3 Money Issues Women Worry About (and How To Face These Fears Head-On)
When it comes to the current state of women and finances, there’s some good news and bad news. On the good news side, a recent Fidelity study found that women have a more positive outlook on their careers, relationships, caregiving responsibilities and the impacts of the pandemic compared to last year. However, 47% of women say their outlook on money and the economy has gotten worse over the past year.
In this “Financially Savvy Female” column, we’re chatting with Lorna Kapusta, head of women investors and customer engagement at Fidelity, about the money worries that are currently plaguing women and what they can do to address these fears.
71% of Women Are Worried About Inflation
The Fidelity study found that inflation is now one of the three primary stressors for women.
“We’re all feeling the impact of 40-year-high inflation on our wallets,” Kapusta said. “According to our recent Fidelity study, women, in particular, are experiencing higher levels of stress during this time of economic uncertainty and instability.”
This might be due to a number of factors, one of which is burnout, Kapusta said.
“Women are already feeling anxious and stressed amid the ongoing economic uncertainty, and inflation is only adding to their anxiety,” she said. “Younger working women especially feel a heightened sense of burnout and they don’t necessarily know how to manage it. Our survey found only 31% of Gen Z and millennial working women feel they have the resources to manage their stress. These two generations are also more likely to have taken time off from work due to challenges with mental health or burnout.”
Another factor to consider is the investing gap.
“Women are more likely to keep extra money in cash instead of investing it,” Kapusta said. “Not only are women missing out on potential growth and compound interest by holding onto cash, but cash sitting in the bank doesn’t keep up with rising inflation, leading to a lower overall net worth and likely higher levels of stress.”
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65% of Women Are Worried About the Cost of Essentials
Inflation and rising costs go hand-in-hand, so it’s not too surprising that the cost of essentials is now a major stressor for women as well. The reason this is hitting women so hard may be due to their role in their households.
“Women tend to drive most consumer purchases, from household essentials to groceries to clothing and more,” Kapusta said. “As a result, they’re the ones noticing the rising cost of essentials at the checkout counter, feeling the direct impact on their purchasing power.”
In addition, women may find it harder than men to keep up with rising costs.
“Though conversations around the gender wage gap are becoming less taboo, many women are still earning less than their male counterparts,” Kapusta said. “We know that only 57% of women understand how to negotiate or ask for a promotion, which, when paired with the rising cost of essentials, may create an even larger wedge in the gender pay gap.”
How Women Can Alleviate Their Fears of Inflation and the Cost of Essentials
Taking an active role in money management can help women feel more in control, even if they can’t control the state of the economy. To get started, Kapusta recommends taking the following steps:
- Reframe your financial foundation. “Consider reviewing your saving and spending habits to get a better understanding of where your money is going each month and how much you’re saving. Write down your income, savings, monthly expenses, and loans and debt payments. This will help you create a budget and determine how much you can contribute to short- and long-term saving goals.”
- Create a roadmap. “Once you have a better idea of your full financial picture, create a financial plan or a road map to achieve what’s most important to you. This includes long-term goals like how you want to retire, but also what you’re saving for today and all your goals in between. To think about your goals, start with what you want to do in the next six to 12 months, then three years, then 10, then retirement. Write it all down. Defining what you want can be a powerful step to making these goals real, leading to less stress and anxiety around finances.”
- Take an active role. “Before I came to Fidelity, I was constantly stressed about money and worrying about my family’s finances and savings. Though I had a great job, I let my husband handle our finances and wasn’t actively involved in it myself. That all changed when I joined the Fidelity team. I realized that I should take more of an active role. After having a conversation with my husband about it, I immediately felt my stress decrease and gained more confidence in my abilities to manage our money.”
58% of Women Are Worried About Not Having Enough Saved for Emergencies
While it’s always a good idea to have an emergency fund, this is probably more top-of-mind now than ever before.
“The pandemic, rising inflation and overall market uncertainty have reminded us all how important it is to have a savings cushion to cover the cost of emergencies,” Kapusta said. “Additionally, with layoffs occurring across industries, women may be feeling anxious about their job security and the uncertainty of what’s to come.”
How Women Can Alleviate Their Fears of Not Having Enough in Emergency Savings
Although over half of women are worried about not having enough saved for emergencies, on the positive side, many are taking active steps to build up their funds.
“According to Fidelity’s research, women are taking action, with 30% saying they will start or add to an emergency fund in the next 12 months,” Kapusta said. “It’s great to see women starting to chip away at their sources of stress and finding solutions to help alleviate it.”
For those who aren’t sure where to start, Kapusta recommends aiming to save enough to cover three to six months of living expenses. To build up these savings, it’s important to include savings in your monthly budget.
“You can consider following Fidelity’s 50-15-5 guideline to help guide your budgeting, spending and saving goals,” she said. “This is broken down so that 50% of your income goes toward essentials — rent, groceries, utilities, etc.; 15% goes towards retirement, whether that’s in a 401(k) or IRA plan; and 5% goes towards short-term goals, including an emergency or rainy-day fund. The remaining 30% can be spent as you see fit, whether you’re planning an upcoming vacation or contributing to another savings goal.”
To ensure you keep up with your goals, it’s important to do regular check-ins with yourself.
“Consider doing check-ins on your budget once per month or quarter to make sure you’re staying on top of spending and savings,” Kapusta said.
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GOBankingRates wants to empower women to take control of their finances. According to the latest stats, women hold $72 billion in private wealth — but fewer women than men consider themselves to be in “good” or “excellent” financial shape. Women are less likely to be investing and are more likely to have debt, and women are still being paid less than men overall. Our “Financially Savvy Female” column will explore the reasons behind these inequities and provide solutions to change them. We believe financial equality begins with financial literacy, so we’re providing tools and tips for women, by women to take control of their money and help them live a richer life.