Illustration by soofiya.com
Finance tips for women of colour (WoC) are hard to come by, even though the idea of wealth creation and preservation is nothing new. For many of us, daughters and granddaughters of immigrants, wealth-building has been a central, subliminal thread of our existence for generations. Many of us hail from people whose very reason for leaving their home countries was to work and start families in the UK and send money back home for loved ones who remained overseas. And then, in later life, to build retirement homes on prized plots of family land. It’s a familiar picture, or at least, a picture that is completely familiar to me.
As a black woman who’s spent my entire career in investment management and professional services industries, I am something of a unicorn. Before I left the corporate world to set up my own business, I would quite often be one of few women with a seat at the table and certainly the only black woman, and the higher up you get, the whiter (and more male) it becomes.
With an upbringing that pivoted around the importance of education, hard work and building solid foundations for the future, it wasn’t a massive leap to conclude that the reward for my efforts as I moved into adulthood was a clean bill of financial health. And with two young daughters the idea of legacy has been brought into sharp focus in recent years as I think not just of my financial future, but theirs.
But for women across the globe, securing the much-vaunted financial freedom seemingly enjoyed indiscriminately by our favourite Instagram influencers (spoiler alert: lots of this is just good advertising), couldn’t feel further from our grasp.
The financial challenges facing WoC are varied. We all know about the gender pay gap, but much of this gap is attributed to motherhood. A significant proportion of the disparity between salaries for men and women is attributed to the lifestyle changes prompted by childbirth, and working mums are particularly impacted by this imbalance in earnings.
“Black women in medical roles within the NHS, for example, are paid 16% less than white women, while the ethnic minority pay gap in the US shows that at its worst, Latina women on average earn about 53 cents for every dollar a white man makes”
But what lies beneath the headlines screaming about this issue, is the fact that for WoC, the situation is even bleaker. Black women in medical roles within the NHS, for example, are paid 16% less than white women, while the ethnic minority pay gap in the US shows that at its worst, Latina women on average earn about 53 cents for every dollar a white man makes. The resulting impact on the proportion of disposable income we have available to save and invest is obvious.
When it comes to representation, social media is helping to level the playing field in the imagery that we are exposed to each day. We have never had more control over what we choose to consume. So why then, do the marketing and communications issued by the financial services industry seems to be languishing in a bygone era, which has traditionally been not just aggressive and masculine but overwhelmingly white too?
I guess if we’re not represented in the boardroom, then how could the financial services industry possibly begin to address the breadth of challenges faced by its target audience and, redress the balance in capturing previously underserved segments of the market which would undoubtedly include WoC? This isn’t even a question of “leaning in” – it’s about being present in the room in the first place.
While this really isn’t a black and white issue, it is one that has very serious consequences for the women who feel this sense of financial exclusion. Despite living longer than men, women on average, retire at 65 with a pension pot one fifth of the size of men’s, and although we are diligent savers, overall we have a predisposition towards cash savings. This, in spite of the fact that stocks and shares investing is proven to generate better returns than cash over the long term, meaning potentially more money in your pocket.
The perfect storm created by a combination of these (and other) factors, means that millions of women could be plunged into pension poverty in future, storing up huge societal issues for generations to come, with WoC arguably absorbing the heaviest impact.
To combat this, firstly we need to engage. Without question, financial institutions and others have a significant role to play in ensuring that we’re not just seen, but heard, but we have to focus: complacency won’t build our nest eggs after all. Spend some time understanding your pension statements for example, so you know how much you currently have saved, what you will potentially retire on and what the gap is between where you are and where you need to be.
Sometimes knowledge is frightening but without it, you could wake up to a nightmare in years to come; don’t be that person. If you don’t have a pension, start one. And the sooner the better; it’s one of the best tax efficient investment vehicles available.
If you don’t have an emergency stash of cash saved for a rainy day – build one. When you have that in place, consider looking into stocks and shares investing through an ISA. Don’t be afraid to speak to a qualified financial adviser – if you ask, you can get tailored finance tips for women. Think of it in the same way as seeing a personal trainer to help you achieve specific body goals. Ask for recommendations from friends and family or see whether your workplace offers access to one as an employee benefit. rainchq offers a service exclusively for women or you could look at a website like vouched for or unbiased for adviser reviews.
If you’re a new mum and never signed up for child benefit for fear that you would be ineligible due to your income bracket or for other reasons, revisit this. Even if you’re not eligible for child benefit, registering ensures that national insurance contributions continue to be made on your behalf should you choose to be a stay at home mum and therefore preserves any state pension provision you may be entitled to in later life.
Finally, bear this mind: when we do invest, we are proven to be better at it than men. Finance tips for women need to be more easily accessible, as in the spirit of competition, have faith because the results are in your favour.