The recognition of International Women’s Day this year serves as a brazen reminder of the disparities women continue to face relative to men. In particular, the COVID-19 pandemic and the ensuing “shecession” have exasperated the wage, wealth and power gaps and raise grave concerns that decades of progress toward closing these inequalities have been wiped.
Yet, one approach that the business and financial services community can take to make strides toward erasing these gender gaps is to improve financial literacy.
The majority of Canadians don’t have the financial knowledge and skills to manage their money, holistically, to ensure they’re financially secure today and in the future. That’s even more true for women.
According to Statistics Canada’s 2014 Canadian Financial Capability Survey, only 31 per cent of women considered themselves to be financially knowledgeable compared with 43 per cent of men. Furthermore, that same study found that 66 per cent of women surveyed had no idea how much money they would need to save to maintain their desired standard of living in retirement.
A Bank of Montreal survey conducted late last year found that not much progress has been made since, as women were 18 per cent less confident than men about their retirement plans and 18 per cent less likely to know how much money they would need for retirement.
Therefore, a majority of Canadians, more so women, are making many “risk-reward” career and personal decisions in a vacuum – with little understanding of the consequences to their financial well-being.
When I address women in financial education workshops, I highlight the unique challenges they face in building financial security to nudge them to take action. For example, they’re shown how a 20 per cent wage gap can easily translate into a 40 per cent wealth gap over their lifetime, and how women are 80 per cent more likely than men to live in poverty during retirement.
Overwhelmingly, the response is, “Wow, I had no idea,” followed by, “I need to be more proactive in building and protecting my wealth.” They speak about pushing harder for a promotion, negotiating their salaries, investing proactively, and taking more control of their own finances and lives.
The “reward” of playing it safe, not seen as greedy or not rocking the boat at work or home no longer seems as appealing relative to the risk of being financially vulnerable or being flat out broke.
The COVID-19 pandemic has highlighted a dilemma many women with children are facing: having to choose between child care and their careers. According to a Royal Bank of Canada study, more than 20,000 Canadian women left the workforce between February and October, 2020, with the pandemic and ensuing demands of raising children playing a big role.
One woman I coached last year was stressed at the thought of having to make this decision. As we worked through different scenarios, she confessed that her marriage was on shaky ground and her husband was pressuring her to give up her career to assume the child-bearing duties because he was the breadwinner. When she realized she was potentially putting her financial future at risk, she decided to advocate for a flexible work schedule with her employer and “tough it out.”
That begs the question: How many women truly understand the sacrifices they’re making? Would their partners be more supportive if they knew the negative implications on their family finances by going to a one-salary household – potentially permanently? There’s little doubt that financial education can help people navigate their choices better and take proactive steps to build and protect their wealth.
If these gender gaps are to be taken seriously and tackled, financial literacy must be a concerted effort across diverse organizations, large and small, that have the reach and a direct line to those who are being most affected.
Financial advisors play a critical role by showing their female clients and prospects the financial implications of different choices, such as unexpectedly losing a job, taking a break from their careers, or forgoing a promotion, among others.
Corporate leaders also have a vital role to play. Organizations that tout their support for women’s equality must walk the talk by offering financial wellness programs that speak to women’s unique challenges. Doing so would reduce their female employees’ stress levels and improve their productivity. It would also help these organizations retain female talent, thereby cutting recruitment and training costs.
Understanding the implications to the bottom line may just be the catalyst companies need to go all-in on flexible work arrangements and implement gender quotas for hiring and promotions.
The theme for International Women’s Day this year is “Choose to Challenge.” Thus, the challenge for advisors and corporations is to prioritize financial literacy through a gender and diversity lens. It’s crucial to help women, who represent half of Canada’s population, steer through uncertainties in life and help them close the wage, wealth and power gaps they face.
Saijal Patel is the founder and chief executive officer of Saij Elle, a financial consultancy and education firm that aims to help women create financial independence and security, financial services institutions serve the needs of female investors better, and companies build effective financial wellness programs for their employees.