Women prioritising short-term planning at the expense of their financial future
The pandemic has not just impacted women disproportionately from an overall monetary perspective. Almost half of female employees (45%) say they feel a greater level of financial anxiety than before the pandemic compared to 38% of men, according to new findings from Close Brothers.
As they look to build financial resilience in the wake of the Covid crisis, just 15% of female employees have been prompted to save more into their personal pension, and only 13% have increased their workplace pension contribution. This compares to 24% and 19% respectively for their male counterparts, putting them at risk of a further widening of the pension gap.
The report, ‘Expecting the unexpected: a spotlight on preparing for a crisis’, highlights the extent to which the past 12 months have changed the financial plans of employees across the UK. Three in five (59%) women either have already or plan to make changes to their financial preparedness, compared to 55% of men. Around three quarters (73%) plan to or have already started keeping a closer eye on their day-to-day spending as a result of the pandemic – compared to 52% of men. Around two thirds (65%) are saving more into an emergency fund (vs 57% of men).
Close Brothers’ 2018 Financial Wellbeing Index (FWI) revealed that women were twice as likely to worry about meeting their day-to-day living costs than their male counterparts. Moreover, it also showed that almost half (48%) of the responses from women said that they felt unprepared for retirement compared to 25% of men.
According to the latest report, a quarter of female employees (24%) felt financially unprepared for the Coronavirus crisis and subsequent lockdowns compared to 14% of men. Just 28% of women have not experienced any financial consequences of the pandemic while 37% of men have been untouched financially.
The findings also show a significant disparity regarding financial, mental, and physical health. More than two in five (44%) women worry more about their financial health as a result of the pandemic compared to a third (34%) of men, 56% about their mental health (vs 45% of men), and half about their physical health (vs 40% of men).
Jeanette Makings, Head of Financial Education at Close Brothers said: “Despite the devastating impact of the pandemic, there is an encouraging story of resilience and a commitment to improve financial health within our findings, particularly among women. Whilst it is clear that there are still chasms between males and females when it comes to financial preparedness, savings and financial confidence, women are strongly leading the way in how they have responded to the crisis by building their immediate financial resilience and vigilance. However, there is a significant knowledge gap when it comes to the role of longer-term saving and its financial wellbeing benefits and there’s a very real risk that female employees are storing a greater problem in their future by prioritising cash at hand over a comprehensive longer-term financial plan.
“Building financial resilience isn’t just about the short term but must include later life financial planning too. It can be tough to balance competing financial priorities, let alone know the best saving vehicles to use, but this is where employers can help. They are perfectly placed to procure holistic, comprehensive, and impactful financial education programmes for their employees. These in turn will enable better financial outcomes for their employees, as well as reducing anxiety caused by ongoing money worries.”