In the not-so-distant past, American women were legally barred from owning their own property. The country's laws surrounding this type of ownership were not amended in favor of women until 1862. It wasn't until 1920 that women earned the right to vote. After that, it took another 54 years before women were given the right to apply for their own credit cards (in 1974).
That women have come a long way is an understatement. Unfortunately, with regard to money, wealth accumulation, investing, and personal finances, there's still a significant amount of ground to cover.
As an eye-opening report from Merrill Lynch titled Women & Financial Wellness makes clear, women still earn far less money than men, accumulate less wealth over the course of their lifetime, and the social taboo surrounding talking about money has contributed to a reality in which 61 percent of women would rather discuss their own death than money. What's more 45 percent of women say they have no financial role model.
Making matters worse, the media has failed women. This even includes women's media, which as the Merrill Lynch report notes, historically has not contributed to "smart and open dialogue about money, lifelong financial planning, and investing questions and needs." Data proves as much. Of 1,594 pages of editorial content in the March 2018 issues of the top 17 women's magazines, there were only five pages covering personal finance, which amounts to less than 1 percent.
Why does any of this matter? Because these factors have a real impact on the financial outcomes and literacy of women. And by extension, it should come as no surprise that women have a number of financial regrets, according to the Merrill Lynch report, which sampled 2,638 women across all geographies and education, income, and asset levels.
Want to guess what the number one financial regret is among women? Not investing more (41 percent of respondents). Here's the problem with that: Investments provide an opportunity for women to develop their wealth in ways that merely earning income does not, says the report. An additional 59 percent of women said they're not doing a good job using investing as a way to pursue their financial goals. Furthermore, a full 60 percent of women still say not having the knowledge to invest is their number one barrier. This is followed by 34 percent of women who say they don't have the confidence to invest.
This is a serious problem, and it's merely one of the financial regrets uncovered by the report. Here's a closer look at the top financial regrets shared by women, according to the Merrill Lynch report and what you can do about them starting right now.
Not investing more
Before we move on to the other regrets identified by the report, let’s spend another minute on this one because it continues to impact successive generations of women. For instance, a mere 46 percent of millennial women are confident in investing, according to Merrill Lynch.
And confidence in investing is not just about actual experience but also exposure, such as through education, says the report. All of the women surveyed said they wished they’d had more education around money and finance. And fully 87 percent of women say basic financial management should be a standard part of the high school curriculum.
Lorna Sabbia, head of retirement and personal wealth solutions of Bank of America Merrill Lynch and one of the report’s co-authors, says what’s needed is even more fundamental than improving educational curriculum. Women need to simply start to talk about money openly and that will inspire confidence in such things as investing.
“To me, that’s the first thing we need to do, and it applies to every single one of the financial regrets women have. We need to break the taboo around talking about money. That’s number one,” says Sabbia. “First, let’s just talk about it. Because once we do that, women do a great job of mobilizing and getting things done.”
Women, start talking about investing. Share what you know about it, what you’ve learned, your mistakes, your successes. Raise each other up.
Because sadly, many women still believe that if they’re good savers, that’s enough–they don’t need to invest. Hint: It’s not enough–you may even be losing money due to inflation.
Importantly, it’s never too late to start. You can take steps right now to begin investing or investing more, says Lorna Kapusta, head of women and customer engagement at Fidelity Investments.
“Just getting started on the path to help your money grow will have a lasting impact more than [letting your money sit] in the bank and you don’t need a lot of money to start,” says Kapusta.
Need a little help? Kapusta suggests checking with your employer’s human resources department to see if the company’s retirement savings provider offers free workshops or one-on-one appointments. Access to these resources during the workday can make it easier to take part and get started.
Women wish they had chosen a career with higher pay
Thirty-five percent of women say they wish they had chosen a career with higher pay. If you’re reading that statistic and it hits home, all is not lost. Even if you’re not in a position to change career paths entirely, it is still very possible to improve your salary.
“Can you position yourself for the next best paying job at your company or a promotion? And are you actively working to do that?” says Sabbia. “Are you garnering visibility and making your intentions known?”
And then she adds this priceless point: You can’t dream in silence.
Let’s just sit with that for a moment.
