Why Women Stay Poor

The UK Equal Opportunities Commission has stated that it
will take at least two more generations for women to bridge
the gap and reach the same earnings as our full time male
colleagues. This is despite the fact that the first equal
pay legislation was introduced over 30 years ago. Progress
is being made, but ever so slowly. Why is it that women
can't seem to catch up?

There are certainly enough motivators. We hate the fact
that we don't have enough money, we know we probably spend
too much and we certainly know we don't save as much as we
should. There are also all the horror stories about
failing pensions and old age poverty. These are still not
enough to spur us into action and take control of our
income generation. The answer is deep seated and lies in
our conditioning. Until we understand how this impacts our
attitude to money, all the changes in legislation and
extended maternity leave in the world will not raise our
earning levels.

Our conditioning is determined at a very early age. Some
time between the ages of 0 and 8 we are taught a set of
values or beliefs. In fact, David McClelland,
Distinguished Research Professor of Boston University,
proved it could be as early as 0 to 3 when our 'values' are
determined by our parents and those most closest to us.
These values impact how we feel about and respond to all
sorts of things including our attitudes to money, wealth
and the types of work we should be pursuing.

The emphasis on should is deliberate. Values are all about
what we believe we should be doing to please others, to
please society in general and to fit in.

For women and money this is complicated. Women today are
taught the importance of being financially independent, to
be self reliant because, afterall, 'a man is not a plan'.
However, sometimes the messages we hear growing up are
inconsistent and conflicting. On the one hand, we're
taught about the importance of money the need to spend and
save it wisely. On the other, we're implicitly and
explicitly taught that it's equally important to be kind,
nurturing and collaborative; that the most important thing
is our relationship with others and not our relationship
with money. Unlike men, we are not taught to be powerful
and 'go for the kill'. This makes us reluctant to demand
what we think we deserve, including equal pay.

To add insult to injury, we are told at a very early age
that girls are poor at maths. From this we conclude that
we must be bad at finance and managing money as well. As a
consequence, we lack confidence in dealing with money,
preferring others to take charge.

If our parents were raised during or shortly after the war,
we also inherited a mentality of scarcity which continues
to impact our attitude to risk and money as we become
adults and parents in our own right.

What has been the result?

Besides the earnings gap which persists, a recent survey by
the Economist Intelligence Unit on behalf of Barclays
Wealth showed that we are far less likely to take risks
with our money, whether in personal finance or business
affairs. Women tend to place less importance than men on
our income from investments and we save to reach a goal.
Once the goal is reached we will often act to protect what
it is that we have built up. This means we are limiting
our potential to create even more wealth and be superrich.

Men have a different attitude and game plan. The same
survey showed that men claim to have better knowledge than
women of every aspect of personal finance. They are more
confident and as Dr Ros Altmann, Governor of the London
School of Economics states, "Men have more of a mindset
that you have to just go out and get it and you can see
their attitude towards risk taking in the games they play."
It may just be a matter of confidence or bravado, but men
play to win, take less time researching investment products
and invest in the longer term.

Does this all mean we are doomed to stay poor for the rest
of our lives? No! It means that what you focus on is what
you get and it's time to focus on getting rich. Being rich
is a positive thing. It is about flexibility, freedom and
being in control.

What do we to become rich?

1. Choose to do something about your financial literacy
Financial skills are not innate but learnt. We need to
learn financial skills and practice them to gain
confidence. This means undertaking short courses in
financial literacy which teach you how to prepare a balance
sheet or income statement. Read the financial pages of
daily newspapers to build an understanding of the financial
world at large. Don't be put off by 'big words', buy a
jargon buster such as "The Dummies Guide to Investing".

2. Spend don't save Invest a defined amount (minimum 10% of
your net income) every month into a high income bearing
savings account – but don't leave it there. Once you have
accumulated enough, buy an asset which will produce passive
income indefinitely. This could be a buy to let property
which produces positive cash flow. Use this positive cash
flow to buy a second income generating asset and continue
to build assets.

3. Develop financial goals and stick to them After you've
built your financial skills and have learnt to prepare a
balance sheet and income statement, define how much income
and assets you need to make you feel 'rich'. This will be
different for each individual. If you are planning your
retirement fund aim to build a fund that contains 25 times
the annual amount you want to have when you retire. So, if
you want a total income of £30,000 each year when you
retire, you need to have £750,000 in your retirement fund.

4. Reward achievement in investment – don't use spending as
an emotional crutch

Our client wanted to buy a new Audi sportscar for £500 per
month. Our challenge to her was to develop a stream of
passive income to produce £500 per month within a year and
then buy the sportscar as a reward.

5. Network, network, network – but network with
financially literate and clever people.

We are told that women are great at networking so use this
skill to build networks with others (both men and women)
who are interested in building wealth. Ask around to
identify good tax accountants, IFAs, property companies and
so forth. Build your own 'wealth team' with those
individuals and companies who share your views and your
ideals.

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Pam Kennett is a Director of WealthBeing. Pam has first
hand experience of the confusing world of finance and money
through building a buy to let portfolio of £2 million.
WealthBeing is a wealth education and coaching company
which helps individuals develop practical skills and
knowledge to build their wealth.
Find out more by visiting http://www.wealthbeing.co.uk or
contact Pam direct at pam@wealthbeing.co.uk