Author Katrina Shanks, CEO Financial Advice NZ Article originally published in Stuff.co.nz.
OPINION: I just love the theme for this year’s International Women’s Day, on March 8: #EmbraceEquity.
Forget about equal opportunities, now it’s all about equity being the “must-have”.
The International Women’s Day movement says it’s important to know the difference: equality means everyone is given “the same resources or opportunities”, while equity “recognises each person has different circumstances, and allocates the exact resources and opportunities needed to reach an equal outcome”.
Put another way, equity gives everyone what they need to be successful, not the exact same thing. If everyone was given the exact same thing, expecting that would make people equal, it assumes everyone started out in the same place – “and that can be vastly inaccurate because everyone isn’t the same”.
Obviously, equity should apply in all walks of life, and there’s no better illustration of its absence than when it comes to pay and finances and saving.
The statistics all show the same thing: as a group, women figure worse than men when it comes to finances – and that is down mainly to what they are paid and how much time they are in the workforce.
Women earn considerably less than men as a group. Government figures show that last year the national gender pay gap – the gap between men’s and women’s median hourly pay – was 9.2% and that’s around where it’s been for much of the past decade.
It’s mainly because women are under-represented in higher-level jobs, and that’s down to how much time they typically spend in the workforce. Many are employed in industries where more than 80% of the workers are women, and those jobs tend to be lower paid.
It’s a vicious circle.
The Retirement Commission Te Ara Ahunga Ora says that despite the data showing women generally have very good attitudes to spending, saving and borrowing, they still have a long way to go to closing the gender gaps around financial capability: they not only earn less on average, but typically take more time out from paid work through maternity and family commitments. Also, they often return to part-time work, all meaning their income is lower for longer, all of which has an impact on earnings, KiwiSaver contributions, and on retirement balances.
Their research shows women are less aware of their KiwiSaver settings, less confident at investing, and fewer women than men seek financial advice. Women are also disproportionally impacted financially by divorce and domestic violence, and by downturns in the labour market.
The gaps they see include:
- -More than one in five women have a KiwiSaver account but don’t contribute (22% compared to 16% of men).
- -Though more women than men are signed up to KiwiSaver, women on average have a balance of $27,061 compared to $32,553 for men. That gap widens the older women get.
- -39% of women with KiwiSaver estimate they have $10,000 or less in their account compared to 26% of men, and 26% of men believe they have over $50,000 compared to only 14% of women.
- -Women were more likely than men to earn less than $30,000 a year personally (39% compared to 33% of men). Conversely, men are more likely to earn more than $70,000 personally (32% compared to only 13% of women).
- -There is also a gender gap in terms of using and understanding financial products.
Despite all this, women do score higher on day-to-day money management attributes such as saving and budgeting, are more likely than men to plan their budget exactly and to keep to the budget, and score higher in long-term thinking and impulsivity control compared to men. (I particularly like that last one!)
And research by ASB found that despite the pay gap, women are actually 2% better off than men when it comes to “day-to-day” budgeting.
So, it’s nothing to do with ability, rather a matter to being given more chances to prove we have it.
All of which sounds like a bit of equity, particularly around pay, would benefit everyone.
As the International Women’s Day organisers say, it’s all about allocating the exact resources and opportunities needed to reach an equal outcome, and that’s where employers need to come to the party.
So, what are some of the actions women can do to improve their finances and their financial resilience?
- -Carve out some time to look at your finances. You’re busy balancing a job and a family and friends, but try hard to make time to see where the money’s going and how you’re budgeting, and how all that’s working for you. Spend time working on it. And if you can, work towards getting more financially literate at the same time if needed. Do some online research, or talk to an expert about help with a plan.
- -Build up an emergency fund because it gives you financial resilience. Make sure you’ve done that after you’ve taken that hard look at your budget. And remember, your credit card is not your emergency fund, this is all about your debt.
- -Remember to build you into that budget as well. Don’t forget you’re important as well.
- -Know your value in the job market and ask for what you are worth.
- -Insure your biggest asset – yourself. Especially to protect your income if you become sick or disabled.
I focus on ensuring I have an emergency fund, stay debt free for everyday living, contribute to my retirement monthly, understand my value and insure my biggest asset – myself. My focus has changed with different stages of my life – I feel now I have achieved a good balance. My financial adviser has helped significantly to keep me focussed.
As my financial adviser would say keep focussed on what matters and if things change that’s ok change with it.