Saturday, March 8, 2014

Why Women Need More Money Than Men -- and What Can Be Done to Make It Happen

Women need more money than men. Why? (No, not so we can buy more shoes, handbags or manicures.) Women need more because we live longer than men, make significantly less salary than our male peers, and are more likely to be single parents raising a family on one income.
Having a child is now the single best indicator of financial collapse.
Women comprise 87% of the impoverished elderly. A woman who works full-time for 40 years will earn $523,000 less than her male counterpart. At age 65, that extra half a million dollars could keep her from becoming one of the elderly poor.
What do these grim statistics tell us? They tell us that women, especially as they become older, are not prepared to take care of themselves financially. Yet nearly 90% of all women will end up managing their finances alone at some point in their lives.
Despite a woman's greater potential for financial need, it appears that many factors hamper financial equality between the sexes.
What can women do to beat these alarming odds?
Here are a few of my own - perhaps unique - ideas:
Delay motherhood.   My husband and I purposely waited until we had achieved financial freedom before adopting our daughter, because we didn’t want to repeat our own parent’s experiences. We both grew up with workaholic, struggling young parents and quite frankly, that often stunk. We didn't want money to interfere with our parenting.
Forming a family through adoption, rather than pregnancy, was a decision I made when I was a mere teenager. (The way I figured it, why "make my own" child when there are countless orphans dying for a family already.)  Since my husband and I chose to create our family through adoption, my biological time clock wasn't a ticking time bomb.
As my blog’s tagline says, “Financially free, our family hasn’t set an alarm clock in years. Whether it be work, parenting or play, we wake with the sun, eager to spend each new day doing whatever we choose.”   We waited until we could afford to commit to parenting 100%, together. For our family, the wait has been worth it.
I realize the path we chose isn't a good fit for most, but I do think it's sensible for parenthood to wait until certain things are in order. Consider taking the time to first:
  • finish college, establish your career, or launch your business
  • pay off your credit cards and other consumer debt
  • build an emergency fund
  • protect your growing wealth with insurance policies like disability and health
  • start your retirement account
  • build a solid partnership with your significant other
Share parenting and careers with your child's father.   I have two biases to confess right off the bat: One: I think most kids grow up best when raised by their parents (as opposed to day-care providers); and two: women need to know how to make money (see the statistics referenced in this article, above).
My ideal parenting-career model looks like this: Mom and Dad divide childcare and career hours between the two of them. For instance, rather than settle for the stereotypical full-time working father and the stay-at-home mom, each parent works part-time (20-25 hours each), during different shifts, while swapping care of the kids.
Think about the benefits to this kind of arrangement:
  1. Kids grow up spending quality time with both parents
  2. Both Mom and Dad get to spend quality time with the kids
  3. Both parents have the opportunity to pursue their own career paths
  4. No childcare expenses are required
  5. Mom hasn't given up her earning power
I recognize this isn't an easy arrangement for everyone. Many families feel they both need to work full-time to support their family. Some don't think their employer would allow them to work part-time. Others are single-parents who can't count on reliable child-support or parental care from the other. It's not the perfect solution for everyone. But if it sounds like an appealing idea to you, see if you can eliminate the "yes-but's" and figure out a way to make it happen anyway.
Refuse to be underpaid.  Remember-- a woman who works full-time for 40 years will earn $523,000 less than her male counterpart.  When you perform the same work, why in the world should you settle for less pay? Demand what you deserve,
Become financially literate.  Almost 90% of all women will end up managing their finances alone, so it's foolhardy to allow the man in your life to handle your finances. Read books, take classes, find a money mentor.
Come to grips with the emotions behind money.  The “How To’s” of personal finance are the same for women as they are for men. What is different is our feelings and beliefs about money. It has been demonstrated that most women are raised to nurture and seek acceptance and view money as a means to create a lifestyle. Women spend on things that enhance day-to-day living. Conversely, most men grow up learning to fix and provide. They view money as a means to capture and accumulate value, like a house and retirement. Men don't spend, they invest. Men don't want something, they need it. Theirs tends to be a future-money orientation.
Modify your money mindset to a more functional one.
Create a lifetime financial plan.  I use Microsoft Money's lifetime financial planning tool. Stay tuned for a future post for more details.
If you are married (or in a committed relationship), invest in it.  Money ranks as the first most argued topic for many couples. It has been estimated that an astounding 80% of divorces are the result of money disagreements.
A good marriage takes effort. I've been married for 21 years, so believe me, I know.  We schedule regular date nights sans kid, and see a counselor for "maintenance tune-ups". Money and time well invested, I assure you.
Push for national change in Congress, state legislature, public schools, and at the corporate level. Support systems that will help to ease financial differences between genders.
Readers, how do you think women can beat the odds?  I recognize this topic could raise some controversy, so please remember to express your constructive opinion, thoughts and ideas with respect and kindness.
Learn more on this topic:
Prince Charming Isn't Coming: How Women Get Smart About Money
The Two-Income Trap: Why Middle-Class Mothers and Fathers Are Going Broke
The Overspent American: Why We Want What We Don't Need
Women & Money: Owning the Power to Control Your Destiny
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Note: Statistical information for this article was obtained from the following sources:


  1. Wow, you are the first person that said this out loud! Bravo

    When I tell people to get their career together first. They feel they will be too old to have children by then

    Children can be a big impact on one's life. You have to mentally and financially be prepared, it's a life long commitment. With a good spouse and having your financial house in order, the process can and will go smoother

  2. Interesting post! I like the idea of sharing parenting/working duties, but we haven't been able to find the right balance that provides enough income AND benefits (as most PT work doesn't offer benefits). Sure, we could go get them on our own, but I'm afraid the costs would be prohibitive in our situation. Perhaps you can follow up with how you guys are covered with health insurance, etc.

  3. Interestingly, I was just considering writing a post titled "Is it easier for men to be frugal than women?" It would have been based in part on the premise that women have to spend a lot more money to be considered "put together" than men do, and that clothing/beauty/hygiene products targeted towards women are sometimes more expensive than those targeted towards men.

    I think I may still write it and refer back to this post--I think the "a woman's body is unacceptable no matter what she does" issue plays into considerations of wealth and women.

  4. thanks for your great post, i learn alot from it

  5. Nowadays, everyone has a chance to date a millionaire, there are lots of millionaire dating sites we can search online.