Financial Issues Women Face

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This article begins a new series on the special financial issues that women may face (but men will find it useful, too).  These special financial issues women face may include marriage, being out of the work force for child rearing, widowhood, and on average living longer than men.  All women need to be informed about the full range of financial issues.  Nearly all women will need to be financially independent at some point in their life when starting out, divorced, widowed, or having never married.  Let’s being with earnings.

Financial Issues Women Face – Earnings

Two circumstances that particularly affect women’s finances include, on average, living longer and earning less than men.  One illuminating statistic is that college educated women may earn several hundred thousand dollars less than a college educated man over her lifetime according to the Women’s Institute For A Secure Retirement.  (Their website has good resources:  Two reasons, among many, why women tend to earn less than men include being out of the workforce for child rearing and not being as successful in salary negotiations.  If you are going to stay home and still want income or experience, consider working part-time, working at home, exploring flex time opportunities, or going freelance. (For work-at-home and freelance opportunities, see

Salary Negotiations

Studies show that women are much less likely to initiate salary discussions than men and get less when they do.  If you work for one of those organizations that don’t have standard salary rates and raises for every job, then know that you must be prepared to look out for your interests and don’t depend upon someone else to look out for you.  A Carnegie Mellon study found that only 7% of women MBAs negotiated their first salary (vs 57% of men) and women got $4000 less on average.  Don’t let the men get paid more than you for doing the same job — ensure that you get the equal salary from the beginning.  That first salary may set the baseline for most of your future raises and bonuses, even if you change jobs.

Be prepared for a negotiation, know what your job is worth, and ensure that you are seen as a valuable employee.  It’s helpful if you have an idea what the general salaries in your organization are, but if not, get average salary information here: and  Ask men in the organization for advice on what salary or raise you should aim for and there is a good chance that they will tell you what they make or what they have heard a colleague makes.   Even if the amount may be an exaggeration, start out asking for more.  At the same time, be realistic about your bargaining position and act accordingly; how strongly will the organization want to get or keep you?  Practice out loud the night before and jot down a few notes about what you are going to say for their potential offers.  Tell them if you have a competing offer.  Explain how you are worth the higher amount to the organization.  Be prepared to go for only a few rounds of back and forth.  Sometimes it may be worthwhile for each side to think about the bottom line overnight if they can’t agree at the session.  Don’t equate negotiating with conflict.  In addition to getting the salary you want, it may earn you the reputation of being tough which may provide other intangible benefits.

Be ready to get the next raise you are worth.  Ensure that your performance throughout the year can be counted upon to advance the bottom line of the organization (and the boss).  And finally, remember that women have been among the best hagglers in markets and bazaars since the beginning of business.  Note that there are plenty of organizations, like governments, where groveling for a raise like Dagwood Bumstead is not necessary.  These have published pay grades and increases for all jobs without haggling and much more likely to result in equal pay for equal work.

Implications for Retirement Savings

Women earning lower salaries than men have more implications than the immediate cash flow issues.  It also means lower retirement income later, based upon lower 401(k) contributions and Social Security benefits.  You may not have much control of SSA benefits, but you do with your own retirement savings.  While the common suggestion is to save 10-15% percent of your income for retirement, women should consider saving more to be better prepared for a longer retirement.  Remember that you can increase your savings in stages, especially when you get raises.

Read more in-depth information on financial issues women face, in my Financial Guide to Life book.

About John Kimball

Over the past few decades, I have experienced most of these financial issues with both mistakes and successes. I sure wish someone had told me these things when I was first starting out. So many times I have cried out, "I want a do over!" when I learned a new financial lesson or tip. I aim to pass along to you the financial insights I have gained from experience, reading, analysis, and living the financial aspects of managing, saving, investing, and spending your money. I am an analyst with a large organization and happily married with two children on their way to an expensive college, no doubt. I read numerous financial blogs, websites, newsletters, magazines, newspapers, and books to bring you the latest news, insights, tips, and lessons combined with decades of experience.

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