It's always nice to know you're putting something away for your future, but unfortunately it seems that there's a widening gap between the savings habits of men and women – and it's leaving women severely out of pocket.
Research from Scottish Widows has found that women save significantly less than their male counterparts, with them typically taking a short-term view of their savings rather than a longer-term outlook.
The figures show that over the last year a woman's savings pot has dropped by around £260, while men have actually increased theirs by an average of £200. In fact, 22% of women have no savings at all compared to just 15% of men, and even women that do save still have less of a nest egg – on average, women have £9,300 set aside for the future, while men have around £11,100 to call on.
Over time, this can have a significant impact. The study found that some 60% of women aren't preparing adequately for retirement compared to 51% of men, and even when women save exactly the same as their male counterparts over a 40-year career they could still be between £33,000 and £89,000 worse off – simply because of the different ways they choose to save.
This variation in savings behaviour can be explained by the different attitudes that men and women have towards saving, with 21% saving exclusively for the short-term and just 14% choosing to save for the long-term. This trend is reversed in men, however, with 18% saving for the short-term and a sensible 21% having a long-term view.
Women were found to be more risk averse too, and that could have a clear impact on the potential for growing their savings pot. Just 28% of women invest in stocks and shares ISAs for the potential of better returns than cash investments compared to 34% of men, while 10% of men would prefer their pension to be invested in the stock market while only half that figure (5%) of women would choose the same.
Arguably, a lot of these differences are due to the extra barriers that women face when it comes to saving, particularly with the possibility of career breaks for childcare and the increased incidence of part-time working. This means a lot of women end up saving less towards a workplace pension than their male counterparts, with Scottish Widows calculating that the typical career break can reduce a pension pot by over £28,000.
Scottish Widows is therefore urging the industry to do more to help tackle this gender bias, such as removing barriers to pension saving and improving communication and information, but there are things that can be done on a personal level as well.
It's all about taking charge of your finances and realising the importance of long-term saving, no matter your gender, because the value of a nest egg can never be underestimated. Experts suggest having at least three months' worth of income saved as an emergency fund, but what about your long-term goals? Taking an extended outlook rather than focusing on the here and now is vital, and it's important you're able to utilise the various different savings options at your disposal.
Saving towards a pension should be an absolute must, particularly if you're a member of a workplace pension scheme if you want to benefit from employer contributions, but don't forget about having your own savings account too. A notice account could be ideal, giving you the chance to access your cash if you absolutely must whilst ensuring the notice period will let you work out whether you really need it or whether you can do without.
An easy access account could also be a great option for those unexpected emergencies, or if you're willing to lock your money away for the future you could opt for a fixed rate instead. Utilising your ISA allowance is also a must, and don't forget a stocks and shares version if you want the potential of even better returns – just make sure you're prepared for the extra risk that goes along with it.
So, make sure to take a long-term view and focus on building your nest egg so you're properly prepared for the future, and remember that even saving little and often can still add up.
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