Holding a life insurance policy is a key step toward improving your financial health and building generational wealth. It’s something everyone should have, but men still outpace women in terms of purchasing life insurance. Life Insurance Marketing and Research Association (LIMRA) data indicates that while 78% of women consider personal finances very important, only 31% have plans to purchase life insurance coverage.
This disconnect between priorities and action might be the result of deeply ingrained stereotypes regarding women and finances, women’s lack of access to financial advisers and information, as well as the ongoing gender pay gap. Haven Life’s Gender Roles and Life Insurance Survey found women are more likely to perform household duties such as cooking, grocery shopping and providing care for children and pets than their male partners.
Women do it all, but many also seem to internalize the harmful notion that men are better at money management.
As a young woman, I set out to take control of my financial future and booked an appointment at a financial advisory firm. Little did I know, I had booked an appointment with one of the firm’s leading principals — someone unaccustomed to providing guidance to clients with a net worth under $500,000. As you can probably imagine, our meeting to discuss managing my student-loan debt was brief and awkward.
Some women, who grew up around stereotypes and strict gender roles, might feel self-conscious about revealing their financial circumstances, taking charge, and advocating for themselves.
For example, when it comes to pay equity, I have never known if my paycheck was lower than that of my male colleagues. However, a 2022 study found that women earn 82% of what men earn, on average — similar to where the pay gap stood 20 years ago. To me, that means I must invest at least 18% better to close the pay gap and make intentional, informed decisions with available funds.
“ As women, we owe it to ourselves to understand our finances. ”
As women, we owe it to ourselves to understand our finances. Studies show that women spend more time researching their investment choices than men, and are more likely to take on appropriate levels of risk. Women can take further charge of their financial future in the following ways:
- Make use of online digital tools and take ownership of one’s financial education.
- Understand one’s personal finances and become conversant in the basics of budgeting, savings, investing, and retirement.
- Establish clear goals and build, perhaps with the help of a financial adviser, a plan to achieve those goals with a built-in margin for error.
- Stay optimistic that one’s financial goals are attainable. Women need to feel empowered to succeed. It’s difficult to save and invest for the future if one is a complete pessimist.
For example, an empowering achievement of mine was to pay off my student loans in my early thirties. When we identify clear goals and achieve those milestones, even small ones, we establish a virtuous cycle that builds confidence and leads to even greater outcomes over time.
Women who take charge of their financial future by prioritizing financial literacy are doing a service to their family and positioning them to accumulate generational wealth.
Access is power
Earlier, I shared an account of my unsuccessful first meeting with a financial adviser. A negative first experience can cause women to hesitate before taking further steps, especially when preconceived notions exist.
Technology is helping women gain a full picture of their financial health, which can help them overcome societal, cultural and family expectations that they put money management on the back burner. Online services can help close the financial literacy gap and help women benefit from professional grade counsel at a time, place and price point that works for them. Access to personalized consultations with automated advisers, online insurance calculators and other tools enable women to better equip themselves to protect against uncertainty in their lives and the market.
Online services also provide women with a degree of anonymity that removes some of the fear of embarrassment or added costs of seeking financial advice. After all, Google won’t make a face if you ask a basic question.
Clarity and confidence
The persisting gender pay gap and looming recession underscore how important it is for women to prioritize their financial health. Yet women are often hesitant to take control of their finances. How often do we allow ourselves to be persuaded that someone else “knows better,” or that we are not well-informed?
Often, these assumptions are simply untrue. We typically know more than we think we do, and it becomes a matter of time and persistence to keep learning. Knowledge, like interest, compounds over time.
Sahang-Hee Hahn is head of strategy and planning at Haven Life.
More: Women are less likely to get more money when negotiating a starting salary
Also read: U.S. gender pay gap barely budged over the past 20 years.
April is National Financial Literacy Month. To mark the occasion, MarketWatch will publish a series of “Financial Fitness” articles to help readers improve their fiscal health, and offer advice on how to save, invest and spend their money wisely. Read more here.