Employees can’t be emotionally confident unless they’re financially confident. This is especially true with women, who identify as less emotionally and financially confident than men, according to a Guardian study.
And employees who aren’t emotionally and financially confident aren’t doing their best work. That’s because financially confident employees take financial steps to fulfill the goals that are important to them. If goals aren’t met, employees aren’t happy and their confidence takes a hit.
The gender confidence gap study looked at how financial behaviors and habits affect employees’ overall well-being and satisfaction with their lives. One surprising finding: How much an employee earns doesn’t have as strong a tie to employees’ financial and emotional confidence as proactive financial habits and knowledge of financial concepts and products.
But earning less than their male counterparts can’t have a positive effect on a woman’s psyche. While progress has been made when it comes to pay equity, based on household incomes of $50K or more, women reported earning approximately 22% less per year than men.
The one thing, however, that seems to impact a woman’s salary the most is being a mother. Over her career span, a woman with one child earns about 28% less, and each additional child lowers her earnings by another 3%. But having children doesn’t have the same effect on a man’s earnings. Part of the hit on a mother’s earnings is due to time out of the workforce, and they’re more likely to care for aging parents.
The lower earnings could be why women fall into the two least confident financial profiles – day-to-day decision-makers (28%) and retirement realists (29%). This demonstrates a lower level of financial and emotional confidence. As for men, only 33% fell in those two categories. Men tended to be in the other two profiles – ambitious spenders and confident planners.
Why do women lack financial confidence?
One reason is that they lack a financial strategy. In fact, 37% admitted to not having one, as opposed to 24 % of men.
Another reason, they lack professional guidance. Forty-one percent see it as too expensive.
And finally, they just don’t know what to ask for.
Overall, women reported lower levels of understanding financial concepts. For example, the percentage of women versus men who say they understand each concept pretty well are:
- Asset allocation (51% vs. 73%)
- Income replacement because of a disability (57% vs. 72%)
- Exchange traded funds (ETF) (63% vs. 77%)
- Income replacement in retirement (59% vs. 72%), and
- Individual stocks and bonds (73% vs. 86%).
The sad part is women know way more than they think they do. When women were quizzed, they (38%) were more likely to check “don’t know” than their male counterparts (25%). However, when the “don’t know” option was taken away, they were much more likely to select the correct answer. Which shows a major lack of confidence.
What employers can do?
It may seem repetitive, but the best thing HR can do is ask their female employees what benefits they want the most via a survey. It may be surprising the specific financial needs female employees have that could be supported by their employers.
Other options include:
- Providing access to financial guidance and financial literacy resources. If you currently offer group sessions with financial professionals, consider adding one-on-one sessions to accommodate those who feel self-conscious speaking out in a group setting.
- Offering virtual recorded sessions. This can also help women increase their financial literacy on their own time. And if you could have women conduct the sessions, it would show that women possess the same capacity for financial literacy as men.
- Holding educational sessions that touch on the different types of financial guidance women need during the different stages of their lives.
- Offering an app via a corporate partnership or financial services firm that specializes in financial literacy for women.
- Spreading the word far and wide about the financial benefits your firm has that women can take advantage of. And use as many communication platforms as possible to hit as many generations as you can. Remember if they don’t know about them, they can’t use them.