Why women have it worse - financially - than men

27 November 2012

Women may be the fairer sex, but when it comes to money and financial planning they tend to get a raw deal in comparison to men.

So is it their fault or is life conspiring against them? Here are 10 reasons why women generally have less cash to splash than their male counterparts.

1. Smaller salaries

The average woman earns £500,000 less than her male colleagues over the course of her working life.

And according to the Fawcett Society, which campaigns for gender equality, the pay gap, which is 14.9% across the UK, jumps to almost 23% in London and 55% in the financial services industry.

2. Paltry pensions

Recent research from Scottish Widows showed that the gap between the amount men and women are saving for old age has grown to a record high, with women falling almost £30,000 behind.

Reasons for this include smaller incomes, stopping work to have babies and bring up children and relying on a spouse's income despite the risk of divorce (see below).

3. Children

Women's pensions are not the only part of their finances adversely affected by stopping work to have children.

For many mothers, taking a career break to have a baby also means missing out on promotions at work. And for those with two or more children, the cost of childcare can often make it pointless them working at all.

4. Lack of knowledge

Many women allow the men in their lives to control the family finances. However, it is crucial to build a credit history, not only so that they can take loans, mortgages and credit cards should they need to, but also for retirement saving purposes.

How can women get the best deals when they don't understand the offers available?

5. Emotions

While men are generally implacable when it comes to financial decisions, an increasing number of women are finding themselves supporting their partners out of the goodness of their hearts.

According to psychological studies, this is because women are more likely to want to act as "saviours".

To avoid heartache and financial ruin, however, it's a good idea to remember the old adage: "Never a lender or a borrower be."

6. Gender equality (in financial services)

Traditionally, women have paid less than men for car insurance because statistics show that they are less likely to have and accident and that any accidents they do have cost insurers less than those involving male drivers.

From next month, however, the new European Gender Directive, voted for by the European Court of Justice (ECJ) will prevent insurers offering female drivers cheaper cover.

Their premiums will rise to subsidise more foolhardy male motorists as a result.

7. Divorce

We are used to reading about rich and famous men's fortunes being decimated by messy divorces. However, when marriages break down, the biggest losers are often the women involved.

For some ex-wives, the main problem is finding the cash to keep going immediately after the separation (before a settlement has been agreed) without getting into debt, for others it is fighting for the necessary maintenance to keep their children housed and fed.

Ladies who had been relying on their husbands to fund their retirements can also find themselves high and dry.

8. Lack of interest

Women's reputation for managing their money less well than men is not all based on factors outside their control.

Many women simply are not interested in finance and are too caught up in the complexity of modern life to not focus on budgeting and planning. This will have to change if they want to turn their financial fortunes around.

9. Life expectancy

Women live longer than men, with a boy born in 2012 expected to live to 91 and a girl to 94.

As they have earned less money during their working lives, and saved less towards their pensions, than their male counterparts, women are therefore likely to have to work longer and longer to avoid financial hardship in old age.

On a positive note, however, annuity providers will no longer be able to penalise women for living longer from next month due to the Gender Directive described above.

10. Shopping!

Women are much more likely to enjoy a bit of retail therapy. However, shopping to influence your mood and wasting money on things you do not need is a great way to get yourself trapped in a spending spiral.

And there is no doubt that ladies who want their financial situations to improve need to avoid shopping sprees.

Source: AOL Money

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