How does the gender pay gap affect women's investing opportunities?
Depending on the shortfall, inadequate pay can decimate one’s ability to properly save. Ideally, people should strive to save at least 20% of their salary. If a woman makes 80 cents to a man’s one dollar, her ability to save is thwarted—either she won’t save anything at all, or her standard of living will need to decrease significantly to account for the budget reduction. While the latter scenario is more ideal, it begs for an alternative, which is to eliminate the pay gap entirely. Easier said than done.
Once someone accepts a job offer, there’s a lot less room for negotiating salary. It’s essential for you to know your worth beforehand and to not accept anything less. When your future livelihood is at stake, it’s vital that you do your homework, which means researching appropriate salaries in the industry. Additionally, you must effectively market your skill sets, making certain a prospective employer clearly sees your value. Negotiation is expected.
If you’re new to the bargaining table, that’s OK. It’s not something we’re typically taught in school. So, prepare yourself ahead of time. Don’t just expect an employer to automatically offer you what they’re willing to actually pay you. They’ll invariably start low, you’ll start high, and then you’ll both meet somewhere in the middle. Anticipate this discussion. Many experts have written books on the subject. One that comes to mind is Nice Girls Don’t Get the Corner Office by Lois P. Frankel. You can find numerous others as well as a mountain of videos online about this topic.
What are some common barriers women face when it comes to investing?
The most common barrier, regardless of gender, is not knowing where to begin. But because of societal expectations, men are more inclined to eventually put their money to work for them, whereas many women tend to eschew risk altogether. Perhaps in an ironic twist, women are often better savers. Their one hurdle? A reluctance to put their money into growth vehicles. Instead, the money often gets tucked away into a savings account simply because it seems like the responsible thing to do.
When it comes to money, there’s a real danger in playing it safe. Long-term saving without investing leads to shrinkage due to inflation. Therefore, investing is a necessity and a matter of survival when it comes to retirement. Unfortunately, huge segments of the population never hear this message, particularly women. What’s stopping the message? A persistent belief that it’s rude to talk about money, especially among women. They may think it’s greedy, boring, or not virtuous. Fortunately, this is changing, and more women are taking an active role in the growth of their wealth.
How can women overcome a lack of confidence and knowledge in investing?
Get your hands on some financial literature. It’s safe and there’s absolutely no risk. You can put down books you don’t like and find others that resonate with you. Libraries are tremendous resources. If the idea of spending a few afternoons at the library doesn’t interest you, then consider social media. There are innumerable groups on Facebook and elsewhere where members continually disseminate new information, allowing casual observers to delve into topics at their leisure.
Eventually, you’ll come across financial experts who speak to you, whose messages resonate with you in a profound way. That’s big. When that happens, it’s an invitation to dig further and research more of their material. In time, you’ll develop a working vocabulary, and the world of investing will no longer appear foreign to you.
When you feel ready, the time will come to reach out to a financial advisor who can get you started on your wealth-building journey. Choose a tailored approach, either one that’s hands-on or one that’s more passive in nature, depending on your comfort level. Conversations around money will become effortless, and the growth of your prosperity will become a foregone conclusion.
What are some investment strategies that are particularly relevant for women?
Understand your own risk tolerance. Don’t let your impatience override your reticence. Inhibitions exist for a reason. It’s perfectly fine to start slowly. Get your feet wet before you dive in. Get your balance first, then take action. Often, the best place to start your investment journey has less to do with your bank account and more to do with your overall health, both mental and physical. When it comes to enhancing well-being, it’s all reward and no risk. What better first investment!
When you start with the idea of wellness and vitality, a remarkable phenomenon occurs—you channel a renewed sense of optimism about the direction of your life. You feel in control. That’s exactly where you want to be before you put your cold hard cash on the line. The last thing you want to feel is desperate. Desperation leads to rash decision-making and ill-timed behaviors. However, when you feel secure, when you know that you’re the manager of your destiny, you gain the requisite clarity to move forward and make impeccable decisions about how to allocate your money.
What resources and support networks are available for women investors?
To gain a clear picture of where you want to be, it’s nice to have role models. I mentioned the importance of finding teachers who resonate with you. Taking that a step further, it’s helpful to find people who once stood exactly where you’re standing and to learn their story of how they got where they are now. Understand that your job isn’t to replicate their success or do everything precisely how they did it. That wouldn’t make sense. Your path is unique to you, but it’s useful to not only see that it’s possible to get where you want to be, but to witness numerous examples of how to get there.
You want an abundance of good ideas from which to choose. When it comes to investing, diversity is key. Sticking all your eggs in one basket can quickly lead to ruin. As you go about your wealth-building journey, you’ll hear all about multiple streams of income. You’ll learn to ensure that all your savings buckets are being filled proportionately and that your portfolios are sufficiently diversified.
How will you gain access to this information? In whatever ways that resonate with you. I do caution against free-lunch seminars because they want you to buy into their self-serving methodologies. In addition to reading books and relevant articles, I highly recommend consulting with a licensed financial advisor.
Lastly, women in search of more information about how to take hold of their finances can visit savvyladies.org, a nonprofit organization dedicated to sharing unbiased financial advice with no solicitation.
Editor's note: This article appeared in the May 2024 print edition of Dental Economics magazine. Dentists in North America are eligible for a complimentary print subscription. Sign up here.
Mark B. Murphy, CEO of Northeast Private Client Group, is an accomplished author, speaker, and motivator who's revolutionizing the financial planning and wealth management industry. He helps entrepreneurs achieve multigenerational wealth through personalized strategies, leveraging his strategic planning and financial engineering expertise. Forbes has ranked him as the number one financial security professional in New Jersey and number 15 nationwide. Additionally, his book, The Ultimate Investment, is a number one bestseller and new release on Amazon.
