How women give away their financial power

Just over a century since the suffragettes’ movement during which the female empowerment initiative first gained traction, women are today more empowered than ever before. Although no one argues that institutional sexism and pervasive discrimination against women still exists in all parts of the world, women have made significant advances in their empowerment journey. In terms of wealth-building, women (for a variety of reasons) still lag behind their male counterparts. While some of the disparity results from historical inequalities such as the gender pay gap, women can to some extent be held responsible for giving away their financial power. Here’s how.

Misunderstanding the term empowerment

The advent of mass consumerism and advertising has given birth to a completely vacuous, albeit widely accepted, interpretation of the word ‘empowerment’ – barely recognisable from the true meaning of ‘female empowerment’ as envisaged by the radical movement that it started out as. The move towards female empowerment was borne out of the need to address inherent inequalities in the areas of human rights, education, opportunities and equal access for all. Sadly, our pop culture now flogs an entirely undignified version of female empowerment which can be found in anything from a bottle of perfume to a pair of stilettos, as long as it involves a credit card. While men are encouraged to build status and power through smart investing and accumulation of assets, women are advised that the opposite is true for them. We are taught that maxing out our credit card on this season’s must-haves is the ultimate display of autonomy and independence; that having an empty bank account and a full wardrobe is somehow liberating. There is nothing remotely liberating about debt, and our job as women is to reject and expose this message for the lie that it is. It begins with taking full responsibility for our journey to financial empowerment, changing our spending habits, and educating our daughters, nieces and granddaughters that no amount of stilettos will make them truly empowered. We need to stop the ‘shop til you drop’ and ‘retail therapy’ rhetoric, and start talking about wealth-building as a true form of liberation that knows no gender.

Not asking

Similarly, the ‘nice girls don’t ask’ rhetoric stands in direct contrast to the ‘tough guys negotiate’ lesson that men are taught from a fairly young age. Women tend to shy away from negotiating or asking for what they want, and this can have long-term effects on their ability to build wealth. While institutional discrimination and inequalities play a role in the gender wage gap, women often compromise themselves by not asking for what they actually want.

In their book, ‘Women don’t ask’ (Babock and Laschever, 2007) the authors studied the starting salaries of masters graduates from the same university. Looking exclusively at gender, they noted that men earned on average 7.6% more than women. Exploring this finding further, they discovered that while 57% of the men had negotiated their starting salaries upwards, only 7% of the women had negotiated their income while the rest simply accepted the initial offer.

The reality is that most employers would pay a candidate less than they are worth if the candidate is not prepared to negotiate them upwards. In fact, many employers begin the negotiation process lower with the expectation that the candidate will negotiate them upwards. The result is that if you don’t negotiate, you risk the chance of entering the workplace beneath your market value.

As women, we need to appreciate the importance of negotiating our salaries upfront in accordance with our experience, qualifications and skills set. The long-term effects of not negotiating your first salary can last throughout your career and my never be correctly aligned. Every future salary increase, bonus, share option or group benefit will be predicated on your starting salary, which makes the art of negotiation a vital one for all women to learn.

The authors use the example of a man who starts of his career earning $107 000 per year and a woman earning $100 000 per year. If both are treated equally throughout their tenure, and are given the same increases and promotion opportunities, over a 35-year period the woman would need to work 8 years longer to be as wealthy as her male counterpart. Bear in mind that this example does not make allowance for the woman taking time off to bear or raise children.

Undervaluing their workplace skills

In a fascinating 2017 survey commissioned by Welch’s, it was found that working mothers spend an astounding 98 hours of work a week in order to keep their paid jobs and their family lives running smoothly. Assuming that their paid job entails a 40-hour work week, working women spend on average another 58 hours shopping, cleaning, doing homework, cooking, washing and doing chores. Essentially, 59% of their weekly work is unpaid, leaving many women with an under-developed sense of their economic value.

In historically male-dominated industries such as engineering and manufacturing, many women are made to feel ‘lucky’ to have been offered a job and hesitate to negotiate out of fear for appearing ungrateful for the opportunity. Over and above the inherent financial inequalities, there are more nuanced effects of being under-paid by one’s employer. A lower-salaried employee is assumed to be less skilled and less valuable, whilst the converse is true as well. Those who had the confidence to negotiate a higher package are deemed to be more valuable to the business and all-round better performers, which has positive effects on their self-esteem and confidence as employees.

Women need to refrain from feeling ‘fortunate’ for being granted equal opportunities to men. Equality is a basic human right regardless of the industry you choose to participate in. It should be a combination of skills, experience and attitude that determine a person’s value to an organisation, and it is the right of all employees to negotiate a salary that is correctly aligned with their skills set to ensure that nobody in the workplace feels undervalued and economically taken advantage of.

Being a stay-at-home mother

A great modern-day misnomer is that stay-at-home mothers are often referred to as ‘not working’. Staying at home to raise children is physically, psychologically and emotionally gruelling, and many a working mother will admit, albeit somewhat guiltily, to enjoying going back to the office to have a rest from the full-time demands of small children. The tireless work that stay-at-home mothers do as carers, caterers and homemakers is often deemed not to have economic value, and it is little wonder that many mothers are not accustomed to evaluating their skills in economic terms.

The decision to give up one’s career in its entirety in order to raise children should not be taken lightly as there are massive financial, emotional and relationship issues that need to be considered. Many women who have given up their careers in order to raise children attest to feeling bored, unstimulated and resentfully reliant on their partner for money. In addition, many women harbour feelings of guilt that their partner has to work hard to fund their lifestyle. Many women struggle with the transition from earning their own money to having to ask their spouse for money, and this can cause tension in a relationship.

Comparatively, the working spouse can feel enormous pressure as the sole breadwinner to work longer hours in order to make ends meet. A likely result is that one spouse is left feeling worthless and bored, while the other feels over-worked and unduly pressured.

Whether you choose to continue working full time, structure a part-time arrangement, do freelance work or completely give up your career, our advice is to fully understand the financial and psychological implications of the decision, both in the foreseeable future and when you have school-going children who no longer make huge demands on your time. Re-entering the workforce at some stage in the future is a distinct possibility and women need to ensure that their skills remain relevant and marketable.

Letting their partner control their finances

It is difficult to believe that marital power in South Africa was only abolished in 1984 – a mere 33 years ago. Prior to 1984, the estate of a couple married in community of property was deemed to fall under the control of the husband. The wife could not leave a will, enter a contract, sell an asset or litigate. As a result, financial responsibility is a relatively new concern for many older women who have recently found themselves single as a result of death or divorce. Many women from that era are not used to being spoken to about investing and retiring, and in turn would not have discussed such things with their daughters.

Personal finance is a personal responsibility and it is essential that both partners in the relationship shoulder the responsibility, regardless of who earns the income. Comments such as ‘my husband takes care of the money’ or ‘I don’t need to get involved with that side of things’ only serve to diminish a woman’s position by making her financially dependent on another person. Not being in control of finances in the event of death, disability or divorce can leave a woman in an incredibly vulnerable position, and can severely limit her decision-making powers if the relationship ends for whatever reason.

It is true that “freedom cannot be achieved unless the women have been emancipated from all forms of oppression” (Nelson Mandela). It is also true that, as women, we should refrain from compromising our futures by neglecting to harness the power we hold to achieve financial freedom.

Have a fantastic week!

Sue



Categories: Financial Planning

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