How is Money Different for Women?

Money is Different for Women

Women in today’s world are burdened with the responsibility of achieving success in various areas of life. Whether it’s managing a career, raising a family, or caring for elderly parents, the expectations placed on women are often overwhelming.

Many of these responsibilities come with significant financial implications, especially when considering scenarios like sharing finances with a partner or recovering financially after a divorce. Unfortunately, despite the heavy demands women face, they are often paid less for their work compared to men, making the path to financial independence and security even more challenging.

Legal Milestones in Financial Independence for Women

It’s important to remember that women’s financial independence is a relatively recent development.

For example, it wasn’t until 1974 that the passage of the Equal Credit Opportunity Act made it possible for women to apply for credit cards or loans without a male co-signer¹. And it wasn’t until 1988, with the passage of the Women's Business Ownership Act (WBOA), that women were allowed to obtain business loans without a male relative’s co-signature.²

Before these laws, a woman’s ability to build wealth was often dependent on the men in her life—whether it be a husband, father, or another male relative. Without the ability to access credit on their own, women were severely restricted in their ability to make financial decisions, grow businesses, invest in property, or even purchase homes independently. This meant that for generations, women were systematically excluded from the financial opportunities that are often the foundation for building wealth and long-term financial stability.

The fact that women were only granted financial autonomy in the last few decades is a key reason why they are still playing catch-up in areas like earnings, savings, and investing.

Without the same historical access to credit, capital, and financial independence that men have long enjoyed, women are more likely to find themselves behind the curve when it comes to growing their personal wealth. Additionally, systemic barriers—like the gender pay gap—persist, limiting women's earning potential and reducing their ability to save and invest as effectively as men.

Today, while women have made considerable progress in their ability to manage and grow their finances, these lingering challenges underscore the importance of continued efforts toward gender equity in financial systems.

Women must not only overcome the historical barriers that have limited their wealth-building potential, but they must also navigate current systemic challenges like wage disparities, career interruptions for caregiving, and underrepresentation in high-paying industries.

The Gender Wage Gap and Its Impact on Financial Security

The wage gap is a pervasive issue that women face in almost every industry. According to a recent Forbes report³:

Women earn, on average, 16% less than men.

Women working full-time earn just 84 cents for every dollar a man makes.

Women of color are among the lowest-paid workers, with Black and Hispanic women in rural areas making just 56 cents for every dollar that rural white, non-Hispanic men earn.

This pay disparity is particularly stark when looking at specific racial groups. For example:

Latina women are compensated just 55% of what non-Hispanic white men are paid in 2024.

Black women earn 64% of what non-Hispanic white men are paid.

Native American women are typically paid only 59 cents for every dollar paid to white, non-Hispanic men.

Why Lower Earnings Make Financial Independence Harder for Women

With lower earnings, women often struggle to save for retirement or invest in their financial future. For example, women in retirement are often financially disadvantaged due to career interruptions or lower lifetime earnings.

This is particularly concerning given that women tend to live longer than men. According to the Centers for Disease Control and Prevention (CDC), women on average live longer than men, meaning they are likely to spend more years in retirement. However, with fewer resources saved, the challenge of financial independence becomes more acute.

The 2020 Covid pandemic also had a disproportionate impact on women in the workforce, which has further widened the gap in retirement savings. A study by the Teachers Insurance and Annuity Association of America (TIAA) found that only 19% of women feel confident in their retirement planning, compared to 35% of men.⁴

This confidence gap has widened over the years, further illustrating the financial challenges women face as they plan for their future.

Financial Challenges Facing Women in Retirement

One of the primary reasons women struggle financially in retirement is the combination of lower lifetime earnings and longer life expectancies.

According to the National Institute on Retirement Security, women aged 65 and older had a median income of $47,244 in 2020, which includes Social Security, retirement savings, and property income.

By comparison, men in the same age group had a median income of $57,144⁵. This income disparity leaves women in a financially precarious situation as they navigate the complexities of retirement.

Additionally, research from Bank of America shows that men’s retirement account balances are 50% higher than women’s, largely due to the wage gap and the fact that women often take time off work to care for children or aging parents⁶.

This time away from the workforce translates to fewer opportunities to save for retirement and reduced employer contributions to retirement accounts, such as 401(k) plans.

The Importance of Retirement Planning for Women

Despite the unique challenges women face, retirement planning is essential.

While it may be tempting to put off planning for the future in the face of daily responsibilities, women cannot afford to ignore the need for financial security in retirement. For women who are married, the odds are high that they will outlive their spouses, meaning they will be solely responsible for managing household finances and healthcare costs later in life.

Furthermore, since Social Security benefits are calculated based on the 35 highest-earning years of a worker's life, women are often at a disadvantage due to career interruptions. Among people 65 and older, unmarried women and widows rely more heavily on the income they receive from Social Security (45%) than men (33%) or couples (28%)⁷.

This makes it all the more important for women to maximize their savings and retirement contributions while they are still working.

Financial Participation in the Household

In many households, women still take a backseat when it comes to managing finances.

A UBS Wealth Management study found that almost half of the women surveyed let their male partners handle financial matters at home⁸. This limited involvement in financial decision-making leaves many women unprepared to manage their own finances, particularly in the event of divorce or the death of a spouse.

Women must take a more active role in managing household finances to build their financial confidence and independence. Understanding household expenses, managing debt, and participating in retirement planning are all crucial steps toward financial security.

By becoming more financially literate and involved in the day-to-day management of household finances, women can take control of their financial future.

Financial Abuse and the Importance of Credit Monitoring

Another issue that disproportionately affects women is financial abuse.

In some cases, a spouse may open credit accounts in the woman’s name without her knowledge, or may limit her access to household funds. This can make it difficult for women to achieve financial independence, particularly if they find themselves in a situation where they need to establish their own bank accounts, purchase a home, or finance a vehicle.

To protect themselves from financial abuse, women should regularly monitor their credit and maintain a high credit score. Keeping an eye on credit activity can help women spot any unauthorized accounts or transactions, and ensure they are in a strong financial position to move forward independently if necessary.

Taking Charge of Your Financial Future

Despite the many challenges women face in the world of personal finance, it’s essential to recognize the power you have to shape your own financial future. Whether it’s taking an active role in managing household finances, planning for retirement, or protecting yourself from financial abuse, there are steps you can take to ensure your long-term financial security.

Understanding the unique financial challenges women face is the first step toward building a more secure future. By acknowledging these differences and taking proactive steps to plan for your financial future, you can ensure that you are prepared for whatever life may bring, from career changes to retirement and beyond.

This article was adapted from my book Planning Your Retirement Life: Secure Your Future NOW: A Woman’s 8-Step Guide To Financial Freedom, Even if You Have No Money, No Time, and Don’t Know Where to Start

1. Civil Rights Division - The Equal Credit Opportunity Act

2. Funding Circle - H.R. 5050’s big impact on women-owned businesses

3. Forbes - Gender Pay Gap Statistics In 2024

4. CNBC - The pandemic has widened the gap between women and men’s retirement savings. What to know about catching up

5. CNBC - Women and men should save differently for retirement — here’s why

6. Money - 401(k) Gender Gap: Men’s Retirement Account Balances Are 50% Higher Than Women’s

7. National Women's Law Center - Social Security is Vital to Older Women's Financial Security

8. UBS Own Your Worth report finds that only 20% of couples participate equally in financial decisions