Gender pay gap: What we don't say about women and money

Friday is equal pay day. It’s the hypothetical point in the year that throws light on continuing inequalities in remuneration between men and women.

If the average male full-time salary were represented by the full year, Friday is the day that the average female full-time salary stops by comparison.

It serves as a stark reminder that things may be changing slowly, but with several weeks of the year ahead of us, there’s clearly still a long way to go.

The latest data from the Office for National Statistics suggests the full-time median gender pay gap has fallen by just 0.3 percentage points to 9.1 per cent in 2017.

“At this rate it’ll take decades for women to get paid the same as men,” said TUC general secretary Frances O’Grady. “The Government needs to crank up the pressure on employers.

“Companies shouldn’t just be made to publish their gender pay gaps. They should be forced to explain how they’ll close them.

“And those bosses who flout the law should be fined.”

This year, equal pay day couldn’t have come at a more important time – when the perception of women, their treatment, and empowerment or lack of it, is a global talking point.

But when it comes to their income, the myriad reasons for lower female incomes – fat cat bosses, the hit their salaries take when they start families, even the reticence to push for a pay rise – may in fact be the least of women’s problems.

The truth is that once the money comes in, the majority of women aren’t taking the steps necessary to make the most of it.

A range of studies conducted over several years and, critically for this discussion, several generations of women, show they treat and use their money in different ways to men.

Surveys from the likes of Scottish Widows, for example, show they are more likely to prioritise everyday spending on their family over their own financial future. Women’s pension savings lag behind those of men.

And when there is a bit of spare cash, women are consistently less confident and more risk averse with their money than men. They are more likely to use savings accounts for the money they set aside, with their money hit by the corrosive effects of inflation and painfully low rates, for example.

Men on the other hand, more empowered by a greater confidence, are more likely to invest their money, taking on greater risk but also the prospect of greater rewards.

It’s not all negative though, says Karen Barrett, chief executive of financial advice platform Unbiased.co.uk.

“Men come across as markedly more confident, but as a result are more than twice as likely to make financial decisions they regret,” she explains. “Men also underestimate how much money they’ll need in retirement, while women seem to have a noticeably better grasp of the cost of living.

“Where women fall down, however, is on setting financial goals. Men are far more likely to have particular financial goals in mind, and to fixate on these. Women also show less awareness of tax losses and are less likely to take action to reduce them.”

But they’re not being helped. With a history of precious little financial education in schools, not only are there few opportunities for women or men to engage with the necessary in-depth financial education as adults, but there are other legacies still at play when it comes to gender and money.

Women are better, on the whole, at assessing the cost of living, budgeting, staying out of serious debt – all skills that, while valuable, do little to make the most of their longer term financial position or indeed the way they are perceived when it comes to the big decision-making.

Critically, today’s financial services companies have evolved from a point in the past when family money was traditionally handled by the man of the house. Women were still being refused mortgages in their own name right up until the late 1970s. The financial world dealt with men, and so, understandably catered to the way their lives, careers and finances progressed.

But many argue the ghosts of those remarkably linear assumptions remain the default position. Banks are being accused of failing to take into account the often very different personal, professional and financial requirements and priorities of women.

It’s a particular problem among older women, again, perhaps for historical reasons. One in 10 women over 50 believe financial institutions are set up to help men more than women, according to a recent study by Saga. Only half of older women would have the confidence to talk to a financial adviser about their assets and goals, compared with two thirds of men.

“The key to better money management is gaining an understanding of risk. That word puts people off, but it shouldn’t,” says Barrett. “Everyone is exposed to financial risk, the main one being that you won’t have enough money at a time when you need it.

“The answer is to own your risk and take control of it. Talk to an adviser to work out what your risk profile is; identify your financial goals; then find the investment strategy that fits both. Reluctance to engage actively with our finances is just another glass ceiling, but we can smash it.”