What is the "wealth gap"—and how do you escape it?
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For every dollar a man makes, a woman makes 82 cents. African American women and Latina women earn 70 cents and 64 cents on the dollar, respectively.
It's an infuriating statistic, and when comedian Amanda Seales heard it, she was livid. “We live in a society where if you're a woman who has children or takes off of work to care for a loved one there will be serious financial consequences," she said. "Even more so if you're a minority!"
But as disturbing as the pay gap is, it is only the tip of the iceberg when it comes to the vast financial differences between men and women. The difference in pay leads to a vast difference in net worth—a "wealth gap"—that then leads to major inequalities in financial security and opportunities.
Difference in Pay
There are many factors behind the pay gap, including the fact that many women work two jobs—one of which is unpaid. In addition to being part of the workforce, they are also often the primary caregivers in their household, which means that they often have to take time off—or sometimes even leave their jobs—to care for loved ones.
"We woman spend 44 percent of our adult lives out of the workforce, not earning money," Seales says, noting that men spend only 28 percent of their lives out of the workforce.
In other words, women spend more of their time doing unpaid labor at home. Meanwhile, they're not earning money, not advancing in their jobs, and not building up their assets.
Difference in Net Worth
To learn more about closing the wealth gap, Seales sat down with Samantha Azzarello, a global marketing strategist at JPMorgan Chase.
Azzarello, suggests that women calculate their overall total net worth—meaning all the money in their checking and savings account, their retirement accounts, any property they own, and any other assets. "Men have a lot more of that on average than women do," Azzarello emphasizes.
"On top of that we live longer than men," says Seales. One consequence of longevity, she notes, is that women's healthcare costs are 39 percent higher than those of men. In other words, women earn less income, which then has to stretch further to last for a longer lifetime.
The best course to reverse this gap and grow net your worth, Azzarello says, is to save more. "Saving sounds boring—and there are no shortcuts around this—but you just have to save more and then invest those savings," she says. "It's really empowering to invest your money, that's how you grow it."
What could you do with more security?
Saving, and building your net worth, Seales says, can help you close the gap and plan for the future. But what would you do with that freedom? Put another way, if money wasn't an object, what would you do with your life?
Would you travel? Volunteer? Start a business? The simple truth is that, because of caregiver burdens and a lack of financial security, many women tend to stay in jobs that provide financial security, rather than seek out more fulfilling opportunities.
But there is hope.
When it comes to building your financial security, you don't need to do it alone. Talk to your friends about saving, investing, and growing your net worth. Get advice when you need it, and give it when you can. "We're stronger together, ladies," Seales says. "You're each other's very best resources."
Josephine Romano is a New York-based personal finance writer.