Empowering Women to Secure Financial Independence: Overcoming Challenges and Building Wealth at Every Stage

Women today have become more powerful in holding wealth, with greater longevity, inheritance, and increasing participation in the workforce contributing to this milestone. Yet, despite these gains, women still face unique challenges in building and maintaining financial security.

The good news? 

Women have distinct advantages they can leverage at every stage of life. Here’s how to make informed decisions, and secure their prosperous financial future.

One of the most persistent issues women face is deferring financial decision-making to others, often their spouses. 

Research shows that 56% of women leave investment decisions to their husbands, and this behavior transcends generations. Surprisingly, millennial women are even more likely than older generations to rely on their partners for financial guidance.

A Stanford alumna once lamented to financial advisor Lynn Ballou about feeling voiceless in financial conversations with her advisor, even though the majority of the couple's wealth was hers. It’s a striking reminder that women need to advocate for their inclusion in these critical discussions.

Women face several external and systemic challenges that impact their financial standing:

1. The Gender Pay Gap: Women earn an estimated 10–20% less than men for comparable work. This disparity compounds over time, resulting in significantly lower lifetime earnings and smaller retirement savings.

2. Career Interruptions: Women often step away from their careers to care for children or aging relatives, impacting their peak earning years and retirement contributions.

3. Longer Life Expectancies: Women, on average, live longer than men, increasing the need for robust savings to sustain them in later years.

4. Divorce and Widowhood: These life events often disproportionately affect women financially, leaving them to rebuild wealth under challenging circumstances.

These challenges highlight the importance of proactive financial planning and engagement throughout life.

Empowering Steps at Every Age

In Your 20s: Laying the Foundation

The 20s are a golden opportunity to establish good financial habits and leverage the power of compounding returns.

• Maximize Your Income: Advocate for raises early in your career. Even small income increases compound significantly over time.

• Start Saving Early: Contribute to your 401(k) to get the full employer match, and consider opening a Roth IRA for tax-free growth.

• Invest Wisely: Women tend to be cautious investors, but taking calculated risks in your 20s can yield substantial returns. Diversify your portfolio and prioritize stocks for long-term growth.

In Your 30s: Building Wealth

This decade often brings milestones like marriage, parenthood, and homeownership. Focus on acquiring assets that can grow your wealth over time.

• Invest Beyond Retirement: Consider real estate or other private equity investments to diversify your portfolio.

• Stay Engaged in Family Finances: If you step away from full-time work, take an active role in managing your family’s financial planning to offset career interruptions.

• Plan for Protection: Start thinking about life insurance, disability coverage, and estate planning as your responsibilities grow.

In Your 40s: Navigating Complexity

Your 40s can be a time of juggling multiple roles—raising children, managing a career, and supporting aging parents.

• Work with a Financial Advisor: A trusted advisor can help you navigate transitions, from funding college tuition to preparing for retirement.

• Review Your Financial Goals: Reassess your investment strategy to align with your changing priorities, ensuring you’re on track for long-term success.

• Strengthen Your Safety Net: Revisit your insurance coverage, update your will, and consider trusts to protect your family’s future.

Studies consistently show that women are better long-term investors than men. Women’s tendency to trade less frequently and approach investing with a goal-oriented mindset often results in better portfolio performance. Fidelity Investments found that women’s portfolios outperform men’s by 0.4% annually. By staying engaged and informed, women can harness this natural advantage to grow and preserve their wealth.

The path to financial security is not about rejecting partnerships but ensuring equal participation. Married couple, single, or divorced, having a clear understanding of your finances is crucial. Women who actively participate in financial planning are better prepared for life’s uncertainties and more confident about their futures.

By taking proactive steps early, staying engaged, and seeking the right guidance, women can overcome challenges and secure their financial independence. Through acknowledging and addressing the unique challenges women face, we can close the investment gap and create a future where women control wealth and thrive as confident financial decision-makers.