Female wealth gap? We're all about overcoming it!
One topic we at Finelles are particularly passionate about is the female wealth gap. To be more precise: overcoming the female wealth gap. Why? Well, because in Germany alone, it amounts to 28%. Women have 28% less wealth at their disposal than men.
We at Finelles are optimists. And we are pragmatists at heart. This is based on our personal experience. We are not perfect, we don’t think we have all the solutions. But we are convinced that by obtaining financial literacy, we can all manage to mitigate the wealth gap. Baby steps, as they say.
Early on in my career, I was taught that there are no “problems” – just “challenges”. What a cliché, right? These days, I find this concept quite convincing. A “challenge” is positive, it indicates that it can be overcome. Also, you can break down a challenge into several components. This has always helped me. Without further ado, let’s break down the female wealth gap.
Female wealth gap: gender pay gap + career break + flexible employment + life expectancy + risk tolerance.
Let’s look at it in more detail:
- Gender Pay Gap – in Germany, the gender pay gap amounts to approximately 21%. It is similar in other European countries such as Austria or Switzerland. Why do women make less? A number of structural factors are at play; women might work more in a part-time capacity, take care of children and elderly parents, work in less lucrative careers, have less management roles… you get the picture.
- Career Break – women in Germany take a career break of on average 5 years due to having children (or taking care of elderly relatives). Needless to say that this impacts their earning prospects, their ability to contribute to public and corporate pension schemes, move up the career ladder, …
- Flexible employment – more women than men work in a part-time capacity (for example, at 50% or 75%), sign up for so-called “mini-jobs” (at a monthly salary of EUR 450), or freelance. All of these contribute to the gender pay gap.
- Life expectancy - women live longer. On average, women in Germany live up to 88 years of age, men up to 83 years. Note the effect of the retirement gap. According to the Institute of Economic and Social Research (WSI, Hans-Böckler-Stiftung) the retirement gap between women and men amounts to approximately 57%. If you correspond to the German average, then you will receive a monthly retirement payment of ca. EUR 618 later (compare to men: EUR 1.037).
- Risk tolerance - women often do not invest but save - they earn a lower return on assets (and lose money in the current low interest environment). Our very own survey in December 2017 confirmed this: 22% of our respondents stated that they do not invest at all; 34% invest between 1 and 10% of their savings… there is room for improvement.
As stated above, we are pragmatists and optimists at heart. There are solutions! You just took the first step by familiarizing yourself with the concept of the female wealth gap. Did I know about this concept in detail a year ago? No. But now, I do. So do you. And there are many tools and remedies to overcome the female wealth gap.
Solutions - to just name a few:
Teaching yourself salary negotiation skills and applying them – so that you don’t earn less when you have all the right qualifications; insist on a promotion; or change jobs if that's what it takes to earn more
- Mitigating the effects of a career break – for example, by staying in touch with your professional network, taking online classes to acquire new professional skills (agile working, social media, ...)
- Reconsidering the terms of your flexible work arrangement – negotiating a higher weekly percentage at work, remote work, non-monetary benefits, additional pension contributions…
- Reading up on retirement gap and how to best mitigate it – for example, by first calculating your very own financial retirement gap and starting to compensate for it via a private pension plan
- Familiarizing yourself with the basics of investing so that you can benefit from its positive effects; letting your money work for you.
Finelles is all about finding solutions. Helping you understand and acquire the tools and mindset to learn about an issue and then overcome it.
This is exactly how we started. And so can you. We are more than happy to help.
Written by Caroline-Lucie Ulbrich
Finelles Founder. Coach and organizational consultant (ECB, Deutsche Bank and UBS).