Unlocking Financial Equality: The Three Major Barriers Preventing Women from Saving and Building Wealth
Despite strides in gender equality, a significant wealth gap persists between men and women in the UK. A major factor contributing to this disparity is the difference in savings between genders, with women saving 35% 1 less than men.
Insignis Cash Solution ran a poll last month asking people which of the following facts contributes the most to a lower saving rate from women:
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- Gender pay gap
- Unpaid work (including Maternity leave)
- Lower financial literacy
- Other
Respondents identified the Gender pay gap as the main reason for the disparity, which was closely followed by Unpaid work. This suggests that access to wealth is the main reason for a lower saving rate. While there is still work to be done, there are initiatives under the ‘Gender Equality Policy’ to tackle this inequality, leaving hope for future generations.
Investing in developing financial literacy early will give the new generation the knowledge and skills necessary to make informed decisions about their money and investments, develop good financial habits, and avoid financial pitfalls, thus helping them build wealth over time.
In this article, we look at the three key factors and ask industry experts their views on tackling this saving inequality and supporting women in building resilient financial wealth.
Gender pay gap
According to the latest data from the Office for National Statistics (ONS), the median gender pay gap for full-time workers was 7.9% in 2021 and 12% for the age groups over 40 years old. So, on average, across their career life, women earn 92.1 pence for every £1 made by men.
Occupational segregation, ageism and gender discrimination contribute to the pay gap. For example, women are more likely to work in lower-paid occupations, such as caring and administrative roles, than men, or they may be passed over for promotions or job opportunities due to perceptions that they are less committed to their careers than men or that they may soon retire or take additional time off work for caregiving responsibilities.
Efforts to address the gender pay gap in the UK include initiatives such as mandatory gender pay gap reporting for companies with over 250 employees. This requires companies to report their gender pay gap data, including information on the difference in pay and bonuses between men and women. The hope is that this transparency will encourage companies to take action to address any gaps and improve their diversity and inclusion practices.
Unpaid work
However, other factors, such as the phenomenon known as the “motherhood penalty”, directly impact women’s career progression in terms of speed and opportunities. Women are more likely to have taken time off work to care for children than their male counterparts. They also tend to take on more unpaid work, such as caring for elderly relatives or disabled family members.
While there are calls for flexible working arrangements and improved access to affordable childcare, the current leave system reinforces traditional gender roles, forcing women to take career breaks that significantly impact women’s earnings and career progression, making it harder for them to achieve financial security and stability over the long term.
“It has been cited frequently that women shoulder the greatest responsibility of unpaid work in the UK, whether that be caring for younger children, older family members of completing household chores. In terms of trying to bring a little more balance to the childcare element, it is imperative that the Government seek to help with subsidised childcare to allow women to return to work if they wish, rather than being financially penalised for being a mother. This in turn would lead to shorter career breaks and earning progression being smoother, allowing women to save more for the future” Fiona Oliver , Business Director, PWM.
Financial literacy
Finally, research suggests that women, on average, have lower financial literacy than men. One major factor contributing to the financial literacy gap is the gender pay gap, which means that women may have less money to invest and manage, making it harder for them to gain practical experience and can lead to a lack of confidence in their abilities.
By providing more accessible and targeted financial education and resources, we can help women overcome these systemic barriers and improve their financial literacy. Some strategies that can help address the financial literacy gap include providing financial education early in life, such as in schools or through community programs, and tailoring financial education to meet women’s specific needs and concerns.
In addition to education and resources, there is also a need for greater awareness and advocacy around the systemic barriers that limit women’s financial literacy and security. By promoting diversity and inclusion in the financial industry, including leadership positions, we can help combat bias and discrimination and create a more equitable and accessible financial system for all.
“The gap in women’s savings sadly will not close overnight. Systemic barriers still exist, which are being worked on and require a collective effort to deliver real change. However, women should also aim to empower themselves, as well as their sisters, daughters, female friends, and colleagues, to improve their own financial literacy. There has been a notable increase in free financial education for women to open-up the conversation and support women to improve their knowledge and financial outcomes.” Kate Eadie , COO, Insignis Cash Solutions
At Insignis Cash Solutions, we have embraced diversity and are incredibly pleased that women make 52% of our workforce and are represented at all levels of the company; 45% of our senior management is made up of women.
Insignis Cash Solutions is committed to supporting women in building their financial knowledge and confidence and improving access to financial resources and services to achieve greater financial security.