Time’s Up on financial silence: How to break the taboo on female investing
The past few years have seen the overdue crumbling of long-held taboos that women have had to endure for decades.
First, movements such as #MeToo and #TimesUp exposed the magnitude of the sexual violence faced by women. Then #MeTooPay uncovered discrepancies in salaries that have fueled the fight for pay equality.
And after November’s election, for the first time in its history, next year the US will have a female vice president.
Yet a great taboo is still alive, kicking, and hindering women from achieving their true potential by allowing financial control over their lives.
This is the taboo around money and investing.
According to a recent report by Merrill Lynch Bank of America, 61 per cent of women would rather talk about their own death than money. Something has to change.
There are countless arguments around what has led us to the point where over half of women admit to never having held an investment product, and only one in five holding one currently. But to me, the more relevant question is what we can do to change this grim statistic and get more women investing responsibly.
I believe that the first step is breaking the taboo around our financial ambition.
Money and investing is just not a conversation that women have ever got into the rhythm of having. We tend to talk about money in terms of how much things cost and what we spend at our local supermarket to feed our family, not about our plans for the future, what we want our money to do for us, or what our financial aspirations are.
In fact, according to the same survey by Merrill Lynch Bank of America, most women don’t really start thinking about investing until much later in life, when their children are born.
Part of changing that means rethinking the way we use terms such as “ambitious” and “pushy” to refer to women who do have those aspirations and don’t shy away from pursuing their goals. I know this well — I have been called “ambitious” and even a “bulldog”. I would not have it any other way. If being a bulldog gets me to where I want to be in life, then bulldog it is.
But the problem is that often women don’t even know what it is they want their money to do for them.
For many people, and for women especially, money is filled with emotional meaning. The presence of money can mean opportunity, security, status, acceptance and power. Its absence can mean the opposite.
It also has emotional value: we see money as the means to protect our family and our children, to provide them with a future. No wonder it is such a loaded topic that we almost feel embarrassed to talk about it.
Yet we need to break through that, because the cost of our silence is very high. Not only does our reluctance to talk about money lead to women earning less than our male counterparts for similar jobs, but it also means that we are not exploring all the available investment opportunities to grow our wealth.
So to do just that, here are three ways we can individually and as a community overcome the money taboo.
First, have a SHTF account (that stands for “Shit Hit The Fan”). This is your emergency fund, a safety blanket so to speak, in case you need to leave your job or a bad relationship, in case you have an accident and can’t work, or in case there’s a restructuring at work and you lose your job. This should cover six months of living expenses at least, and should be kept highly liquid.
Second, how many millionaires do you know who have become rich by investing in savings accounts?
Money sitting in your current account or standard low-interest savings account is a waste because it will lose its value over time. For example, £100 now will be worth roughly £98 in a year’s time, thanks to inflation as the cost of living goes up. If you add the opportunity cost of forgoing an average five per cent return per year on your money, leaving your £100 at the bank means you are losing £7 every year.
So, spend your money on the best thing it can buy: wealth. Invest your money wisely to create wealth — for example, in stocks and shares, peer-to-peer property lending, or other innovative finance products.
Third, remember that being financially literate is a powerful thing. Greater knowledge will lead to greater confidence, which will allow us all to become less dependent on wealth managers and more independent when it comes to investing. It is paramount that all of us — whatever our gender or experience level — seek to educate ourselves and spend time to understand the basics of financial management.
Finally, always remember that it is not your salary that makes you rich — it is your investments. No matter how much or how little you earn, have a money plan and make a conscious effort to invest a regular amount every month by setting up a direct debit. Invest your money and spend what is left rather than spending it and investing what is left.
This is good advice for everyone, but it is especially relevant if we are to enable women to take control of their financial futures once and for all. This is the era of gender progress — so let’s change the narrative. There is nothing shameful about having aspirations that involve being financially independent, building wealth or deciding that we want to live our lives a certain way, both now and when we are older. Far from it.
So as we head into a new year, here is my message to women: let’s have these conversations out in the open, educate ourselves, and break the taboo around female financial empowerment once and for all.
Main image credit: Getty