As women, we face many money stereotypes. We’re often seen as the spenders, sneaking to hide our recent shoe purchases from our thrifty husbands, when in reality, studies like this one from Deloitte show that men splurge as often as women and usually spend more when they do. And though much of the financial media targeted at women is about spending, according to Bank of America’s research, about 90% of women are already confident about paying bills, budgeting, and other day-to-day financial tasks.
The same research shows that our biggest financial regrets as women have more to do with wishing we were better educated about money, wishing we had higher-paying jobs, and wishing we’d invested more and started earlier. These are the dragons we need to slay to up our money game and these are the topics I recently discussed with the founder of Her First $100K, Financial Feminist author, and host of the Financial Feminist podcast, Tori Dunlap.
When it comes to financial education, research by Fidelity has shown that women, especially Millennial and Gen Z women, prefer to learn about finances from other women. They also say they are more confident and motivated to take action when talking with their peers.
“Wall Street has a long history of sidelining women and minorities in the investing world and it’s about time we change that narrative,” says Dunlap. “We need to build a community where women feel encouraged to learn about financial independence and lift each other up in the process. Every day, I see the impact of financial education through the Her First $100K community. From heartfelt thank-you notes on social media to powerful stories of women achieving financial independence through our programs, it’s clear how transformative this knowledge can be. Together, we’re proving that incredible things happen when women support each other, and we’re seeing that support within our community.”
One member of the Her First $100K community recalled feeling like the personal finance realm was impossible to get into, and learning about money was even harder. She said, “I didn’t even know what an emergency fund was when I first started out. I needed help, and Tori walked me through all of the basics and the foundational stuff, which was the gateway into the world of investing my money. Tori was a catalyst for this change. If I hadn’t had the education that I did in 2019, 2020 would've been so much worse.” Another member says, "The people I’ve met through Her First $100K support me more than the people I’ve known my entire life.”
Of course, education and peer support go a long way, but to thrive financially, we also need excess income to save. While managing spending is part of that, an often more challenging part of the equation is maximizing our earning potential as women. In 2021, single men earned an average annual income of $49,525 compared to a single woman’s annual earnings of $38,178, according to the US Bureau of Labor Statistics. If a woman had an extra $11,347 of annual income and invested it at 8%, she would have close to $520,000 after 20 years. This is why, amongst other reasons, it is critical for us as women to advocate for higher pay.
This is something Tori knows a lot about, having saved up $100,000 by age 25 so she could quit her corporate job and become a full-time entrepreneur.
“When I first set out to save money, I was 22, living in Seattle, and making $55,000 at my first corporate job. And I hated it – I wanted to quit and be a full-time entrepreneur, but I didn’t have the money. So I embarked on my goal to save $100K by the time I was 25 years old. Along the way, I learned that saving isn’t just about cutting back; it’s about having a solid plan—automating your savings, increasing your income, and getting clear on how money can help you build the life you want.”
A Her First $100K community member followed Tori’s path into entrepreneurship and was able to increase her salary by 300%. “I had about $25,000 in debt, was working for the government, and also freelancing. I found out that employees in the same position as me were making $20,000 more a year. Thanks to Tori, I run my own company now and paid off all my debt. Tori made it feel possible, she provided me with steps that I felt like I could actually take.”
Steps like negotiating a higher salary can be key for women experiencing a pay gap, but negotiating is something many women dread. Harvard Business Review says that women often describe negotiating “like going to the dentist” and that 20% of us never negotiate, often in part out of a fear of being disliked. Things that have been shown to help us negotiate better are putting time into fully preparing and setting clear priorities, channeling positive emotions and joyful memories ahead of the negotiation, and focusing on the total compensation package, not just salary. Programs like CNBC’s recently launched a Make It Course “Negotiating A Higher Salary” can help build these skills.
Growing our education and earnings capacity may also be key to reducing apprehension around investing. While it has long been held that women are less tolerant of risk than men, research shows that it is the differences between men’s and women’s financial circumstances that may contribute to this difference, not gender itself.
For instance, women prefer to make investing decisions based on what we know, meaning financial education is even more important for women who want to invest (whereas men will invest based on actual or perceived knowledge about money). Furthermore, income uncertainty and net worth also impact our willingness to take risks, so earning less could be a factor in why less than half of women feel confident managing investments or creating a diversified portfolio. It’s common sense; if you have less, the risk of losing it can be scarier.
The focus is typically on the fear of taking the first step, of making mistakes, and of losing money. The greater concern we often neglect is the cost of delay, which can cost us millions of dollars in retirement. The effects of time and compound interest can be an investor’s biggest ally and meaningfully reduce the total amount one must save to achieve one's financial goals.
This particular issue is one that Dunlap and her team are tackling head-on.
“Many people believe that investing is only for the rich or that you need a substantial amount of money to get started. This just isn't true. Even small investments can make a significant difference over time,” says Dunlap. “Another common misconception is that you must be completely debt-free before you can begin investing. In reality, it's often more beneficial to prioritize investing, especially if your debt carries an interest rate under 7%. Lastly, while some view investing as inherently risky, focusing on long-term, diversified strategies can greatly reduce that risk, making investing a viable option for everyone.”
“That's why we created Stock Market School—to provide women with the education they need to make informed investment decisions. Our program outlines all the steps needed to start (and keep) investing. From stock market 101 to debunking investing myths, our program helps women create their own personalized investing strategies because everyone has their own magic number.”
When we tear down the barriers to investing, earning, and knowledge, the rewards are clear. An Ellevest survey showed that over 85% of women who invest say it makes them feel powerful.
As Tori puts it “the act of getting a financial education is inherently feminist. Paying off your debt, having enough money saved where you can leave a toxic environment, investing your money, helping bridge the investing gap—that’s resistance. Having control over my money allowed me to walk away from a toxic job, travel to Europe, donate to causes I believe in, and ultimately build the career of my dreams. For women, financial independence is one of the most powerful tools we have—it opens doors, gives us choices, and puts us in control of our futures.”
As originally published on Forbes: https://www.forbes.com/sites/danielleseurkamp/2024/10/24/three-financial-dragons-women-need-to-slay-with-tori-dunlap/
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