Everyone must save enough money for themselves. But here’s why women must save more than men. Read on to know more.
Rising inflation often makes you wonder if you are saving enough for your retirement. But if you are a woman, then you should know that you need to save more than men. Our intention isn’t to scare all young women but we are simply laying out some facts!
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Before we lay out more facts, let’s take a minute to convince you to make savings your topmost priority. You can start with Mutual Funds, create SIPs every month or simply open a Fixed Deposit Account and earn interest. Whatever you decide, we just want to put it out there that at BankBazaar have a ton of savings options for you.
Being a woman automatically puts you on a pedestal, because you are capable of taking on multiple responsibilities. You juggle work, home, children and everything else in between with amazing ease. But, sometimes you could slip a little when it comes to saving for your future.
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That’s not all. You are also at a slight disadvantage when it comes to building a retirement corpus because you will need to save twice as much as a man. You can be single, married, married with children, divorced, a single parent, or widowed. And if you are single, then by all means, you must look out for yourself.
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According to the 2011 census, there were nearly 74 million single women in India. And the country saw an increase of 39% between 2001 and 2011. So, here are some reasons why as a woman, you need to save more than men.
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Huge Gender Pay Gap
Yes, the gender pay gap is real. According to Monster Salary Index (MSI)*, in India there is a huge gap of 20%, wherein women earn 20% lesser than men. Moreover, the study revealed that men earn a median gross hourly salary of Rs. 231 while women earn only Rs. 184.8.
Though the gap is daunting, it has narrowed by five percentage points from 24.8 per cent in 2016. However, the report presented points out that the gap widens as one gains work experience.
According to the report, men with 0-2 years of experience earned 7.8 percent higher median wages than women, and those with an experience of 6-10 years earned 15.3% more. That’s not all, men with more than 11 years of experience earned 25 per cent higher median wages than their women counterparts. Phew!
*MSI is an initiative by Monster India in collaboration with Paycheck.in (managed by WageIndicator Foundation) and IIM – Ahmedabad as a research partner. This survey was conducted capturing responses from about 5500 working women (3100+) and men (2300+). It witnessed maximum participation from Delhi NCR at 24%, followed by Mumbai at 22% and then Bengaluru at 20%. The participation from non-metros was at 36%.
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Lesser Number Of Working Years
No matter how hard you try to deny it but women do end up working for lesser periods of time in comparison to men. Now, that could happen due to various reasons. Women, in general, take a break from their careers to take care of children, or to be a trailing partner if their spouse moves to another location for work and they are unable to find work during that period. Sometimes, they could simply wave their career goodbye because they get married and their in-laws may not encourage them to work.
That said, on an average, women take about seven years time off and during this period they either deplete their savings or have no earnings at all. And, if they ever try to get back into the workforce they end up losing that time to develop the new or required skill sets that end up being setbacks in their career.
Now, this results in serious loss of money too. Because they are forced to join work with way lesser salaries than their male peers. More often than not, they would get a hike of only 30% on their last salary irrespective of the number of inactive/missed years.
While on the other hand, men would have made 10-15% each year for the number of years a woman wasn’t working. That in itself is a sizeable amount of money lost for the woman.
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Less Number Of Working Years = Lower Pension/ EPF/Gratuity
Typically most working professionals tend to save up through other means while they are working with their companies. They become eligible for things like Employee Provident Fund (EPF), Gratuity or pension. This is mainly for serving a certain number of years in a particular company.
However, since women have a tendency to take a break through their career, they might not always be eligible for such savings plans. So, they lose out on getting enough stashed away in pension, EPF or gratuity for that matter.
Higher Life Expectancy
Often people hope for a long and healthy life. But imagine a long and healthy life with insufficient finances? Well, that could happen to women more than it could happen to men. Because women have a higher life expectancy of 69.9 years as compared to men who have only 66.9 years.
So at 60 years when most people retire, a man who has worked for approximately 35 years with a steady income and consistent raise will have a bigger retirement corpus than a woman. And that brings us to the point why women will have to save more because they would live longer than men and will need a bigger corpus to last those longer periods.
With age comes health risks and if you don’t have a good Health Insurance cover, you will end up spending your life savings on medical care.
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However, this needn’t be the case always. So, if you’re a woman and are reading this, then here are some tips for you to ensure you don’t end up in a soup.
- Increase Your Savings Percentage – Ideally, people save 10% of their income. But if you are a woman then you must consider saving more than just 10% of your income every month. You should try to save at least 20% or 25% of your salary. You may be tempted to spend money on numerous things when you start working, but if you make an effort in your early years, you will not have to suffer later on. Open a Savings Account and set instructions to your salary account to debit 20% of your salary at the beginning of each month. This way, you won’t have that money in hand and will not be tempted to spend it.
- Invest Wisely – If you want to double up your savings you must start investing early. Investing in top performing Mutual Funds through a Systematic Investment Plan (SIP) is a step in the right direction. However, if you aren’t someone who likes taking risks you can consider opening a Fixed Deposit for your savings. Investing in real estate also is a good option.
- Get Insured Early On – Medical emergencies can deplete your savings at a very quick pace. Getting the right cover is key. Be it a Term Life Insurance or a Health Insurance, know the benefits of getting it when you’re younger. This way, you don’t have to pay a huge premium every month and it should cover you in case of any health issues. However, be sure to read and understand all the clauses in the fine print.
- Re-look And Negotiate Your Pay – If you have been working at a company long enough without getting any sort of increment, then it’s time for that conversation. Yes, take the initiative and speak to your organisation about a raise. And if you are someone who is joining back after a break it is a good idea to negotiate your offer with the company and demand for a higher pay. Remember, don’t settle for less. It’s not worth it in the long run!
- Extend Your Working Tenure – Well, you can demand higher pay only when you have worked hard and long for it. So, you will have to give up on the idea of retiring early. And this is mainly because you will need those extra years to save up for your retirement. This way, you will transition into retirement without having to scrounge in your later years.
Now that you know why women must save more than men let’s start with the first step – save! We have plenty of options for you to start saving wisely. Care to check? Just click the link below.