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Financial Wellness and the Gender Gap

BrightPlan Team

The Covid-19 recession has hit women especially hard. More than 2 million women have dropped out of the labor force since February 2020―erasing 30 years of gains from women’s participation in the U.S. labor force. Many are quitting because pandemic-related restrictions impacted their jobs, but many are also burdened by caregiving demands. Pandemic-related unemployment also disproportionately affected women of color. 

The pandemic worsened the existing gaps between genders when it comes to money. We’ve all heard about the wage gap. Women earn about 20% less than men on average across all industries and women make up the majority (58%) of low-wage earners. However, the wage gap pales in comparison to the gender wealth gap. Women, on average, own just 30% of what men own. Part of the reason for the wealth gap is the investing gap. Although narrowing fast, women, on average, are less likely to invest than men. And then there is the confidence gap. Even though women who invest tend to outperform men, women feel 23% less confident than men about investing and wealth building in general.

What role should employers play in helping move the needle in the right direction and specifically, what role can corporate financial wellness play?

 

Financial literacy and planning lead to financial confidence

Women are, on average, 23% less confident than men about managing their money. However, women live longer than men, and most women will eventually have to manage their own finances. Financially literate women tend to be more confident in managing their money and ensuring that their family’s needs are met during periods of uncertainty. 

Beyond staying resilient in an emergency, financial literacy is also the building block for growing wealth in the long term. Investing is one of the best ways to grow wealth, but women are less likely to invest than men and more likely to keep their money in cash. Financial literacy can help women be more confident in investing and growing their wealth over the long run. 

 

Financial confidence leads to financial well-being 

Employee well-being refers to the physical, mental and financial well-being of your workforce. The pandemic motivated employers to double down on their employee wellness efforts, yet many are still missing the root cause of their employees’ stress. Finances are a top cause of stress for employees, negatively affecting their mental and physical well-being. 

Financially confident employees are also more likely to feel financially secure since they understand their situation and what is needed to keep their household afloat. As a result, employees that are financially well are likely to find themselves better able to contribute to an overall positive workplace experience since they are not stressed out about money―leading to more productive and engaged employees.

 

The role of corporate financial wellness

Employers are uniquely positioned to support their employees’ financial well-being. Most of an employee’s financial life is tied closely to their employer as the primary source of income and benefits. 50% of stressed employees say finances are a distraction at work and 75% of employees believe corporate financial wellness programs would positively impact their finances. This statement is especially true for women. 

When women are financially secure, families and communities thrive. As companies and HR leaders focus on employee well-being, offering resources and tools to improve employees’ financial well-being is not only the right thing to do―it’s a strategic imperative. Financially secure and confident women tend to be more productive and engaged. Creating an inclusive culture where women employees are supported to do and feel their best will go a long way in creating a workplace where employees thrive and do their best work―ultimately achieving greater business outcomes.

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