Impact on Women Finances For The Gender Pay Gap

We’ve all heard the stereotypes– “Women aren’t as dedicated to their careers as men,” or “Hiring men is easier since maternity leave is a burden.” And, of course, the classic, “Women are too emotional for high-pressure roles.”

Despite all the progress India has made over the last few years, there is still a persistent issue that hits close to home for many women: the gender pay gap. On average, women get paid 20% less than men. We’ve either personally experienced it, heard stories from friends or colleagues, or seen the statistics. It’s hard to deny that the disparity in what men and women earn for the same work is still a real problem. This gender pay gap is rooted in systemic issues such as gender bias, cultural norms, occupational segregation, and the undervalue of women’s work. Women are also usually found to be in lower-paying jobs, whereas men dominate industries like technology, finance, and engineering, which offer much higher wages. 

Wage Inequality Effects and Financial Challenges for Women:

1. Limited Income, Limited Opportunities:

Women end up with less disposable income due to the women pay gap. A smaller earning power affects their ability to invest in their own futures, seek higher education, and take advantage of professional growth opportunities. At the end of a 40 year period, women save approximately 21% less than men due to gender wage inequality.

Because of lower wages, women have fewer savings, leaving them more susceptible to financial instability, particularly during times of a crisis.

·   Lower savings: Women save less of their income due to smaller wages , which affects their ability to build a financial cushion for emergencies, retirement, or any major life events.

·   Have less access to credit: Women sometimes struggle to qualify for loans or credit, limiting them from making significant investments such as purchasing property or starting their own business.

·   Decreased financial independence: The gender pay gap forces women to be financially depended on family members.  

2. The Burden of Unpaid Work:

Childcare and housework, which unpaid and time consuming, is usually taken up by women.  This reduces the time and energy they can commit to paid employment, limiting their chances to increase their income

This deepens the gender wage inequality between men and women since women have smaller chances to advance their careers. This makes it hard for them to build wealth over time.

3. Long-Term Financial Consequences:

Lower wages mean that women have smaller contributions to their retirement savings plans and other long-term investments.

·   Since most retirement contributions are based on a percentage of income, women end up saving less towards their retirement. This forces them to rely heavily on family or government support. 

·   Smaller earnings also limits them from investing in wealth-building assets like property, stocks, or businesses, making it harder to grow long-term financial security.

·   Women with lower wages may also struggle to afford healthcare, especially as they age, which can lead to greater health-related financial burdens.

4. Generational Impact:

The financial challenges for women due to wage inequality effects don’t just affect them, but also have a ripple effect on their families and communities. As primary caregivers, their financial struggles can limit opportunities for their children.

·   Lower education: limited income can reduce access to quality education, affecting children’s long-term prospects.

·   Weakened financial literacy: Children who grow up in economically disadvantaged households are less likely to develop strong financial skills leading to cycles of poverty.

The Path Forward

Addressing the financial impact of women’s pay gap requires policy reforms and changes within workplaces. Businesses should prioritize closing the women pay gap through initiatives such as pay transparency, gender audits, and flexible work arrangements that allow women to balance paid work with family responsibilities.  Moreover, mentoring programs and leadership opportunities for women can help bridge the gap by giving them the skills and support they need. Lxme’s Mentor Program is a unique opportunity addressing the gender pay gap for women to turn their passion to profit and earn from home. 

Along with better pay, there are also other ways that women can grow their savings- such as making better investment choices. Women can learn everything about finance with Lxme’s resources, live sessions, blogs, and even 1:1 sessions to speak with money experts. One of the best ways to create wealth is through investing and making money work harder than you do. You can start investing with Lxme’s goal-based mutual fund portfolios curated by experts as one of the best financial strategies for women. 

Additionally, salary negotiation is another skill that will be very useful for women because it empowers them to advocate for fair pay and ensures they receive compensation that reflects their skills and contributions. Lxme’s blog on closing gender pay gap salary guides you on how to effectively negotiate your salary.

Closing the woman pay gap isn’t just about giving women equal pay—it’s about ensuring they have the financial resources to live independently, financial planning for women, investing in their futures, and supporting their families. It’s time to recognize the true value of women’s work and take steps toward a more equitable financial future for all.

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