your savings and debt-payoff goals look like. Armed with that information, create a written budget that tracks every single penny earned, whether it’s $1,000 a month or $10,000. Then, pour that data into a budget app like You Need a Budget, Mint, or Mvelopes. It’s not about how much you have, it’s about what you do with the amount you have.

We’ve come a long way, but we’ve still got a ways to go. Despite the tremendous strides made in the struggle for gender equality, women still face institutional barriers to equal participation in society. As the 2020 Presidential Election nears, we have to vote for politicians who push for change and reform in the areas of employment, fair and equitable compensation, and access to free financial literacy education. Whether it’s supporting equal pay, job protection for parents on maternity leave, or increasing the minimum wage to $15, rocking your vote and letting your voice be heard will help women build wealth for generations to come.

This is the first in our ongoing series, “Women & Money.” Come back next week for our investigative report on the link between climate change and women’s poverty.

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