“My life didn’t please me, so I created my life.” – Coco Chanel

Writing about women and finances means striking a careful balance between the way things are and the way things are perceived to be. Women have come a long way in the quest for equality but, when it comes to managing money and building wealth, the gap between men and women is much larger than people might imagine. It’s tempting to want to “fix the problem” but the trouble is that when we focus too much on the inequality itself, we lose sight of the fact that it matters less than it exists and more how we react to it. I don’t think it’s possible for our world to ever be completely fair because fairness is always a matter of perspective (any parent can give you plenty of examples of that!) but I do believe that there are things we can do as individuals to level the playing field.

Last week I wrote about three of the five reasons that women need to focus on their finances and this week I’m going to share the final two.

Women are often the caregivers for aging parents

Research suggests that women are more likely to take time off work, reduce their working hours or turn down promotions in order to care for aging/ill parents. According to the American Journal of Public Health, “women provide the majority of informal care to spouses, parents, parents-in-law, friends, and neighbors, and they play many roles while caregiving—hands-on health provider, care manager, friend, companion, surrogate decision-maker and advocate.” Whether it is through choice or a sense of duty, there’s no doubt that taking on a caregiving role has a dramatic impact on a woman’s earning power, her ability to save and also her physical and emotional health.

The cost of long-term care is one that concerns a lot of people and it’s an expense that is often underestimated. In an ideal situation we would all lead happy, healthy, independent lives until the moment we pass away peacefully in our sleep but the reality is that, for many people, old age brings reduced mobility and increased dependence on others for assistance with activities such as bathing, dressing and food preparation. When a person’s financial resources won’t stretch to the cost of an assisted living or long-term care facility (or they simply don’t want to move) the responsibility for their care is often assumed by their family, friends, and neighbors. More often than not, these caregivers are women.

Related article:  The not so free 55

The fact that women are more likely to find themselves in a caregiving position might not be “fair” but the knowledge that it’s more likely should motivate women to make a saving, wealth building, and financial stability a priority in order to create a financial buffer against the cost of caring for aging parents or an unwell spouse. From a personal perspective, both my parents are in their late 70s and, while they’re currently in good health, I’m very aware of the fact that could change. I’m also very aware of the fact that they live 5000 miles away. If I don’t want my sister to have to shoulder the responsibility of caring for our parents should something happen then that means I need to put myself in a situation where I have the financial resources to get on a plane and go home if I’m needed without having to rely on credit or my retirement savings in order to fund the trip? I also want to have the choice of being able to care for my parents should the need arise instead of having to leave that responsibility to someone else because I can’t afford to help.

They let others handle the money

It’s stereotypical to assume that most women have a challenging relationship with money but there is a wealth of evidence to suggest that, statistically, women are poorer after divorce or the death of a spouse. Divorce increases the risk of poverty for women and studies conducted by BMO show that women can actually experience a decrease in income by over 40% after a divorce. The largest decrease in wealth (and the greatest increase in poverty) is seen in married adults who become divorced between the ages of 67 and 80.  BMO estimates that 52% of debt problems can be attributed to either divorce or separation which is a huge problem when you consider the impact that carrying debt can have on your retirement income and your ability to save.

Related article:  Couples need to talk about money

Older women, in particular, tend to defer to the advice of others and are often blissfully unaware of the details of household finances which create stress and difficulty in the event that they are widowed. Statistically, the vast majority of women will live most of their retirement years without a spouse which makes it critically important that women take control of their finances (and their financial future) from an early age if they don’t want to become part of the statistic that shows 75% of low-income seniors are women.

The simple fact is that we have no control over what life throws at us but we have every control over how we respond to it and how we attempt to protect ourselves from it. Just because women are more likely to work part-time, work for minimum wage and take time off from work in order to care for children or other family members doesn’t mean that they are doomed to a life of financial lack. There are plenty of examples of “low income” people who have built wealth and plenty of examples of “high income” people with nothing to show for it but debt and “stuff”. The statistics don’t shape our reality, only our own actions can do that.

Rather than holding us down, these statistics should inspire and motivate women to learn more, do more and build more in order to improve their personal financial situation. Whether you’re male or female, rich or poor, the principles of wealth building are the same: know where you stand financially, pay yourself first and spend less than you earn. I believe that time, education and discipline are our three biggest allies in building wealth and that educating ourselves (and those around us) about finances, creating a good relationship with money and building disciplined financial habits will do more to level the playing field than anything else. What do you think?