OK, moving on. Take steps to bring your dreams to life. Sabbia suggests developing advocates and supporters at your workplace and talking to your manager frankly about your goals, asking for a candid assessment of any skill gap you may have that would prevent reaching your next career step.
Fidelity’s Kapusta offers similar advice, underscoring the importance of talking openly with supervisors.
“While it can seem intimidating, feel empowered to schedule an honest conversation about your salary with your boss,” says Kapusta. “Be prepared with a list of things that make you a valued employee who deserves top dollar, and see how that goes before quitting over money. Even if you don't get the exact number you ask for, you might score enough of a bump to make it worthwhile to stay put.”
Another important point with regard to women and increasing your salary, the gender wage gap continues to be a problem. But here too there are ways to try and overcome such realities, advises Sabbia.
“Some of it now is understanding what should, and should not be said during interviews,” Sabbia explains. “The 64-million-dollar question during job interviews is ‘Tell me what you earned at your last job.’ Certain states have rules around what you can, and cannot ask so that there’s no further exploitation of the differences in pay between men and women. Be aware of that when interviewing.”
These types of questions should instead be shifted toward salary expectations during interviews rather than what you earned at your last job.
“It all comes back to the more we talk about this, and educate women, the more women are aware and it makes them better prepared for these types of conversations and for positioning themselves for promotions and raises,” says Sabbia.
Too much credit card debt
Retail therapy is tempting. And using credit cards can be a slippery slope. Thirty-four percent of women wish they had not accrued such substantial credit card debt, according to Merrill Lynch.
Kapusta offers some tangible steps to correct this issue.
“Debt continues to place a historic burden on millions of Americans. In fact, our recent research found that paying down debt was the top financial task that women want to accomplish in 2021,” she says.
While digging out of debt can be painful, it doesn’t need to be complicated. You can begin by simply looking for credit cards with lower interest rates. Because it should go without saying that it’s difficult to dig out of debt when the interest keeps piling up.
“To make sure that more of your payments go to paying down the principal, shop around for low-interest balance transfer offers or loans. You may even qualify for 0 percent interest promotional rates,” says Kapusta.
You also need to make it a point to pay more than the minimum balance on credit cards.
“Making the minimum payment on credit cards can leave you in debt for years. By paying just the minimum, a credit card balance of $1,000 at a 12 percent interest rate with a minimum required payment of $35 would take 34 months to pay off,” says Kapusta. “Adding a little bit more to your monthly payment can help you pay off the debt in a fraction of the time. Find spots in your monthly spending where you can cut back and put that towards your monthly minimum—even just a little bit will help.”
Lived within or below their means
About 32 percent of women say their biggest financial regret is not having lived life within or below their means. If this is you, know it’s not too late to bring about change.
“Start with a simple budget to understand what you spend and what you make,” suggests Sabbia. “Sometimes that’s a joyful experience for women and sometimes it’s not. But you need to truly balance your checkbook and understand how much things cost.”
It also helps to define what emergency saving looks like and your liquidity needs, says Sabbia.
Fidelity’s Kapusta recommends following the 50/15/5 budgeting guideline, which is a way of breaking down your paycheck and managing your spending.
“Aim to set aside 50 percent of your income to cover essentials such as rent or monthly payments; 15 percent towards retirement; and 5 percent toward short-term savings,” explains Kapusta. “The remaining 30 percent is intended to be used for discretionary expenses.”
However, Kapusta adds this caveat: There isn’t a one-size-fits-all approach to budgeting.
Depending on where you live, such as in a city where costs are higher, you may need to be a little more flexible. But using 50/15/5 as a guideline can be helpful in managing your expenses today and for your future.
If as Sabbia notes, the initial challenge we must tackle as women is simply talking about money openly, then it’s time to start doing that now. Because as the Merrill Lynch report notes, we’re missing an important opportunity on multiple levels. We're short-changing ourselves, really.
“Women across generations, families, and workplaces can help each other through sharing lessons learned and practical advice,” says the Merrill Lynch report. “Older women can help younger women as financial mentors and role models. The media and financial services, too, can help educate women by eliminating some of the taboo that still exists when talking about money.”
And one more point, this too from the many outstanding messages brought forward by Merrill Lynch that should resonate with women far and wide: We need to instill a new set of life expectations for women…Your only sure investment is an investment in yourself.