Unveiling the Unique Challenges Women Face in Financial Planning
In an ever-evolving world, women take on increasingly vital societal roles, becoming influential decision-makers, entrepreneurs, and leaders in various industries. By 2024 the privately held wealth of Canadian women is estimated to rise from $1.2 trillion to $2.7 trillion, representing 50% of total wealth in Canada.
Despite these advancements, gender-specific wealth challenges persist, posing obstacles to financial independence and affluence for Canadian women. In this article, we will review approaches to combat challenges women face on their journey toward financial success.
Addressing the Gender Pay Gap: A prominent hurdle for women is the gender wage gap. In Canada, on average, women make 11% less per hour than their male counterparts. We cannot count on companies to implement diversity and inclusion initiatives overnight, but certain factors are within our control. Firstly, shifting the mindset and normalizing talking about salaries between colleagues, both women and men, to bring awareness to the subject. Secondly, encouraging negotiation skills and self-advocacy among women during salary discussions, as only 31% of women have negotiated their salaries upon the initial offer. Among those who did, 63% received a pay hike. Companies usually have room to move, and the stats prove it is worth negotiating. Lastly, fostering a cultural shift where women are encouraged to pursue career opportunities traditionally dominated by men can further narrow the wage gap and promote greater economic equality.
Planning for Extended Retirement: The gender pay gap often leads to lower lifetime earnings and reduced access to employer-sponsored retirement plans. Women are retiring, on average, with 30% less than men, according to the “2021 Mercer Retirement Readiness Barometer”. Furthermore, women tend to live longer than men, and how long you live/invest is arguably the most important factor determining your retirement success, even more than other factors like your annual returns. Owning a well-diversified portfolio, properly taking advantage of tax-sheltered accounts, and understanding what your ideal retirement looks like will make your money work smarter for you.
Financial Confidence and Literacy: At some point in their lifetime, 90% of women will be the sole financial decision-maker in their families, whether it is due to divorce or widowhood. Therefore, building financial literacy by seeking educational resources, such as workshops, online courses, or books, is important. “The Psychology of Money: Timeless Lessons on Wealth, Greed, and Happiness” by Morgan Housel is a great place to start. Additionally, tracking personal finances, setting clear financial goals, and building a team of trusted financial professionals can help gain practical experience and develop a strong foundation in financial literacy.
Investing time and energy to comprehend the financial challenges women encounter is essential to navigate past them. Encouraging open conversations, self-advocacy, planning for an extended retirement, and building financial literacy are crucial steps toward overcoming these obstacles and achieving lasting independent financial success.
This information has been prepared by Lisa Carter, CFP®, CLU®, CIM® who is a Wealth Advisor and Financial Planner for Westmount Wealth Management Inc. and an Insurance Advisor for Westmount Wealth Planning Inc. Westmount Wealth Management Inc. is registered as a Portfolio Manager in British Columbia, Alberta, and Ontario. Westmount Wealth Planning Inc. is a subsidiary of Westmount Wealth Management Inc.
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