Globally, women’s representation in the corporate world shows a mixed picture. According to data from Equileap, women hold 28% of board member positions, make up 20% of executives, account for 26% of senior management roles, and represent 38% of the total workforce. Despite these strides in professional settings, a significant disparity remains when it comes to pay, with women earning, on average, 20% less than men across the globe.
The issue of gender inequality is not limited to income alone. When we turn our attention to women and finance – that is, not just what women earn but also what they save, invest, and accumulate over time – the picture remains equally concerning.
This blog aims to shed light on the vital role of women in wealth accumulation and about closing the wealth gap. We will explore the root causes of this inequality and offer wealth inequality solutions to empowering women economically.
What is the gender wealth gap?
The gender wealth divide refers to the disparity in the accumulation of assets and wealth between men and women. This gap is not just about the difference in earnings but extends to the overall financial resources and assets that individuals have access to over their lifetimes. It’s a complex issue rooted in various societal, economic, and cultural factors that influence women’s economic empowerment to participate in the workforce, their career progression, and their investment opportunities.
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Underlying causes of the gender wealth gap
The gender and wealth distribution is a complex issue rooted in various social, economic, and cultural factors. In order to resolve the disparity and create a more equitable financial environment, it is critical to comprehend these fundamental factors.
The role of inheritance
One of the foundational elements contributing to the financial injustice in wealth is the role of inheritance. Traditionally, men have been more likely to inherit significant assets, perpetuating a cycle of gender-based wealth distribution. This inheritance bias is compounded by social norms that often see women prioritising familial harmony over financial equity, placing them at a disadvantage when it comes to wealth accumulation.
Women who are employed often face a sharp wage difference compared to their male counterparts. On average, women earn only a fraction of what men earn, a disparity that exists even for similar work. On average, Indian men earned ₹20,666 per month, while women earned only ₹15,722.25. This wage gap is primarily due to discriminatory pay practices and is a global issue. It affects women’s ability to accumulate wealth throughout their lives.
Limited access to high-paying jobs
It is startling how few women hold positions of leadership. Even if they have the necessary skills, training, and experience, women are frequently passed over for leadership roles and promotions.
Take the healthcare sector in India; according to a report, only 18% of leadership positions are held by women, and they earn 34% less than their male peers. Globally, the situation is not much better. Women hold just 25% of senior positions and a mere 5% of leadership roles in the healthcare industry.This underrepresentation in senior roles significantly impacts their earnings and overall financial inclusion for women.
Impact of gender roles
Traditional gender roles further worsen the gender pay gap. Women are disproportionately responsible for household management, which can limit their career progression and opportunities.
Women are more likely than males to take time from work to care for their families or fulfil other family-related responsibilities. These breaks can have long-term effects on their career trajectory, earnings potential, and overall wealth accumulation. Consequently, women often end up with lower savings and investments than men, contributing to the gender wealth gap.
Why is women’s role in wealth accumulation crucial?
Wealth accumulation through investing and savings is important for women’s financial empowerment. Here’s a condensed overview:
- Financial independence: By saving and investing, women can grow their wealth over time, gaining financial autonomy and reducing dependence on external financial support. This independence allows for more freedom in life decisions.
- Promoting gender financial equality: Historically, women have faced lower wages and limited career opportunities, contributing to a wealth gap. Through diligent savings and strategic investing, women can bridge this gap, achieving financial independence and laying a solid foundation for their future.
- Breaking stereotypes: Engaging actively in financial planning and wealth accumulation challenges the outdated notion that women are less capable of managing money. By taking charge of their finances and participating in economic equality advocacy, women debunk these stereotypes, showcasing their financial acumen.
- Protecting against uncertainties: Life’s unpredictability necessitates a proactive approach to financial planning. Effective money managers are better equipped to handle unforeseen circumstances like job loss or emergency.
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How to bridge the wealth divide?
Taking control of personal finances is essential for women in bridging the wealth gap. Here are some wealth building strategies:
- Learn continuously: The first step is gaining knowledge. Look for financial literacy camps, economic empowerment programs, read books, or explore online resources. It is essential to know the fundamentals of debt management, investment, retirement planning, and budgeting. This understanding serves as the foundation for wise financial choices.
- Set clear financial goals: It’s critical to have clear financial goals for both the short and long terms. Having specific targets helps in creating a focused strategy to achieve them.
- Create a budget: Maintain a record of your earnings and spending. Draft a monthly budget to ensure you are spending within your means and allocating funds towards your goals. It’s critical to periodically examine and modify this budget to account for any modifications to your financial circumstances.
- Women and investing: Start by allocating some funds, even if they are small, each month. Then, to gradually increase your wealth, think about investing. Investments can seem tough, but they are a key component of financial growth. Seeking advice from a financial advisor can assist you in aligning your investing decisions with your goals and risk appetite.
- Manage debt: It’s important to have a strategy for managing any debts. Prioritise paying off high-interest debts first and look into options for refinancing or consolidating loans to more manageable terms. A clear plan for debt reduction can significantly improve your financial health.
The way forward
The path to bridging the wealth gap lies in empowering women with economic equality initiatives and knowledge for effective financial management. By equipping women with financial literacy and encouraging their active participation in wealth accumulation, we pave the way for a more equitable future. This empowerment isn’t merely for individual gain but a collective stride towards economic resilience and gender equality.