They say that if you want a man to wake up to the financial realities that women face in today’s world, just let him have a daughter. In three days, mine turns 11.
“But Dad, I don’t know how to make money,” she told me last year, when she was stressing over not having enough for something or other. (The jobs-around-the-house message doesn’t seem to be working with her for some reason.)
As I look ahead and try to see what her financial prospects will be, like any parent I wonder how best to prepare her. If you will permit me some generalities that won’t be true for everyone, the odds are still stacked against her.
The inequality of it all
As things stand now, she can expect to earn less than her male peers. Sure, this might be because she has different qualifications, chooses part-time work instead of full-time, or makes career choices that limit her earnings. But even if you take all those into account, she will still somehow come out with a significantly smaller pay packet than the men around her doing exactly the same work.
Even higher qualifications will not protect her from this inequality, since it seems that the pay gap becomes even wider as you get higher up the corporate ladder.
She’ll probably be influenced by stereotypically female roles (if she hasn’t been already), which could lead to her subconsciously limiting her career choices. Have a look at the following top career aspirations for young women in past occupational choice surveys:
She’ll also probably live longer than the men in her life. What parent wouldn’t wish her a long life? Yet it also means that, if she outlives her partner, she will have a longer retirement to fund, and will probably rely on NZ Super more.
Her KiwiSaver will help, but if and when she decides to have one of my grandchildren, she’ll have to take a break and won’t be able to contribute or receive contributions from her employer.
If her relationship flounders along the way, leading to separation, she could be left at a financial disadvantage. If they do split, they may not include their retirement savings when they distribute their assets, leaving her in an even worse position for the long run.
So not a brilliant picture all around, I’d say.
Now for the good news
With the advent of KiwiSaver, the demographics of investors in New Zealand have changed radically. While investing used to be just for middle-aged white males, suddenly all 2.2 million of us are investors, since the money we contribute is invested by professional fund managers in assets like shares, property, bonds and cash.
So if you think you are just ‘saving’ for retirement, think again – everyone in KiwiSaver is an investor. It’s time to start managing your portfolio!
The good news is, my daughter should be good at investing. Turns out women on average are better investors than men. Research shows that the testosterone only gets in the way.
My daughter hopefully won’t suffer from the overconfidence that her male friends (and brothers, for that matter) will when it comes to trading. Men tend to trade more, and the more you do, the more you can lose and rack up fees in the process.
Even though they trade more, men also tend to hold on to losing shares with a ‘she’ll be right’ attitude, believing that they will make back their losses. If my daughter follows her intuition, she’ll be quicker to unload the losers.
So where does that leave me as a parent, celebrating my daughter’s 11th?
Well, she definitely has a knack for making original greeting cards, so perhaps I need to encourage her entrepreneurial spirit a bit. I feel a first business coming on…