Millions of women worldwide face significant financial disparities compared to men, accumulating to hundreds of thousands of pounds less in lifetime earnings. This financial gap begins early in life and persists into retirement. Understanding these challenges and taking proactive steps can help close the wealth gap for future generations.
 

Childhood: The Starting Point of the Wealth Gap

Research by Starling Bank shows that parents give boys 20% more pocket money than girls, averaging £3 per week compared to £2.50 for girls. Over a year, this leaves boys £26 better off, reinforcing financial inequality from an early age. Additionally, girls' toys often cost about 5% more than boys' toys, contributing to what's known as the 'pink tax' — where products targeted at women are priced higher than those aimed at men.
 

How to Fix It:

• Parents should introduce equal pocket money for boys and girls.
• Encourage children to save for items they want to develop healthy financial habits early.
• Involve both boys and girls in household budgeting discussions to improve their financial literacy.

Early Working Life: Navigating Financial Inequality

The cost of living crisis has disproportionately impacted women. According to the Young Women’s Trust, 36% of young women have taken on more debt in the past 12 months, compared to 28% of young men. Women in their early 20s earn 1.3% less than men, delaying major milestones like homeownership by at least a year. The 'pink tax' also persists, with women paying 40% more for essential toiletries than men.

How to Fix It:

• Encourage young women to invest as a long-term financial strategy.
• Lifetime ISAs can boost house savings with a 25% government bonus.
• Avoid the pink tax by comparing prices, seeking gender-neutral products, or buying men’s alternatives when possible.

The Caring Years: Financial Burdens of Childcare and Family Care

Women in their 40s often experience the widest gender pay gap, earning 9.1% less than men on average. Women are also a third more likely to provide unpaid childcare or elderly care than men. This caregiving responsibility often results in career breaks, reduced savings, and lower pension contributions. Women account for three-quarters of part-time workers in the UK, further limiting their earning potential.
 

How to Fix It:

• Couples should manage financial decisions together to ensure caregiving doesn’t harm one partner’s financial security.
• If one partner stops working, the other can contribute to their partner’s pension to maintain retirement savings.
• Take advantage of available benefits like:
  • Universal Credit
  • Tax-free childcare for children under 12 (or 17 for those with disabilities)
  • The Holiday Activities and Food Programme for children on free school meals.

Women who take time off work should also ensure they receive NI credits to maintain their state pension eligibility.

Divorce: Financial Risks for Women

Divorce can severely impact women’s financial stability. According to Scottish Widows, women often fail to claim their share of pension assets, resulting in a potential loss of £77,000 in retirement funds.

How to Fix It:

• During divorce proceedings, ensure pensions are discussed alongside other assets.
• Prioritizing the family home over pension rights can lead to a significant loss of retirement income.
• Seek guidance from the Money and Pensions Service (MAPS) for free financial advice.

Later Life: The Retirement Wealth Gap

Women typically live longer than men, with an average lifespan of 82 years compared to 78 years for men. However, women are expected to retire with an average pension pot of £130,000 less than their male counterparts — roughly a one-third reduction in retirement funds. Women are also more vulnerable to digital poverty, which limits their access to online resources for better financial planning, savings accounts, and investment opportunities.

How to Fix It:

• Review your National Insurance (NI) contributions regularly. Women with career breaks may qualify for NI credits to fill gaps in their records.
• Consider buying back missing NI years (from 2005 to 2016) before the April 5 deadline.
• Track down any old pension plans. An estimated £31 billion is sitting in unclaimed pension funds. Use the government’s free Pension Tracing Service to find missing accounts.
• Maximize entitlements such as:
  • Pension Credit
  • Attendance Allowance
  • Carer’s Allowance

Practical Steps to Close the Wealth Gap

1. Invest Early: Women are half as likely as men to invest. Investing over a long-term period offers greater growth potential than traditional savings accounts.
2. Review Household Expenses: Monitor shared finances to ensure gendered spending patterns don’t put women at a disadvantage.
3. Promote Financial Education: Schools, universities, and workplaces must prioritize teaching financial literacy to empower women with better money management skills.
4. Advocate for Fair Workplace Practices: Encourage employers to be transparent about pay structures and offer mentorship programs that promote career progression for women.